LIBRARY OF CATALONIA


                                                                     FOREIGN
(BIBLIOTECA DE CATALUN...
Dynamic and open, enterprising and cosmopoli-            More than 2,700 foreign companies are currently           I am pl...
INDEX
          MAIN CONCLUSIONS OF                         06         FDI IN EMERGING INDUSTRIES IN
          THE STUDY  ...
01                 The results of the fieldwork, discussion groups, interviews
                   with relevant actors and...
10
                                                        03 than 3100 foreign companies are                06 emerging i...
02
INTRODUCTION TO
THE STUDY AND THE
ECONOMIC CONTEXT
02                                                                                                                        ...
02                                                                                                                FOREIGN ...
02                                                                                                        FOREIGN INVESTME...
03
CURRENT SITUATION
OF FDI IN CATALONIA
AND THE REST OF
THE WORLD
FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • CURRENT SITUATION OF FDI IN CATALONIA AND THE REST OF THE WORLD

...
FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • CURRENT SITUATION OF FDI IN CATALONIA AND THE REST OF THE WORLD

...
FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • CURRENT SITUATION OF FDI IN CATALONIA AND THE REST OF THE WORLD

...
FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • CURRENT SITUATION OF FDI IN CATALONIA AND THE REST OF THE WORLD

...
04
TRADITIONAL FDI IN
CATALONIA: CONCENTRATED
IN KEY POINTS ALONG THE
VALUE CHAIN
04                                                                                                              FOREIGN IN...
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
Foreign Investment in the Barcelona and Catalonia area
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Foreign Investment in the Barcelona and Catalonia area

  1. 1. LIBRARY OF CATALONIA FOREIGN (BIBLIOTECA DE CATALUNYA) CIP INFORMATION Foreign investment in the Barcelona area and Catalonia I. Carranza, Isabel, ed. II. Rodríguez, Imma (Rodríguez López), ed. III. Diamante, Giulia, ed. IV. ACC1Ó V. Barce- lona. Sector de Promoció Econòmica 1. Inversions estrangeres – Barcelona 2. Inversions es- trangeres – Catalunya 339.727 .22(467) INVESTMENT IN THE BARCELONA AREA AND CATALONIA Disclaimers: This work is licensed under the Attri- bution-Noncommercial-Share-Alike 3.0 Creative Commons. It allows the re- production, distribution and broadcast provided that they cite the author and do not be a commercial use. The creation of deriva- tive works is permitted provided that they are spread with the same license. The full license is available at http://creativecom- mons.org/licenses/by-nc-sa/3.0/es/deed.en EDITION Barcelona City Council Economic Promotion sector Llacuna 162, 1st floor 08018 - Barcelona - Spain T. +34 93 256 39 29 proeconomica-ajbcn@bcn.cat Government of Catalonia ACC1Ó Invest in Catalonia Passeig de Gràcia, 129 08008 - Barcelona T. + 34 93 476 72 00 catalonia@acc10.cat PricewaterhouseCoopers Pablo López Romero Elena Casas Martínez COORDINATION Isabel Carranza - Barcelona City Council Imma Rodríguez - Invest in Catalonia - ACC1Ó Giulia Diamante - Planning and analysis - ACC1Ó DESIGN Index PRINTING Cevagraf, S.C.C.L. D.L.: Barcelona, November 2009 No. of copies: 2,000
  2. 2. Dynamic and open, enterprising and cosmopoli- More than 2,700 foreign companies are currently I am pleased to present the 5th edition of the sectors and countries. Knowledge-intensive and tan, Barcelona has always been a city that welco- operating in the Barcelona area. These companies study "Foreign investment in the area of Barce- high value-added activities take a special impor- mes foreign investment. The city has a dense have shown their loyalty to the area by staying lona and Catalonia”, which is jointly developed, tance in business growth strategies for compa- metropolitan area full of vitality, and Barcelona’s here and consolidating their presence through re- biannually, by Invest in Catalonia - ACC1Ó and the nies and represent, at the same time, a factor of economy is characterized by the diversification of newed investments. More and more companies Economic Development Area of the Barcelona competitiveness to attract and retain foreign in- activity with a strong industrial base and a predo- with a vision of the future are choosing Barcelona City Council. Certainly, foreign investment in our vestment. The availability and investment in minant services sector. The city’s objectives in- as the location of their business, as shown by the country, and the opinion of businessmen about it, scientific and technological infrastructures, toge- clude actively maintaining this economic high rate of satisfaction of the foreign companies are key aspects that contribute to improve the ther with policies and government incentives for diversification, adapting to new demands and operating here. The companies established in the competitiveness of Catalan companies and, ulti- research and development, become some of the meeting new challenges to stay attractive and city frequently make new investments to focus mately, of Catalonia. most valued aspects by businesses when ma- competitive in a globalized world. on strategic growth in activities of increased king the final decision to establish in our territory. added value. The strategic location of