FDI of Spain

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Foreign DirectInvestment in Spain

2009 REPORT


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1. INTRODUCTION

In 2008 , according to the provisional data published by UNCTAD , worldwide FDIfell 14.5% to 1.66 trillion dollars , due to the effects of the world financial crisiscurrently gripping economies. This decrease in FDI was primarily the result of a25.3% reduction in the developed world, as opposed to a 7.2% increase indeveloping economies.

Once again, in 2008 the main recipients of investment flows are the developedeconomies , despite the fact that the developed world's market share fell from69.1% in 2007 to 60.4% in 2008. The EU stands out with 33% of the total marketshare.

Despite the negative international climate, according to the Ministry of Industry,Tourism and Trade's Foreign Investment Registry , gross foreign investment inSpain in 2008 rose to 37.715 billion Euros , 0.4% more than the previousyear , a figure only exceeded in 2000.

The Bank of Spain puts FDI received by the country in 2008 at 44.742 billionEuros, 11% less than 2007 1. This decrease is considerably less than theEuropean Union average (-36.9%), and those seen in the continent's main

economies: France (-20.2%), United Kingdom (-50.7%), Germany (-55.8%), Italy(-66.9%) or the Netherlands (-103%).

These figures make Spain the 7th most attractive country in the world forinvestment .

The aim of the 2009 Report is to analyse FDI in Spain over the last year in detail.To do this, firstly, the report will discuss FDI flows in 2008, according to the datacollected by the Foreign Investment Registry , revealing the most activecountries of origin of investment flows to Spain, the main recipient sectors, and the

regions that most benefited from these flows.Secondly , we will look at greenfield and reinvestment projects in Spain in2008.

Thirdly , the report will examine the key contribution made by FDI to theSpanish economy , mainly regarding GDP, job creation and company performance.

The report focuses on what will be called productive investment, obtained bysubtracting the total investment in Foreign Securities Holding Companies (FSHC),as these tend to be companies that owe their existence almost exclusively to thefiscal optimization strategies used by their foreign shareholders. Therefore, thereport concentrates only on investment that generates wealth and added value.

1 See the note on methodology explaining the differences in the figures arrived at by the differentsources.


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Lastly , there will be a general assessment in the main conclusions of the report.


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2. ANALYSIS OF FDI FLOWS INSPAIN FOR 2008


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2.1. Global FDI Trends in 2008

In 2008 , according to the provisional data published by UNCTAD , global FDIflows reached 1.66 trillion dollars , a 14.5% decrease on 2007, when a recordamount of FDI flows were recorded ($ 1.94 trillion).

Due to the world recession , restrictive credit conditions, the drop in companyprofits and the dismal prospects of world economic growth in the future, manycompanies have announced plans to slow production, reduce theirworkforces and cut back capital spending, all of which lead to a decrease inFDI.

However, the impact of the crisis varies greatly between regions andcountries , leading to considerable changes in the geographical FDI trends.

The current crisis , in contrast to that experienced in 1997 in developing Asianeconomies, originated in developed countries. These countries have beenthe first to be affected by the sharp drop in FDI flows , while the impact onthe economies of Newly Industrialised Countries (NIC) has, up to now, been muchless serious.

UNCTAD's data for 2008 points to a reduction in FDI inflows to most developedcountries, mainly due to the worsening of the problems affecting financialinstitutions resulting from the liquidity crunch in the capital and debt markets. Forthese reasons, UNCTAD considers that the FDI inflows to developed countries fell more sharply than global flows, by 25.3% in comparison with 2007. Thedecrease in leveraged buyouts, mergers and acquisitions due to the factorsoutlined above, has been an important factor in the reduction of FDI flows.Specifically, mergers and acquisitions in developed countries fell by 33.6% inrelation to the previous year.

In contrast, for NIC economies and those in transition, UNCTAD points to FDI flowincreases. Specifically, growth in foreign direct investment inflows, although lessthan in 2007 (when it surpassed 20%), seems to have remained positive in 2008 at7.2% . FDI inflows received by East, South and South East Asia increased by 6.4%,though the most considerable growth was seen in Africa (+34.7%) and Latin

America (+9.4%).

