Why did Spain attract FDI in the late 80’s/early 90’s?
EC accession, big market, link to Latin America, lower Unit Labour Cost
Why does not Spain attract so much investment today?
Higher competition in world’s FDI (emerging economies) and in the European Union (EU enlargement)
EMPLOYMENT The inward stock of FDI in 2005 generates 1,3 million jobs (direct employment) in Spain, which mean 7% of the total employment. 2. Inward FDI (II): Effects GROSS FIXED CAPITAL FORMATION Inward FDI has traditionally contributed to gross fixed capital formation. In 2000 the FDI inflows meant around 25% of the total Gross fixed capital formation.
Traditionally key to finance Spanish current account (30-40% of total capital inflows) not so much today (around 10%)
To sum up, these inflows had an impact on domestic economy, fostering investment, growth and productivity and creating a more dynamic market, less home-biased. These fundamentals paved the way for a further phase in the internationalisation process: the outward FDI.