our country in southern Over the centuries, the city has continually rein- Europe, the quality of life we enjoy and our entre- I am confident that Catalonia is prepared to face vented itself to adjust to the needs of each period Attracting foreign investment to the Barcelona preneurial spirit, are factors that make Catalonia the challenges of globalization and technological and open itself to the world. With its long indus- area, as presented in this fifth edition of the study, one of Europe's most attractive areas for foreign change and, at the same time, it is able to make trial tradition, Barcelona is now focusing strongly is a key aim of the public administration to create investment. The fact that more than 3,000 foreign the most of the opportunities created by the cu- on the knowledge economy and sustainability, loyalty and increase inflows of foreign investment. companies are established and generate a total rrent situation. The Catalan government, aimed at based on the solid advantage of its unbeatable lo- Today Barcelona’s objective is to focus firmly and flow of foreign direct investment of 3,458 million encouraging the development of new business cation as the southern gateway to Europe and the decisively on a model of economic growth based Euros, in 2008, confirms the ability of Catalonia projects, will develop further cooperation with the Mediterranean. It is an attractive city due to its bu- on innovation, creativity and the knowledge eco- and Barcelona to attract high value-added foreign private sector to support the growth of our terri- siness development, entrepreneurial initiatives, in- nomy. Barcelona wants to continue to be known investment and international talent. tory, thereby ensuring the welfare of all citizens. ternational talent, leading research, boundless for its proactive support of talent and creativity, its creativity and quality of life, which has earned the openness to new economic activities, and its drive Despite the current situation, where the world admiration of the entire world. to increase the quality of life of its inhabitants. economy has experienced a setback due to the Josep Huguet i Biosca financial crisis and, in turn, the competition is Minister of Innovation, Universities The Barcelona metropolitan area has a popula- increasing globally, Catalonia has to make an and Enterprise tion of 4.9 million and an area of 3,236 km2. Its Jordi Hereu effort to remain an attractive destination for considerably diversified business community Mayor of Barcelona foreign investment, maximizing the advantages of has a long industrial tradition and provides a having a diversified business network and very attractive location for foreign investment. competitive service providers, along with human Barcelona was recently named the headquarters resources with high technical skills. of the Secretariat of the Union for the Mediterra- nean, a fact that will strengthen the city’s In addition to maintaining the traditional foreign leadership in this area even more and attract investment, Catalonia has to carry on with its leading companies interested in benefiting from productive model transformation process and new business opportunities. lead the foreign investment attraction of emerging
  3. 3. INDEX MAIN CONCLUSIONS OF 06 FDI IN EMERGING INDUSTRIES IN THE STUDY CATALONIA: ATTRACTING TALENT AND REACHING CRITICAL MASS 5.1 The dynamics of the business 51 community in emerging industries: a note 01 05 on local-global alliances 5.2 The role of clusters as generators of the economic activities 52 5.3 The competitive advantage of Catalonia 56 and the Barcelona area in terms of FDI in INTRODUCTION TO THE STUDY emerging industries AND THE ECONOMIC CONTEXT 5.4 Human capital 60 2.1 Introduction to the study 12 5.5 Access to financing: venture capital and 61 2.2 Methodological approach and 13 public incentives conceptual framework of the study 5.6 Other contextual factors 64 02 2.3 Opportunities of FDI for Catalonia in the context of world economic change 15 GEOGRAPHIC ANALISYS OF FDI IN CURRENT SITUATION OF FDI IN CATALONIA CATALONIA AND THE REST OF THE 6.1 Europe and the United States 71 WORLD 6.2 Asia 73 3.1 Current situation of FDI in the world 20 6.3 Mediterranean countries 76 03 3.2 Increased competition to attract FDI 3.3 Current situation of FDI in Catalonia and the Barcelona area 22 23 06 6.4 Geographic comparison: critical points, challenges and opportunities 78 APPENDICES TRADITIONAL FDI IN CATALONIA: 7.1 Methodology of the study 84 CONCENTRATED AT KEY POINTS ALONG THE VALUE CHAIN 7.2 List of figures, tables and graphs 88 7.3 Sources 89 4.1 The situation of the business 31 07 community in mature industries: the 7.4 Glossary of terms 91 focus on activities with high added 04 value and knowledge intensive activities 4.2 The business model of companies in 34 mature industries: the R&D&i opportunity 4.3 The competitive advantage of 36 Catalonia and the Barcelona area in terms of traditional FDI 4.4 Human capital 41 4.5 Other contextual factors 42
  4. 4. 01 The results of the fieldwork, discussion groups, interviews with relevant actors and the analysis of different databases specializing in FDI have made it possible to collect the most MAIN CONCLUSIONS outstanding perspectives on the current and future situation of FDI, the challenges facing the Barcelona area and Catalo- nia in terms of competitiveness and the factors that make us OF THE STUDY optimistic about positioning Catalonia as one of the most attractive locations for investment in coming years.