Unlike developed economies, mergers and acquisitions in NICs and transitioneconomies rose by 12.7% in 2008.


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Table 1. FDI by Regions, 2007 and 2008

Region / Economy 2007 (billions) 2008 2 (billions) Change (%)

World 1,940.9 1,658.5 -14.5

Developed Economies 1,341.8 1,001.8 -25.3

EU 864 544.9 -36.9

Developing

Economies

512.2 549.1 7.2

Source: Invest in Spain, from data provided by UNCTAD, 2009.

Graph 1. FDI Evolution by Region

Figures in billions of Euros.BRIC: Brazil, Russia, India, China.

*Provisional data.Source: Invest in Spain, from data provided by UNCTAD, 2009.

2 Provisional data, latest UNCTAD report, 20 May 2009.

0

100

200

300

400

500

600

700

800

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 BRICs

Industrializadosno UE

UE 282.7

193.6

557.4

0

100

200

300

400

500

600

700

800

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 BRIC

IndustrializedNon-EU countries

EU 282.

193

557


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2.2. Recent FDI Evolution in Spain

FDI inflows to Spain increased sharply during the 1980s as a result of entryinto the European Economic Community, driven by the advantages of locatingin Spain. In addition to low labour costs, the size of Spain's market and its growthpotential acted as incentives to those wishing to produce and sell in both nationaland international markets.

In 1994 the rate of investment inflows began to decline gradually , butrecovered spectacularly in 2000, a record year for FDI in Spain , mainly due

to the strong appeal of tax policy for Foreign Securities Holding Companies(FSHC) 3.

This trend changed after the year 2000 , and was spurred by the entry of tennew members to the EU in 2004 , all of which have lower labour costs andsimilar production systems to Spain's, well-established industrial bases and arecloser to Central Europe.

Faced with this new context, the assets Spain can offer to attract FDI havechanged , and now principally involve business and niche-related activities thatcorrespond to the country's high level of development: sectors with high addedvalue and technological elements, and with large quality, differentiation,R&D&I and design components, among others.

In addition, Spain's attraction lies in its highly qualified workforce, its sophisticatedconsumer demands, and large purchasing power. Coupled with these factors, Spainhas positioned itself as an ideal springboard that can be used to access marketssuch as Latin America and EMEA (Europe, the Middle East and Africa), not onlybecause if cultural links, but because of the strategic advantages offered bySpanish companies already well-established in these markets.

Thus, Spain has consolidated a FDI capture model similar to that of theworld's most advanced economies , in which the lion's share of FDI inflows are

related to mergers and acquisitions.

After 6 consecutive years of decline in FDI inflows, 2007 saw a sharp turnaround of investment flows to Spain, an increase that has beenconsolidated in 2008.

3 Foreign Securities Holding Companies are companies established in Spain whose main purpose is to

hold shares of other companies located abroad. FSHCs are tend to owe their existence to fiscaloptimization strategies within a single corporate group, and in many cases do not have a direct effect onSpain's economy, since they are limited to the transfer of financial investments.


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Graph 3. Evolution of Foreign Investment in Spain, Gross and Net,

1997-2008

Figures in billions of Euros.Source: Invest in Spain, from data provided by the Foreign Investment Registry, 2009.

2.3. FDI in 2008

Gross Foreign Direct Investment in Spain in 2008 , according to the Ministry of Industry, Tourism and Trade's Foreign Investment Registry , rose to 37.715

billion Euros , 0.4% more than the previous year, a figure only surpassed in 2000.

Net Foreign Direct Investment reached an all time record , at 34.543 billionEuros , 26.7% higher than in 2007 . This is specially important, as it points to asubstantial reduction in disinvestment in Spain and, consequently, asignificant level of confidence on the part of foreign investors in Spain inspite of an unfavourable international economic climate.

