It is a popular belief that Foreign Direct Investment (FDI) has had a crucial role in the development of Spain's economy, especially after the large impact brought on by the liberalization efforts since the late 1950’s and also the entry to the European Community in 1986. In recent history, Spain has known a great recession, being on the edge of bankruptcy and experiencing extremely high unemployment rates. Today however, we see a different picture.
Gross Domestic Product
Spain seems to be on the verge of recovery with current growth for nine consecutive quarters. In fact, in the last publication of "Autumn 2015 Economic Forecast", the European Commission expects Spain’s economy to rise above the European average. Spain’s real GDP is forecasted to grow by 3.1% in 2015 and will continue to increase by 2.7% in 2016 and 2.4% in 2017.
However, resulting from recent developments, such as the upcoming national elections in December and the uncertainty created by the yet unclear consequences of the Catalan parliamentary elections last September, it is fair to expect the annual growth rate to slow down slightly. Nonetheless, Spain seems to be gaining strength and is currently one of the fastest growing economies within the European Union.
Foreign Direct Investments
The newly released figures of the European Commission also expect Spanish investments to grow continuously.
An important part of this growth in investment rates is due to the level of FDI entering Spain. According to the latest figures by UNCTAD (United Nations on Trade and Development), Spain received a FDI inflow of almost 23 billion USD over 2014, making it the third largest FDI recipient of Europe that year, after the UK and the Netherlands. In terms of FDI Stock, Spain occupied fourth place with a total installed foreign capital of 722 billion USD.
The high level of interest in Spain is not surprising though. The country offers a young, highly educated, and ambitious workforce with competitive labour costs below the European average. Moreover, Spain's legislations are regarded as investor friendly, as can be concluded from Spain’s ninth position on the OECD’s “FDI Restrictiveness Index” (the higher a country appears on this list, the more open to FDI it is).
In turn, as Rafael Myro highlights in his paper “Foreign Direct Investment in Spain” (2015), the presence of foreign companies can have an advantageous impact on the growth of GDP and increasing employment.
Following the Innovators
Good examples in this regard can be found in the Information Technology sector. Foreign direct investment in Spain, driven by the attractiveness of the labour force and a well-established ICT infrastructure, is found in the increasing presence of companies such as IBM, HP and NetApp in Spain.
In 2013 for instance, IBM announced it would open a Cloud Center in Spain, providing cloud services to customers worldwide and investing 8 million USD. In 2014, HP made public that it would open its global center for 3D-printing in Spain, operating from Barcelona and making use of the highly qualified and ambitious staff available.
A third example is the American data storage and processing multinational, NetApp, who recently celebrated its fifteenth year of presence in Spain, operating out of its Spanish headquarters in Madrid.
So, what are you waiting for?
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