Spain

Print article

Cutting-edge developments in Madrid

Spain’s modern and flourishing economy is the place to go for long-term investors seeking a growing and strategically located market. Today’s increasingly globalized and interconnected international economy presents complex choices for companies seeking to expand their business. In many knowledge and information-based sectors requiring high skills, technology and world-class infrastructures, companies are examining a vast array of items before carrying out an investment.

Europe is witnessing a wave of corporate mergers and acquisitions reminiscent of the consolidation of the roaring 1990s. But on this occasion Spanish multinationals (such as Telefónica, Ferrovial or BSCH) are amongst the most active players and are not just buying up assets in Latin America but also acquiring or merging with rivals in Europe and entering markets in the US. Spain has therefore positioned itself as the ideal bridge for a new wave of foreign investment into the US (especially into markets with a large Hispanic population) and an inflow of investment from US companies looking for a base from which to grow their businesses across Europe, the Mediterranean and Latin America.

THE MEDITERRANEAN TIGER

Spain has proven over the past decade that it provides excellent conditions to attract foreign investors. Indeed, Spain’s dynamic growth, rock-solid macroeconomic, institutional and political stability, membership in the eurozone, relatively low wages, together with its strategic location, highly qualified and young workforce, modern infrastructures, outstanding business and investment climate and high quality of life are the ideal combination for companies searching for new markets in Europe, Latin America and the Mediterranean basin.

Companies looking to invest in growing economies demand that they show sustainability and healthy macroeconomic fundamentals. Spain offers the best of both worlds. The Spanish economy, the eighth largest in the world, has grown by an average of 3.7% during the past decade, registering 11 consecutive years of growth. Spain recorded a 3.9 % GDP growth rate in 2006. Interest rates remain at historically low levels and Spain is one of the few OECD countries to have consistently registered budget surpluses in the past years.

Moreover, Spain’s expansion is balanced, with services, industry and construction all thriving. Industrial production is growing at a high rate, as is investment in general and more specifically in capital goods (which surged by 9.1% in the second quarter of 2006). Job creation has been and remains robust. Between 1995-2005 Spain created 6,441,000 jobs, which amounted to more than one-third of the total for the EU. The unemployment rate has been declining swiftly in the past 12 years (from 19% in 1994 to the current 8.3%) despite a surge in Spain’s labor force (3.3% in the past year) brought about by the record number of immigrants and an increase in labor market participation by certain population groups (especially women).

But there is much more than growth and stability awaiting the investor. Spain still enjoys a wage cost advantage versus other western European economies. Its booming stock market (which recently reached sixyear highs) and real estate market are being driven primarily by structural factors such as population growth, an influx of young workers through immigration, rising incomes and wages, substantial FDI inflows and the internationalization of Spanish companies.

THE FDI BOOM

Spain’s excellent track record in attracting FDI is a testament to its good business climate. Six hundred US companies have subsidiaries in Spain and their annual turnover is €53 billion (7.1% of Spain’s GDP). US companies operating in Spain are overwhelmingly upbeat about their prospects and those of the Spanish economy in 2007. Specifically, 76% of US companies doing business in Spain surveyed by the American Chamber of Commerce in Spain and the leading business school ESADE feel that growth prospects for the Spanish economy are either very favorable or favorable in 2007.

US investors locating in Spain will also benefit from excellent transportation links to the rest of Europe and other continents, a more liberalized labor market than other western European countries and a large internal market of 44 million people. In fact, 31% of US companies operating in Spain import more than 90% of the products they offer in the Spanish market. A myriad of sectors are expanding and attracting FDI. 650,000 housing units were built in Spain in 2005, more than in Germany and France combined. Spain is a tourist powerhouse, ranking second in the world with 55 million visitors annually. Telecommunications, financial and transportation services and the energy sector are poised for more growth under the prudent supervision of EU and national regulators.

Spain’s diversified industrial sector features agribusiness, pharmaceutical and chemicals, automotive, electronic goods and household appliances. Spain is a highly developed but still emerging country which exudes dynamism, optimism and entrepreneurial spirit due to the fact that it is a comparatively young democracy and that its enormous inflow of immigrants allows it to grow its population and renew its labor force. It is the ideal choice for establishing regional headquarters and research and development centers for US companies seeking a growing but sophisticated market; a natural bridge to Europe, Latin America and the Mediterranean countries.

Contact Information

American Chamber of Commerce in Spain
Tuset, 8 entlo 3a
08006 Barcelona
Spain
Tel: +34 93 415 9963
E-mail: info@amchamspain.com
Website: www.amchamspain.com

Useful websites

back

All pages are copyright of © Roxby Media Ltd - European American Business is a Roxby Media publication.