The Bank of Spain puts FDI received by the country in 2008 at 44.742 billionEuros, 11% less than 2007 4. This decrease is considerably less than theEuropean Union average (-36.9%), and those seen in the continent's maineconomies: France (-20.2%), United Kingdom (-50.7%), Germany (-55.8%), Italy

(-66.9%) or the Netherlands (-103%).

4 See the note on methodology explaining the differences in the figures arrived at by the differentsources.

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

45.000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Gross Investment Net Investment


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The difference between the figures of the Registry and the Bank of Spain are due tothe fact that the latter, in contrast to the former, includes figures on intra-groupfinancing, an estimation of reinvestment of profits and investment in fixed assets 5.

Spain's healthy FDI performance for 2008 has lead to an increase in thecountry's share in world FDI capture , from 3.5% in 2007 to 4% in 2008 .

According to UNCTAD, due to these results, in 2008 Spain held 7th place inworld FDI inflows and 4th place in the EU .

Graph 4. Spain's Participation in Global Flows, 1998-2008

Provisional data.Source: Invest in Spain, from data provided by UNCTAD, 2009.

Returning to the figures published by the Investment Registry, gross productiveinvestment (not counting FSHCs), was 28.793 billion Euros in 2008, a 2.5%drop in relation to the previous year.

However, once again, it was net productive investment that displayed the mostpositive figures; specifically, 25.679 billion Euros and an increase of 32.8% on2007.

5 See note on methodology.

3.5%

1.5%

4.0%

2.1% 1.6%

2.9% 3.4%

6.1%

4.6%

3.5% 2.5%

0 200 400 600

800 1000

1200

1400

1600

1800

2000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

EU Other Industrialized C. BRIC Rest Spains Share

SpainsShare


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Graph 5. Composition of FDI Flows in Spain for 2008


As regards Gross FDI in FSHCs , 2008 saw an 11.3% increase in relation to2007, to 8.922 billion Euros . This shows that this type of investment continues tobe attractive for investors wishing to channel their investment to Spain.

2.4. Origin of Investment

By geographical blocks , the EU was the largest investor in Spain, with 93.2% of total FDI inflows in 2008.

By countries , the main investors were the United Kingdom , with 46.3% of thetotal, Germany , with 26.3%, France , with 7.8% and the Netherlands , with4.1%, with a joint total of 84.5% gross productive FDI.

11,69,7 8,9 9,8

29,5 28,88,6 10,0

3,9

8,0 8,9

13,7

21,1

3,9

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

2002 2003 2004 2005 2006 2007 2008Productiva ETVEs IED total

11.69.7 8.9 9.8

29.5 28.88.6 10.0

3.9

8.0 8.9

13.7

21.1

3.9

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2002 2003 2004 2005 2006 2007 2008Productive FSHCs Total FDI


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Graph 6. Ultimate Origin of Gross Productive FDI in Spain, 2008.

Note: The presence of Spain in this graph with 3.1% of the total investment is due toinvestments made in Spain by subsidiaries of Spanish companies abroad.Source: Invest in Spain, from data provided by the Foreign Investment Registry, 2009.

2.5. Sectors and Investment Activities

In 2008, the sectorial distribution of foreign productive capital flows showed thatthe most important sectors (those with double digits in the National Classification of Economic Activities - CNAE) were the Trade and Commerce group, with 47% of the total , followed at some distance by Production and Distribution of Electricity, Gas and Water , with 27.3%, Financial Intermediation, Bankingand Insurance, with 9.4%, and Real Estate Activities and Services , with 6.8%of the total.

The year on year evolution for 2007-2008 shows the Trade and Commerce sector to be the most dynamic, with an increase of 2,728% , due to the purchaseof Altadis by Imperial Tobacco. Significant increases were also experienced by theExtractive Industries and Oil Refining , with an increase of 226.2% andFinancial Intermediation, Banking and Insurance , with 41.2% .