  5. 5. 10 03 than 3100 foreign companies are 06 emerging industries in Catalonia 09 and North American companies More FDI in European operating in Catalonia, with a total flow of and the Barcelona area is consolidating emphasized a set of opportunities for the FDI of €3.45 billion in 2008. New Economy industries such as biotech- Barcelona area and Catalonia that can help nology, renewable energies and ICTs in increase the attractiveness of the region: The Barcelona area accounts for about clusters designed to attract a critical mass 75% of the FDI projects in Catalonia on of investment and entrepreneurial talent. • Support from the public sector for the MAIN CONCLUSIONS average and accounted for 87% in 2008. In biotechnology, the Barcelona area is beco- development of the New Economy ming an international benchmark for the cre- through initiatives aimed at the most rele- In the last 5 years, projects connected to ation of new companies, with a growth rate vant factors for companies from these 01 and the Barcelona area lead the ICTs have represented more than 20% of of 30%, which is higher than the European regions that invest in industries such as Catalonia the total and, together with services for average. biotechnology, nanotechnology, etc. rankings of the most attractive places to companies and consumer products, they do business. However, the reduction in the represent 50% of the FDI projects imple- Focusing on the values of entrepreneurship 07competitive advantage of Catalonia • volume of FDI at the global level in the last mented. and international exchange as a differentia- year has resulted in greater competition The ting and positioning factor in Europe. between regions interested in attracting, and the Barcelona area regarding FDI in consolidating and maintaining investments. 04 industries, R&D&i constitutes a emerging industries stems from: • Providing and spreading information on In mature available services and incentives to foreign strategy for increasing business, as well • The availability of technological infras- companies in the process of setting up in 02 to promote the competitive- as a competitive factor for attracting and tructure 59% of the foreign companies in Catalonia. Strategies maintaining FDI in the Barcelona area and emerging industries consulted said the tech- ness of Catalonia and the Barcelona area Catalonia. In 2008 industrial investment in- nological infrastructure in Catalonia was ac- are being implemented in a context of creased by 2.2% and 38% of all FDI received ceptable. growing competitiveness at the world by Catalonia was earmarked for industry. The- 10 companies highlighted the compe- level and within a framework of change in refore, Catalonia’s aim of maintaining pro- •The existence of a network of related Asian production models at the local level. In duction should also help increase R&D&i companies at the local and global levels titive advantage of Catalonia that plays a this regard, different lines of action are activities in mature industries. and service providers. part in the investment decisions of Asian emerging: companies in this area: An attractive lifestyle for qualified pro- 05competitive advantage of Catalonia • • Maintaining traditional FDI in mature in- fessionals and international entrepre- • The existence of a competitive business dustries while focusing on added-value The neurs. 90% of the companies in emerging community that offers support and provides and knowledge-intensive activities. and the Barcelona area regarding traditio- industries that participated in the study said the services these companies need for their • Attracting and consolidating FDI in New nal FDI stems from: they were satisfied with the cultural, sports activities is a highly important factor for then. Economy industries and entrepreneurship. and leisure activities available in the Barce- More than 80% of the Asian companies par- • The technical training of human capital. lona area and Catalonia. ticipating said they were satisfied or very sa- Catalonia and the Barcelona area have a bu- 75% of foreign companies in mature indus- tisfied with the level of concentration of siness community of mature industries tries consider the level of technical personnel •The public administration helps develop companies in related industries. where the focus is on R&D&i, technology and university graduates to be high or very new business projects. and logistics. These industries should repre- high. • The availability of information on the things sent the seed for attracting and consolidating that make Catalonia and Barcelona stand FDI in emerging industries such as biotech- • Policies and incentives related to R&D&i 08 capital available in the Barce- out in terms of work culture, values, the nology, renewable energies and ICTs. together with investment in scientific in- The human involvement of the public administration in frastructures. lona area and Catalonia constitutes a com- the business climate, etc., due to their To favour this approach, public administra- petitiveness factor in its own right. 87% of perception of Europe as a homogeneous tions can impact competitiveness factors at • Access to high-capacity transport and lo- the companies consulted said they were unit. the local level, particularly with regard to in- gistics infrastructure. 63% of foreign com- satisfied with the level of university quali- frastructure, human capital, access to fi- panies in mature industries that participated fications and technical training. This is also •The dissemination of successful cases of nancing, the regulatory framework and in the study said that the level of infrastruc- an area in which the public administration businesses launched with Asian capital to quality of life. ture and accessibility was acceptable. can have an impact by creating synergies provide references for new investors. between the business community and • Public-private sector cooperation. academia. 08 09
  6. 6. 02 INTRODUCTION TO THE STUDY AND THE ECONOMIC CONTEXT
