Spain is one of the countries that attracts the most foreign direct investment. According to a study published in Funcas's quarterly magazine, it records the third-highest figure in Europe and the eleventh in the world.
The paper from the Foundation of Savings Banks states that the factors making Spain attractive for foreign investment are the large market size and its real and potential growth, the availability of infrastructure and human capital and macroeconomic stability. It also notes that integration into the European Union has had a significant positive impact.
It places the weight of foreign capital at 57.9% in terms of GDP, higher than that of countries like France or Germany. In 2022 and 2023, in fact, foreign direct investment (FDI) received by Spain increased significantly, averaging €40 billion per year, while global investment declined.
According to the document, Spain ranked eleventh globally in 2023 as a recipient of net FDI flows, receiving $35.914 billion, equivalent to 2.7% of the world total, and third in Europe, surpassing the United Kingdom and trailing only Germany and France. The United States and China are the international leaders, followed by Singapore, Hong Kong, and Brazil. Canada, Mexico, and the Virgin Islands also outperformed Spain.
Regionally, since 1993, Madrid has been the destination for 60.4% of the productive foreign investment flows that have landed in Spain. Following at a distance are Catalonia (15.5%), the Basque Country (4.9%), Valencia (3.5%) and Andalusia (2.2%).
Investment abroad
Spain demonstrates similar strength as an investor abroad, with annual net flows exceeding $33 billion since 1990. It ranks tenth globally and fifth in Europe, accounting for 3.2% of global outflows during this period.
Since 1993, OECD countries have been the predominant source, contributing 90% of gross productive FDI flows. Within this group, European countries have maintained their position as the primary source of investment, although their share has decreased in the last decade. Nevertheless, they still represent 68% of the total historical investment (57% over the last ten years).
The United Kingdom leads the list with 15.5% of the investments, followed by France (12%), Germany (8.3%), the Netherlands (7.2%), and Italy (6.2%). North American investments have gained relevance in recent years, with the U.S. standing out at 15.1% of the total historical investment and exceeding 20% in the last decade.
The risks surrounding investment
Looking ahead to the immediate future, Funcas expects the Spanish economy to remain a focal point for attracting and issuing direct investments. However, it notes that other factors affecting Spanish society should not be overlooked, such as the rising inequalities, the loss of trust in institutions, and political polarisation, which could negatively impact economic growth prospects and, consequently, the evolution of direct investment.
Madrid approves a tax deduction to attract foreign investment
The Government of the Community of Madrid has given the green light to what is known as the 'Mbappé Law', a regulatory change that aims to attract foreign investments, attract talent and facilitate the return of emigrants. Specifically, the bill contemplates a new deduction of 20% in the regional personal income tax quota for taxpayers who invest in public debt or shares, or make contributions to companies.