Total 2008: 28,8 mM

46,3%

26,3%

7,8% 4,1% 3,1% 1,9% 1,7%

1,6% 0,9% 0,8% 0,6% 0,5% 0,3% 0,3% 0,23 3,1% 0,9

0,09

0,1

0,1

0,1

0,2

0,2

0,3

0,4

0,5

0,5

0,9

1,2

2,2

7,5 13,3

Resto Mxico

Libia Canad Suecia

Blgica Portugal

Italia EEUU

Suiza Luxemburgo

Espaa Pases Bajos

Francia Alemania

Reino Unido

Total UE: 93,2%

882,4%

645,3%

243,9%

61,4%

158,7%

-36,3%

191,0%

- 75,3%- 98,6%- 22,9%216,3%

- 72,0%76,8%

0,0% - 86,6%

Variaci nanual

%sobre total

Total 2008: 28.8 bn

46.3%

26.3%

7.8% 4.1% 3.1% 1.9% 1.7%

1.6% 0.9% 0.8% 0.6% 0.5% 0.3% 0.3% 0.23 3.1% 0.9

0.09

0.1

0.1

0.1

0.2 0.2 0.3

0.4

0.5

0.5

0.9

1.2

2.2

7.5

13.3

Rest Mexico

Libya Canada Sweden

Belgium Portugal

Italy USA

Swzld

Luxemburg Spain

Netherlands France

Germany U.K.

EU Total: 93.2%

882.4%

645.3%

243.9%

61.4%

158.7%

-36.3%

191.0%

- 75.3%- 98.6%- 22.9%216.3%

- 72.0%76.8%

0.0% - 86.6%

Annual Variation

% of Total


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Graph 7. Destination of Gross Productive Investment by Sector, 2007-2008.


Spain currently offers an attractive set of investment opportunities inother sectors with great growth potential, such as:

ICT. Renewable Energy Sources. Health Sciences, Pharmaceuticals and Biotechnology. Environment and Water Treatment. Aeronautics. Logistics.

The existence of these opportunities is confirmed by looking at the analysis madeby FDI Markets 6 on greenfield projects and capital increases in 2008: the twomain recipient sectors were Software and ICT , with 11% of projects, andRenewable Energy with 10% . This means that almost one in four projects carried out in Spain in 2008 was aimed at high-tech sectors (see section 3).

6 Prestigious international database of foreign investment projects used both by UNCTAD and theEconomist Intelligence Unit.


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3. GREENFIELD PROJECTS ANDREINVESTMENT IN SPAIN, 2008


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3.1. Number of Projects 7

In 2008, the number of greenfield and reinvestment projects in Spain rose to489 , and were carried out by 376 companies .

This figure represents an increase of 14.5% in comparison to 2007, with 427projects. This trend is even more positive if compared to 2006, when only 288projects were initiated. This represents an increase of 69.8% between 2006and 2008 .

Graph 8. Number of Greenfield and Reinvestment Projects in Spain,2006-2008

288

427

489

0

100

200

300

400

500

600

2006 2007 2008

Source: Invest in Spain, from data provided by FDI Markets, 2009.

7 The only information source used in this section is the FDI Markets database, (previously known asOCOMONITOR), a global benchmark in business investment projects that gathers information fromalmost 9000 sources, and which is the exclusive source of project data for UNCTAD's World Investment Report and the Economist Intelligence Unit .

Methodologically, the data provided by FDI Markets for invested capital may differ from official statisticsdue to the fact that FDI Market's analysis excludes mergers and acquisitions, privatizations and portfolioinvestments. Furthermore, FDI Markets counts the total put up by the company at the time of announcement or commencement of projects, excluding changes to the amount of investment made insuccessive years.


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3.2. Greenfield and Reinvestment Projects by Sector

One of the main aspects to be highlighted is the leading role played by sectorswith added value and high technology components as m the main recipientsof greenfield and reinvestment projects in Spain in 2008.

The two main recipient sectors were Software and ICT , with 11% of projects ,and Renewable Energy with 10% , meaning that almost one in four projects carried out in Spain in 2008 were aimed at high-tech sectors .