  7. 7. 02 FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • INTRODUCTION TO THE STUDY AND THE ECONOMIC CONTEXT 2.1 2.2 Introduction to the Study Methodological Approach and Conceptual Framework of the Study Barcelona City Council’s Area of International • An initial section that presents the main con- Economic Promotion and Invest in Catalonia (Ca- clusions of the study, with a breakdown of the talan Government - ACC1Ó) have prepared the Catalan economy’s strengths and potential for According to the register of foreign companies in The study on FDI in Catalonia is based on an uni- fifth edition of the study “Foreign Investment in growth and as an attractive destination for FDI. Catalonia, there are more than 3,100 foreign com- que conceptual framework developed for this the Barcelona Area and Catalonia” with the co- panies operating in Catalonia that represent edition that adapts to the structure of sections llaboration of PricewaterhouseCoopers. • A statistics section with the main macro-econo- approximately one third of the foreign companies presented in the past. This conceptual framework mic figures of the current and recent context of in Spain1. In terms of geographic concentration in is based on the hypothesis (see Figure 1) that Unlike the previous edition, which came out in FDI in Catalonia and the world, as well as the Catalonia, approximately 90% of foreign compa- different kinds of FDI can be defined based on the June 2007 this one has been issued in a climate , defining features. nies are located in the Barcelona area. For the pur- level of maturity of the production industries and of uncertainty for foreign direct investment (FDI) poses of this study, the Barcelona area is the companies operating in the region. Each kind and for the economies of Catalonia and the world. • A section dedicated to traditional FDI in Cata- understood to be the Barcelona metropolitan of FDI can be associated with a main objective, as With this in mind, the study focuses on the featu- lonia, which is understood to mean FDI targeted area, which covers the administrative limits of the well as a specific focus of action. These different res of the Catalan economy that have made Cata- at companies in mature, consolidated industries city, plus the 7 counties that surround it: Barcelo- associated strategies basically seek to increase lonia and the city of Barcelona a model for the and FDI from countries with a long-term presence nès, Maresme, Garraf, Baix Llobregat, Vallès the amount of FDI projects and flows throughout entire world when it comes to attracting business in Catalonia. In this section, the emphasis is on Oriental, Vallès Occidental and Alt Penedès. the region. projects and flows of FDI from all over the world. the main challenges of consolidating investment and the points on the value chain that will be the Despite the current economic situation, the trends most important in coming years: research and that have been prevalent in recent years are still development and innovation (R&D&i), logistics FIGURE 1. FDI CONCEPTUAL FRAMEWORK valid regarding industrial production, the shift of and distribution. the most advanced economies towards the New Economy and the organization of the economy in • A section dedicated to FDI in emerging indus- GLOBAL CONTEXTUAL FACTORS RELATED TO FDI complex networks. tries in Catalonia, especially in New Economy in- > Development of global macroeconomy dustries that are expected to play a key role in the > Development of global FDI inflows and outflows With all these factors in play, positioning the eco- future of Catalonia and the rest of the world, > Strategies used by Catalonia’s competitors to attract and maintain FDI nomy of the Barcelona area (and, by extension, especially biotechnology, renewable energies and that of Catalonia as a whole) as an attractive information and communication technologies place for FDI represents a real challenge for the (ICTs). Special attention is paid in this section to KINDS OF FDI MAIN OBJECTIVE FOCUS OF ACTION LOCAL CONTEXTUAL future, as well as a wealth of opportunities. As the concept of international entrepreneurship. FACTORS RELATED TO FDI discussed in different sections of the study, in MORE MATURE > ROLE OF PUBLIC the immediate future Catalonia has to make its • The last section, which is on the geographic CONCENTRATION ON ADMINISTRATION LEVEL OF MATURITY OF PRODUCTION INDUSTRIES capacity to maintain the level of inflows of FDI in analysis of FDI in the Barcelona area and Cata- TRADITIONAL MAINTAINING KEY POINTS ON VALUE CHAIN > HUMAN CAPITAL so-called traditional industries compatible with lonia, discusses the investments made by coun- > ACCESS TO FINANCING the strong push it must give to the emerging in- tries with an historic, consolidated presence in > INFRASTRUCTURE dustries that are expected to drive the world eco- Catalonia and those that have a growing impor- EMERGING ATTRACTING AND REACHING CRITICAL MARKETS CONSOLIDATING MASS > REGULATORY FRAMEWORK nomy in coming years. tance in the Catalan economy, especially Asian > SERVICES AVAILABLE AND and Mediterranean countries. Finally, the defining QUALITY OF LIFE With regard to the study, ACC1Ó and Barcelona features and different opportunities of these INTERNATIONAL ATTRACTING TALENT > BUSINESS CLIMATE City Council’s Area of International Economic Pro- regions are compared. ENTREPRENEURSHIP motion decided to make a drastic change in their LESS MATURE methodological approach and structure. The main NOTE: “Local level” is understood to mean the opposite of “global”, i.e. the area under study: the Barcelona area and Catalonia. part of the study has the following sections: Source: Prepared by PwC. 1 ByJuly 2009, a total of 3124 companies had been surveyed. Invest in Catalonia. 12 13
