
Foreign Direct Investment
After falling as a result of the financial crisis, Spanish FDIs recovered in recent years due to an increase in competitiveness and investor confidence in the country. Despite the outbreak of the Covid-19 pandemic that hit the Iberian state hard, FDI inflows increased slightly from USD 8.5 billion in 2019 to USD 9 billion in 2020, according to the 2021 World Investment Report published by UNCTAD. FDI stocks reached USD 853 billion. FDI inflows increased mainly due to several acquisitions, including U.S. private equity firms Cinven, KKR and Providence acquiring 86% of telecommunications company Masmovil. Investments in Spain are mainly oriented towards financial and insurance services, IT, manufacturing, construction, and transportation and storage sectors. Switzerland, the U.S., the UK, France, Germany and Italy represent more than 60% of the FDI stock of Spain. According to the latest figures from OECD, FDI inflows to Spain reached USD 6.6 billion in the first half of 2021, down from USD 17 billion in the same period one year earlier. Of these investments, 60.2% were directed towards the region of Madrid, followed by Catalonia at 19.1%. The main sectors were telecommunications (21.6%), electricity, gas, steam and air supply (20.8%); real estate activities (6.2%); sports, recreation and entertainment activities (5.3%), and financial services, except insurance and pension funds (5.2% - Spanish Ministry of Commerce and Industry).
The country’s strengths in terms of FDI attractiveness include a restructured financial sector, the boom in tourism, its highly efficient transport network, its development of renewable energies and the cultural proximity to Latin America, with the presence of a number of Spanish multinational companies. Spain also aspires to become one of the world's key research actors. On the other hand, the country has high levels of private and public debt, a very negative net external position and a high level of structural unemployment. Since 2020, Spain suspended the FDI liberalisation regime. Government authorisation is now required for direct investments of more than 10% of a Spanish company's capital made by residents of non-EU or EFTA countries (including the UK) in certain sectors, including critical infrastructure and technologies, media and food safety. Spain ranked 30th out of 190 countries in the latest edition of the Doing Business report published by the World Bank, stable compared to the previous year.
Foreign Direct Investment | 2019 | 2020 | 2021 |
FDI Inward Flow (million USD) | 17,417 | 5,678 | 9,777 |
FDI Stock (million USD) | 769,277 | 864,807 | 819,725 |
Number of Greenfield Investments* | 813 | 548 | 827 |
Value of Greenfield Investments (million USD) | 21,454 | 13,420 | 28,742 |
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Spain | OECD | United States | Germany |
Index of Transaction Transparency* | 7.0 | 6.5 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 6.0 | 5.3 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 6.0 | 7.3 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