Specially relevant is the growth in the number of renewable energy projects ,with an 88.5% increase compared to 2007.

Both sectors already played a significant role in 2007 , jointly representing 18% of projects , showing the growing appeal of Spain for investment projects inR&D and high added value sectors .

Graph 9. Number of Greenfield Projects and Capital Increases by Sector,2008.


52

49

48

38

31

26

25

17

17

14

0 10 20 30 40 50 60

Software & ICT

Renewable Energy

Textiles

Consumer Goods

Company Services

Financial Services

Food and Tobacco

Real State Sector

Transport

Comunications


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An analysis of the remaining strategic sectors reveals:

o Growth in the Health Sciences sector of almost 17% in comparison with2007, from 12 to 14 projects.

o The number of projects in the Software and ICT sector has remainedconstant, with 52 projects in 2007 and 2008.

o The Automobile sector, with con 17 projects, accounted for 3.5% of thetotal number of projects in 2008.

o The Electrical Components sector made up 2% of the total number of projects, with 10 projects.

o The Aerospace sector represented 1.02% of the total number of projects carried out in Spain in 2008.

Table 2. Number of Greenfield and Reinvestment Projects by StrategicSector, 2008.


The increasing share of these sectors reflects the changes to the FDI capturemodel being witnessed in the Spanish economy , in which high-tech, innovationand added value sectors play a key role, as well as services.

3.3. Greenfield and Reinvestment Projects by Countries of Origin

Looking at the countries of origin of projects makes cleat the stability of theworld's largest economies as major investors in Spain .

France held first place in the number of projects carried out in Spain in 2008, withalmost 20% , followed by the United States (1st place in 2007), with 16.5%, Germany , 13%, the United Kingdom , 10% and the Netherlands , 5%.

SECTORS 2007 As % of

total 2008 As % of

total % Variation2007-2008

Software & ICT 52 12.18% 52 10.63% 0.00% Renewable Energy 26 6.09% 49 10.02% 88.46% Health Sciences 12 2.81% 14 2.86% 16.67% Aerospace 7 1.64% 5 1.02% -28.57% Total 427 100.00% 489 100.00% 14.52%


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Graph 10. Greenfield and Reinvestment Projects by Country of Origin, 2008


If we look at the figures by NICs in comparison with 2007, the arrival of China (+HK) as a new source of greenfield projects in Spain, reaching a share of 3.5%in 2008, with 17 projects, while in 2007 this figure was 1.6%.

The appearance of India and Brazil as investor countries has also made itself felt in2008, with 3 greenfield projects each in Spain.

Table 3. Number of Greenfield and Reinvestment Projects by NewlyIndustrialised Countries, 2008.


France 20%

Italy 5% USA

17% Germany 13% United Kingdom 10% Netherlands 5 %

Others 31%

TotalAs % of

totalChina + Hong Kong 17 3.48% India 3 0.61% Brazil 3 0.61%

Poland 2 0.41% Russia 2 0.41% Colombia 2 0.41% Turkey 2 0.41% Argentina 2 0.41% Philippines 2 0.41% Mexico 2 0.41% Singapore 1 0.20% Ecuador 1 0.20% Algeria 1 0.20% Total 489 100.00%


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4. CONTRIBUTION OF FDI TO THESPANISH ECONOMY


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4.1 General Points

It may be safely said that the economic developed experienced by Spain over thelast 30 years can not be fully understood without considering the contribution madeby FDI.

The foreign companies that have invested in Spain have not only generated wealththrough monetary investments and creating thousands of jobs, but thetechnological and knowledge capital that came with this investment have alsocontributed to the industrial and productive fabric of the country.

The following sections summarise and provide details of FDI's contribution to theSpanish economy in four points: contribution to GDP, employment, companyperformance and financing the economy.

4.2 Contribution to GDP

As mentioned above, growth of GDP in Spain owes much to FDIinflows. This contribution can be quantified by measuring the share of accumulatedstock of incoming FDI in Spain's GDP, which on 31 December 2008 reached 41.6%,according to data from the Bank of Spain.