  8. 8. 02 FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • INTRODUCTION TO THE STUDY AND THE ECONOMIC CONTEXT The context in which companies make decisions As mentioned above, one point that was different on FDI in Catalonia has two parts. On the one about this year’s study compared to previous edi- PART 2 hand, it is made up of factors that can be consi- tions was the innovative focus on the work me- Gathering primary data through questionnaires from participating companies, divided into the dered local. The role played at the local level has thodology. Rather than have a representative following 8 contextual areas and a total of 32 variables, rated according to the level of impor- direct implications on decisive aspects such as the sample of companies fill out a questionnaire, tech- tance and the current level of satisfaction: availability of a wide range of infrastructure, the niques were used to acquire a more accurate rea- • Investment context excellent level of human capital in the region and ding of the more qualitative aspects of the current • Investment costs the existence of a certain business climate. Fur- situation, challenges and opportunities faced by • Human capital thermore, at the global level there are also factors major foreign companies in Catalonia. The main • Work culture that can have a decisive effect on companies’ stra- parts of this new methodology are as follows: • Infrastructure tegic decision making regarding future FDI, such • Available services as the more or less aggressive and innovative stra- • Legal and tax framework tegies that other regions can implement to attract • Financing new FDI. • Personal interviews at companies to complement the discussion groups and carry out case studies. BOX 1. ABBREVIATED METHODOLOGY OF THE STUDY Finally, the analysis of secondary data was industry and geographic trends on the evolution •In-depth interviews with 8 facilitating agents, including chambers of commerce, foreign con- maintained from previous editions that provided of FDI over time. sulates and other reference institutions in the area of FDI. a relevant contextual perspective in terms of These agents were included to provide a contrast with the working approach and to highlight the factors that make FDI in Catalonia different. • The organization of discussion groups in the form of industry and geographic workshops, which involved arranging them in two large groups, depending on whether they represented FDI in traditional or emerging industries and markets. A total of 6 workshops were organized with 2.3 the presence of 45 companies: Opportunities of FDI for Catalonia in a Context FDI IN TRADITIONAL INDUSTRIES 1. Point on the R&D&i value chain: future trends and challenges of World Economic Change 2. Point on the logistics and distribution value chain: future trends and challenges 3. Specific features of FDI from the United States and Canada FDI constitutes a key part of the rapid economic The significant growth in the volume of FDI in re- FDI IN EMERGING INDUSTRIES integration witnessed in recent years at the world cent decades and the way in which FDI has 4. Specific features of FDI from Asian companies level. FDI represents a way to create stable, di- spread throughout the world reflect both an in- 5. Specific features of FDI in emerging industries rect, long-lasting ties between economies. At crease in the size and number of FDI transactions 6. International entrepreneurs the same time, FDI has become an important and projects, and an increase in the diversification tool for the development of the local business of the companies in different economies and in- These discussion groups were structured as follows: community and can help improve the competitive dustries. Large companies, corporations and mul- position of the receiving economy and the tinational holding companies traditionally played a PART 1 investor beyond its own borders. dominant role in these global transactions. Howe- Differences in the industries and geographic areas involved, such as: ver, in recent years, there has been a consensus • The dynamic nature of the business community In particular, FDI facilitates the transfer of tech- that small and medium-sized companies have pla- • The key factors for competitiveness of the economy in Catalonia and the Barcelona area nology and know-how between economies. It yed a role of growing importance in FDI2 . • The focus on added-value activities also provides opportunities for the economy of the • The role of clusters country making the investment because its pro- • Experiences in the area of public-private cooperation ducts are promoted more extensively on interna- tional markets. 2 OCDE: Benchmark Definition of Foreign Direct Investment, 4th Edition, April 2008. 14 15
  9. 9. 02 FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • INTRODUCTION TO THE STUDY AND THE ECONOMIC CONTEXT In 2007, world outflows and inflows of FDI in- This context of global economic adjustment general movements are taking place in terms of The aim of this document is to provide a working creased by more than 50% compared to 20063. coincides with another process, which is neither the tertiarization of industrial activities and tool to fulfil the objectives mentioned above and Likewise, the number of FDI projects throughout new nor recent, and involves the accelerated the “industrialization” of service activities. to present Catalonia as an attractive location for Europe increased by 5% compared to 2006, and evolution of advanced economies in the New FDI in the global context. Barcelona City Coun- by 95% compared to 20024. It should be borne Economy. As an advanced economy, Catalonia is In this context, the strategies of attracting, main- cil’s Area of International Economic Promotion, in mind at the present time that the evolution no exception, and its own production industries taining and consolidating FDI have to be adap- Invest in Catalonia (ACC1Ó) and Pricewaterhou- over time of global FDI figures is closely lin- are going through their own development. ted to new consumer needs, production seCoopers would like to express their sincere ked to the evolution of the economic and fi- methods, and especially to contextual, energy thanks to all the people, companies and institu- nancial