Graph 11. Share of Accumulated Stock of Incoming FDI in GDP,2006-2008

Source: Invest in Spain, from data provided by the Bank of Spain, 2009.

34.5%36.8%

41.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

2006 2007 2008


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4.3. Contribution to Employment

FDI's most direct effect on the Spanish economy can be seen in the job market.Specifically, FDI provides jobs for 1,371,082 people (to 31 December 2007), andincreased by 2.4% in relation to the previous year, representing 6.7% of thenational total.

To this must be added indirect job creation due to FDIs impact on the chain of production.

Graph 12. Job Creation (thousands)

Source: Invest in Spain, from data provided by the Foreign Investment Registry, 2009.

As regards the contribution made by companies with foreign capital to the jobmarket, the most favoured sector has been industry, with 14.5% of the totalnumber of jobs created in this sector in Spain. This is followed by the servicessector with 5.9% and the construction sector with 3.2%.

A comparison between the distribution of employment in basic sectors and that of foreign capital companies reveals that while in the Spanish economy as a whole,2/3 of jobs are concentrated in the services sector, this percentage falls to 58.6%when only companies with foreign capital in Spain are taken into account.

In contrast, industry provides employment for 16% of the total working population,but for 34.8% in the case of foreign investment.

Lastly, jobs created by foreign investment in construction represent half of thesectors jobs at national level.

1.338,3

0,3 0,136 0,117

1.283,0

1.370,8

2005 2006 2007

Thousands 1.338,4

1.371,1

FSHCs

+ 2.4%

Companies

+156.7%

+2.4%

+ 4.3%

- 13.9%1.283,1

+4.3%

1,338.3

0,3 0,136 0,117

1,283.0

1,370.8

2005 2006 2007

1,338.41,371.1

- 1,283.1


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Table 4. Jobs by Area of Activity: companies with foreign capital and totalemployment


4.4 Contribution to Company Performance

The turnover of foreign companies in Spain reached 432.589 billion Euros on 31December 2007, an increase of 7.8% on the previous year's figures.

Company results after tax reached 26.744 billion Euros.

This favourable progression of performance reaffirms Spain's great appeal forforeign investors already established in the country.

Graph 13. Turnover of Foreign Companies in Spain ( bn)


2007 As % of total 2007 As % of total Primary Sector 905,800 4.4% 4,580 0.3% 0.5%Industry 3,279,100 16.0% 476,765 34.8% 14.5%Construction 2,693,500 13.2% 86,350 6.3% 3.2%Services 13,598,500 66.4% 803,086 58.6% 5.9%

TOTAL 20,476,900 100.0% 1,370,782 100.0% 6.7%

EMPLOYMENTIN FOREIGN CAPITAL

COMPANIES AS % OFTOTAL EMPLOYMENT

NATIONAL TOTAL

No. of peopleAREA OF ACTIVITY

COMPANIES WITHFOREIGN CAPITAL

No of people

365,8 400,9 432,3

0,28

1,3 0,11

2005 2006 2007

Sociedades (IED productiva)

ETVEs

432,6 367,2

+147,8 %

+4,8 %

+9,3%

401,1

+4,8%

- 91,5 %

+9,6%

365.8 400.9 432.3

0.28

1.3 0.11

2005 2006 2007

Companies (Productive FDI)

FSHCs

432.6 367.2

+147.8 %

+4.8 %

+9.3%

401.1

+4.8%

- 91.5 %

+9.6%


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Graph 14. FDI Company Performance in Spain ( bn)


4.5 Contribution to Financing the Economy

One of FDI's most important contributions to the economy is that made towardfinancing Spain's current account deficit.

Thus, in 2008 the balancing role played by incoming FDI has increased from41.63% in 2007 to 44.36% in 2008.

Graph 15. % Coverage of Economic Financing Needs


14,919

24,2

5,7

1,3

2005 2006 2007

Sociedades(IED productiva)

ETVEs

26,720,6

+103,5 %

+27,2 %

- 1,9% 20,2

32%

- 75,1 %

+26,2 %

+103,5 %

14.919

24.2

5.7

1.3

2005 2006 2007

Companiess(Productive FDI)

FSHCs

26.720.6

+103.5 %

+27.2 %

- 1.9% 20.2

32%

- 75.1 %

+26.2 %

+103.5 %

2006 2007 2008

78,562

101,378 99,107

20.3%

41.6%

44.4%

FDI (Net Liability Variation Bal. of Payments) Capital/ Financing Need


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5. CONCLUSIONS

2008 Flows

Gross Foreign Direct Investment in Spain in 2008 , according to theMinistry of Industry, Tourism and Trade's Foreign Investment Registry ,rose to 37.715 billion Euros , 0.4% more than the previous year, a figureonly surpassed in 2000.

Net Foreign Direct Investment reached an all time record , at 34.543billion Euros , 26.7% higher than in 2007 . This is specially important, asit points to a substantial reduction in disinvestment in Spain and,

consequently, a significant level of confidence on the part of foreigninvestors in Spain in spite of an unfavourable international economicclimate.

Specifically, disinvestment in 2008 decreased by 69.5% , reaching 3.113billion Euros, in contrast to 10.196 billion Euros in the previous year.

Spain's healthy FDI performance for 2008 has lead to an increase in thecountry's share in world FDI capture , from 3.5% in 2007 to 4% in2008 .

According to UNCTAD, due to these results, in 2008 Spain held 7th place inworld FDI inflows and 4th place in the EU .

By geographical blocks, the EU was Spain's largest investor , with 93.2%of total FDI inflows in 2008. By countries (ultimate origin), the maininvestors were the United Kingdom , with 46.3% of the total, Germany ,with 26.3%, France , with 7.8% and the Netherlands , with 4.1%, with a

joint total of 84.5% gross productive FDI. In 2008, the sector distribution of foreign productive capital flows showed

that the most important sectors (those with double digits in the NationalClassification of Economic Activities - CNAE) were the Trade andCommerce group, with 47% of the total, followed at some distance byProduction and Distribution of Electricity, Gas and Water , with 27.3%,Financial Intermediation, Banking and Insurance, with 9.4%, and RealEstate Activities and Services , with 6.8% of the total.

Greenfield 2008

In 2008 the number of projects undertaken by foreign investors in Spainrose 14.5% in comparison to the previous year to reach 489 projects .

Greenfield and reinvestment projects in Spain reached 12.616 billiondollars, creating 15,896 jobs .


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There has been a notable growth in the weight of sectors with highadded value and technology , mainly ICT and renewable energy , asrecipient sectors for investment projects in Spain. In 2008, this kind of project made up almost one in four projects undertaken (21%).

This is in step with the shift in the Spanish economy's FDI capturemodel , from its previous basis on low-tech, labour-intensive sectors to thecurrent model based on R&D&i, added value and services , inaccordance with the FDI capture pattern of the world's major economies.

Contribution of FDI To The Spanish Economy

The foreign companies that have invested in Spain have not only generatedwealth through monetary investments and creating thousands of jobs, butthe technological and knowledge capital that came with this investment havealso contributed to the industrial and productive fabric of the country.

The share of accumulated stock of FDI to Spain in GDP on 31December 2008 reached 41.6%, according to data from the Bank of Spain .

FDI's most direct effect on the Spanish economy can be seen in the jobmarket. Specifically, 1,371,082 jobs have been created in Spain thanksto FDI, representing 6.7% of the national total .

Company results after tax reached 26.744 billion Euros . The turnover

of foreign companies in Spain reached 432.589 billion Euros , on 31December 2007, an increase of 7.8% on the previous year's figures.

One of FDI's most important contributions to the economy is that madetoward financing Spain's current account deficit. Thus, in 2008 theeconomic balancing role in Spain's Economy played by incoming FDIhas risen significantly, from 41.63% in 2007 to 44.36% in 2008 .

FDI of Spain

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