situation. Therefore, once the Over the last three decades, the Catalan eco- and environmental factors. tions that participated and cooperated in the necessary adjustments have been made in the nomy, with its strong industrial character, has different phases of the project by so graciously world macroeconomic panorama, some kind of become an economy every time more based Catalonia and the Barcelona area in particular providing their opinions and input. recovery by 2010 of the different indicators, primarily on knowledge, and Catalan society face the double challenge of increasing their as forecast by the main institutions5, should now depends more directly on the production, competitiveness in attracting FDI and maintai- result in increases in FDI flows and projects dissemination and widespread use of ning and improving the level of satisfaction of throughout the world. knowledge and information. In this regard, the businesspeople operating in the region. 3 www.oecd.org 4 European Investment Monitor 2008 Report. 5 The International Monetary Fund has forecast global growth of 2.5% of GDP by 2010 compared to a drop of 1.4% in 2009. http://www.imf.org/external/pubs/ft/weo/2009/update/02/pdf/0709.pdf 16 17
  10. 10. 03 CURRENT SITUATION OF FDI IN CATALONIA AND THE REST OF THE WORLD
  11. 11. FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • CURRENT SITUATION OF FDI IN CATALONIA AND THE REST OF THE WORLD 03 The evolution of FDI over time is not markedly different from the progress of economic activity; it is, in fact, a consequence of economic activity. This section provides a brief and basically quantitative overview of the most recent data on individual and aggregate FDI flows received by different regions in the world. This analysis is followed by a brief reflection on the trends described recently in the different strategies being used throughout the world to attract FDI, regardless of whether or not they are linked to macroeconomic development. Finally, the in-depth analysis of the situation in Catalonia provides the main conclusions and outlines the different characteristics of the investment made in Catalonia by foreign companies. 3.1 Current Situation of FDI in the World After experiencing a major increase in the first data published by UNCTAD show an aggregate fi- The drop in FDI has been more pronounced in de- An analysis of inflows and outflows of investment years of the 21st century, the aggregate figure of gure for FDI flows of $1.6 trillion, which represents veloped countries and has been much smaller in in different regions shows the dominance of Eu- FDI flows generated or received by different world a 10% reduction compared to the previous year. developing and transition countries. rope, which accounts for nearly half of inflows and regions reached its high point in 2007 The latest . outflows of FDI. Strictly with regard to inflows of There is considerable consensus among the main FDI, the region of Asia and Oceania receives about reference institutions that in financial year 2010 5%, which is nearly twice what it produces. the macroeconomic situation is expected to start GRAPH 01. WORLD FDI BY REGION (2008) improving again, which will affect the recovery of FDI flows around the world. INFLOWS OUTFLOWS 100% 0.3% Africa 2.9% 2.6% Latin America 6.9% 9.8% Asia and Oceania GRAPH 02. DISTRIBUTION OF FDI ATTRACTION AT THE WORLD LEVEL (2003-2008) 2.6% Southeastern Europe and CIS (3) 17.5% 8.1% Other developed countries (2) 75% 10,000 (by number of projects) North America 4.7% 16% Europe (1) 9.1% 8,000 (1) Europe: Austria, Belgium, Bulgaria, Cyprus, 50% 13% Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, 6,000 Italy, Latvia, Luxembourg, Lithuania, Malta, Ne- therlands, Poland, Portugal, Romania, Slovakia, 46% 61% Slovenia, Spain, Sweden, United Kingdom, Gi- braltar, Iceland, Norway and Switzerland. 4,000 25% (2) Other developed countries: Australia, Israel, Japan, New Zealand. (3) Commonwealth of Independent States (CIS): 2,000 Armenia, Azerbaijan, Belarus, Georgia, Ka- zakhstan, Kyrgyzstan, Moldova, Russia, Tajikis- tan, Turkmenistan, Ukraine and Uzbekistan. 0% 0 Source: UNCTAD FDI/TNC database China United India United France Russia Germany Spain Poland Romania Source: OCO Monitor database. States Kingdom 20 21
  12. 12. FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • CURRENT SITUATION OF FDI IN CATALONIA AND THE REST OF THE WORLD 03 By country, more than one fourth of the FDI pro- received, a fact that explains the importance of new jects in the entire world originate in the United emerging countries on the world economic pano- States, whereas Germany generates one tenth of rama. In this classification, Spain is ranked eighth. the total. In the cumulative total for 2003-2008, Spain produced 2.5% of the world total. However, in reference to the volume of FDI, Spain 3.3 is in the seventh position worldwide, and the fourth China, the United States and India occupy the top in Europe, with a market share of 3.9%. Current Situation of FDI in Catalonia three positions in terms of the number of projects and the Barcelona Area Within the context of Spain and Europe, Catalonia as a place to do business, bearing in mind a wide 3.2 plays a leading role when it comes to attracting global FDI. This has been corroborated by several range of contextual factors. Increased Competition to studies, such as the 2008 European Investment Catalonia has historically been a high-priority des- Monitor, which positioned Catalonia as the tination for foreign companies seeking new loca- Attract FDI fourth most attractive location for setting up a tions to do business. FDI projects are business in a ranking topped by the region of implemented in Catalonia in a wide range of tra- Greater London. In another a recent study by ditional and highly innovative industries, which Not all FDI is the same. Different kinds of com- All this is relevant for attracting new investments Cushman & Wakefield,9 the Barcelona area was demonstrates the region’s ability to welcome a panies have different reasons for investing be- and maintaining the FDI being received in the re- ranked fourth out of 34 leading European cities wide spectrum of foreign business initiatives. yond the borders of the country where they have gion, because improving service and monitoring their main operations. Likewise, these same by the local government can ensure jobs are companies assess the decision to invest in maintained. different ways and have different priorities when choosing where to invest. In fact, these reasons Finally, new, more efficient approaches towards and priorities have changed a great deal in recent traditional promotional services, providing infor- years. mation and other services such as accompanying potential investors can ensure the success of FDI Many governments consider FDI in terms of the promotional offices at a time when many public number of jobs created. However, FDI can have administrations are facing major budget cuts. a considerable direct and indirect impact that may vary depending on the kind of FDI attracted, Other considerations that are the result of diffe- the region’s level of economic development, the rent studies8 indicate that, regardless of trends in ties between FDI and the domestic economy global economic activity, where FDI plays a key and the degree to which the promotion of FDI is role, companies around the world are looking into included in the economic strategy of the region new markets and exploring the competitive receiving the investment.6 advantages they have to offer. In other words, without bearing in mind the dollar value of these The fact that there has been a reduction in the flows, the number of countries in different parts amount of FDI around the world has automatically of the world receiving FDI flows is increasing, as led to an increase in competition for a smaller are the creation of wealth and new opportunities number of projects. In this context, it will be more in parts of the world that, until recently, received crucial than ever for governments (and their pro- little investment. motional organizations) to impact investment de- cisions by providing timely information on the region and production industries, and to provide additional services, such as accompanying com- panies as they explore their investment options.7 6 Foreign Investment Promotion Center – World Bank 7 Global Investment Promotion Benchmarking 2009: Summary Report. World Bank Group 22 8 IBM Plant Location International 23 9 Cushman & Wakefield: European Cities Monitor 2009
  13. 13. FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • CURRENT SITUATION OF FDI IN CATALONIA AND THE REST OF THE WORLD 03 In line with total world development and that of flows received in the last ten years. Total flows of GRAPH 04. EVOLUTION OF GROSS FDI IN CATALONIA (2003-2008) the main developed economies, the Catalan eco- FDI received in Catalonia in 2008 amounted to nomy has behaved similarly in relation to the FDI € 3,45 billion10. 4,500 (In millions of euros) 4,000 GRAPH 03. EVOLUTION OF WORLD FDI AND FDI GROWTH IN CATALONIA IN THE LAST TEN YEARS 3,500 3,000 0.0% 2,500 2,000 5.0% 1,500 1,000 0.0% 500 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 5.0% 2003 2004 2005 2006 2007 2008 Source: Ministry of Industry, Tourism and Trade Note: FDI includes ETVEs and NO ETVEs operations. ETVEs are the FDI operations carried out in Spanish holding companies. FDI in Catalonia World FDI 0.0% TABLE 01. Source: UNCTAD FDI/TNC database and Ministry of Industry, Tourism and Trade. Catalonia’s ability to attract FDI is supported by NUMBER OF FOREIGN COMPANIES OPERATING a labour force with a high level of professional IN CATALONIA skills and a sophisticated level of consumer de- COUNTRY OF ORIGIN 2006 2008 mand with considerable purchasing power. More- 90% of the foreign investment received in Ca- the United Kingdom, Germany and Italy, each one over, Catalonia has positioned itself as a Germany 705 537 talonia comes from the EU-27, 4.4% from other contributing about 6%. privileged platform for access to other markets France 519 671 OECD countries and 5.6% from the rest of the in Latin America, continental Europe and the United States 399 392 world. According to the investment criteria of ulti- Middle East, not only for cultural and geographic mate origin, France, with 627 million Euros and The gross foreign investment in Catalonia reasons, but because of the strategic opportuni- Italy 356 360 an increase of 219.8% heads the list of investors the first quarter of 2009 (data are provisional) ties offered by the Catalan and Spanish compa- Netherlands 198 224 with more than a quarter (29.5%) of the volume reached 160.4 million Euros, which represents nies in these regions. Japan 148 153 reached in 2008. The Netherlands is in the second 7.5% of 2008 total and 14.5% of Spain’s inward position (19.1%), followed by the USA (9.8%) and investment during that period. More than 3,100 foreign companies were opera- United Kingdom 140 147 ting in Catalonia in 2008. As shown in the table Switzerland 111 107 and graph below, the countries with the most pre- Belgium - Luxembourg 87 90 sence in Catalonia in terms of the number of com- panies were France, Germany, the United States Denmark 67 73 and Italy. Sweden 62 58 Portugal 46 53 Austria 44 58 Canada 28 25 Finland 20 19 Norway 15 18 Other 55 139 Total 3,000 3,124 10 Ministry of Industry, Tourism and Trade. Source: Invest in Catalonia. 24 25
  14. 14. FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • CURRENT SITUATION OF FDI IN CATALONIA AND THE REST OF THE WORLD 03 A comparison between 2006 and 2008 reflects With regard to the Barcelona area, the analysis of In line with the growing importance of emer- ment. These activities involve high added value the stability of the total number of companies. the number of FDI projects attracted over the ging industries, the advantages offered by the and a considerable technological level, with an Indeed, 40% of these companies have been years indicates that these projects represent at Barcelona area and Catalonia for FDI have evolved. emphasis on quality, differentiation, R&D&i operating in Catalonia for more than 10 years, least 75% of the total number of projects in Ca- There are currently activities and niche markets and design. which indicates the level of loyalty of the talonia and, in 2008, these projects accounted in keeping with this advanced level of develop- investments in the region and its sustained for 87% of all projects. competitiveness. . GRAPH 07. INDUSTRIES ATTRACTING THE MOST FDI IN CATALONIA (2003-2008) GRAPH 05. DISTRIBUTION OF FDI PROJECTS IN THE BARCELONA AREA AND CATALONIA (2003-2008) 60 (Numbers of projects) 100 (Numbers of projects) Rest of Catalonia 40 75 Barcelona Area (*) 50 20 (*) Barcelonès, Maresme, Garraf, Baix Llobregat, Vallès Oriental, Vallès Occidental, Alt Penedès Counties 25 0 Software Business Consumer Food & Pharma- Chemicals Textiles Transport Financial Automotive and ICTs Services Products Tobacco ceuticals Services 0 Source: OCO Monitor database. 2003 2004 2005 2006 2007 2008 Source: OCO Monitor database. Moreover, when the number of FDI projects star- Finally, based on the kind of FDI, and distinguis- ted up in Catalonia in the last 5 years is broken hing between FDI generated by holding compa- When the number of projects attracted is broken to 2008 focused on the activities of manufactu- down by sector, we can see that software and nies and firms that are not holding companies, down based on the field of activity, it can be seen ring, marketing, retail trade and logistics. ICTs accounted for more than 20% of these pro- i.e. production FDI, the analysis shows that that 57% of the projects implemented from 2003 jects and that, along with business services and there was a considerable increase in 2008 in the consumer products, they represented half of the proportion of investment through holding com- FDI projects carried out. panies, which constituted more than one third of GRAPH 06. FDI IN CATALONIA BY FIELD OF ACTIVITY (2003-2008) all the FDI received. 120 (Numbers of projects) GRAPH 08. INVESTMENT BY HOLDING COMPANIES AND NON-HOLDING COMPANIES IN CATALONIA 100 (%) 6% 80 15% Holding Companies (millions of euros) 75 37% Non-Holding Companies (millions of euros) 40 50 85% 94% 63% 25 0 Manufac- Sales and Retail Logistics Head- Business R&D Contact Other Design Construction turing Marketing Trade quarters Services Centres Source: OCO Monitor database (2003-2008). 0 2006 2007 2008 Source: Ministry of Industry, Tourism and Trade. Volume of investment 0,5 0,2 1,2 26 27
  15. 15. 04 TRADITIONAL FDI IN CATALONIA: CONCENTRATED IN KEY POINTS ALONG THE VALUE CHAIN
  16. 16. 04 FOREIGN INVESTMENT IN THE BARCELONA AREA AND CATALONIA • TRADITIONAL FDI IN CATALONIA Traditionally, foreign investment in Catalonia has come from com- FIGURE 3. KEY FACTORS AND ACTORS IN TRADITIONAL FDI panies in consolidated businesses and industries, and basically from advanced economies. Traditional FDI is also characterized by the fact INITIAL FACTORS that the companies that set up in the host country, in this case, the > Acceleration of the tertiarization process of industry Barcelona area and Catalonia, generally fit the traditional model of > Commitment to competitiveness based on knowledge and added value parent company-affiliate company, which means the decision-ma- king centre is far from the place where the FDI is invested. Another MATURE INDUSTRIES PRIORITY AREAS FOR COMPANIES ADVANTAGES OFFERED BY THE characteristic of traditional FDI is related to the fact that the required THAT GENERATE TRADITIONAL FDI BARCELONA AREA AND CATALONIA MAIN OBJECTIVE: know-how is also consolidated and readily available in a wide range MAINTAINING > SKILLED HUMAN CAPITAL > TRANSPORT INFRASTRUCTURE of places. FOCUS OF ACTION: CONCENTRATION ON > R&D&i INCENTIVES > PROFESSIONAL TRAINING KEY POINTS ON > INFRASTRUCTURE > e-ADMINISTRATION In the case of Catalonia, the main competitive factor for attracting VALUE CHAIN > SPEED AND EFFICIENCY WHEN > INCENTIVES AND AID FDI has historically been cost. Although this scenario was fully valid DEALING WITH PUBLIC ADMINISTRATION > PUBLIC-PRIVATE PARTNERSHIPS for most of the second half of the 20th century, increased competi- R&D&i > PARTNERSHIP FORMULAS > TECHNOLOGICAL tion in the European Union and competition from regions where LOGISTICS INFRASTRUCTURE costs are lower has largely changed the current situation. Source: Prepared by PwC The following subsections show the relationship redefinition of company strategies and new between the evolution of the different production needs. Also addressed are the actions taken by industries in the Catalan economy and the chan- other economic actors in the region to success- Therefore, in the case of traditional FDI in Catalo- competitiveness of the region as an attractive ges taking place in traditional FDI in terms of the fully ensure and retain traditional investment. nia, emphasis is now being placed on the points place to invest. For this reason, two workshops on the value chain, such as R&D&i and logistics, were held with companies to focus on these that make it possible to maintain or increase the points. 4.1 FIGURE 2. THE VALUE CHAIN AND TRADITIONAL FDI The situation of the business community in mature industries: The focus on activities with high added value and R&D knowledge-intensive activities PURCHASING OPERATIONS LOGISTICS AND MARKETING AFTER AND SUPPLIES DISTRIBUTION AND SALES SALES The Barcelona area and Catalonia in general have other basic trends, i.e. chiefly the progressive Source: Prepared by PwC evolved from an industrial economy into one structural change towards a service-based based on knowledge. This process, which began economy, with an increase in tangible capital decades ago, has sped up considerably in recent and, in particular, the increased and growing years, thanks to major technical advances and importance of processes linked to innovation. 30 31

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