This chapter analyzes the global and Spanish economic context in 2011-2012. It discusses international trade trends, foreign direct investment, and key aspects of Spain's foreign sector such as the current account balance and capital flows. The Spanish economy saw slight GDP growth in 2011 but forecasts point to declines in 2012-2013. Despite challenges, many Spanish companies continued pursuing internationalization strategies. The chapter examines Spain's trade performance and position in international investment.

3. © 2012, Círculo de Empresarios
Calle Marques de Villamagna, 3, 10ª Planta, 28001 Madrid
Authors:
Ofelia Marín - Lozano - Head of the Economics Department, Círculo de Empresarios
Mauro F. Guillén - Director of the Lauder Institute, The Wharton School
María Grandal Bouza - Economic Roling Analyst of the Economics Department, Círculo de Empresarios
Legal Deposit: M-38180-2012
Design: Tres Tipos Gráficos
Printer: Imprimex

4. YEARBOOK 2012
INTERNATIONALIZATION OF SPANISH COMPANIES

6. 2012 Yearbook on the Internationalization of Spanish Companies
Table of contents
Presentation 13
Prologue 15
1. The world and Spanish economies in 2011-2012 19
1.1 International trade 23
1.2 Foreign direct investment
27
1.3 Spain’s foreign sector 29
Analysis of the Balance of Payments:
current account and capital account balance 29
Spain’s foreign sector: changes in capital flows 35
Spain’s foreign sector: reduced debt position 38
Other indicators relating to the international presence
of Spanish companies 39
2. Spanish companies from an international perspective 41
2.1 Shareholders Returns in a European and Global Context 42
2.2 Investment bank analysts and Spanish companies 49
2.3 Visibility of Spanish Companies in the international financial press 53
2.4 Conclusion 60
3. Special Mentions for the Internationalization of Spanish Companies 63
3.1 Major Companies with a Significant Track Record of Internationalization 64
3.1.1 Banco Santander 64
3.1.2 Iberdrola 65
3.1.3 OHL 65
3.2 Internationalization Operations in 2011 66
3.2.1 Línea Ferroviaria Medina-La Meca 66
3.2.2 Gestamp Automoción 67
3.3 Medium-sized Companies with a Significant Track Record of Internationalization 68
3.3.1 Fluidra 68
3.3.2 Maxam 69
3.3.3 Tubacex 70
3.3.4 Privalia 71
3.4 Foreign Investment in Spain 72
3.4.1 Ford 72
3.4.2 Hutchison Whampoa 72
7

7. Yearbook on the Internationalization of Spanish Companies 2012
4. The New Latin Argonauts: Could they help
in the internationalisation of Spain? (Author: Javier Santiso) 75
4.1 The Latin American diaspora 76
4.2 The Entrepreneur diaspora in Spain 79
4.3 Conclusion 81
5. Internationalization of the company (Author: Pablo Isla) 83
6. Statistical Annex 87
7. Bibliography 99
8. Recent publications of the Círculo de Empresarios 101
8

8. 2012 Yearbook on the Internationalization of Spanish Companies
List of Tables
Table 1.1: IMF forecasts on GDP growth 19
Table 1.2: Spanish non-financial multinationals among the world’s
leaders by international presence, 2011 21
Table 1.3: GDP and trade in goods by regions, 2009-2011 24
Table 1.4: Main exporter of goods, 2011 25
Table 1.5: Main importers of goods, 2011 26
Table 1.6: Major cross-border mergers and acquisitions worldwide in 2011 29
Table 1.7: Balance of payments: balances 30
Table 1.8: Foreign trade in goods, specialization by product 31
Table 1.9: Foreign trade in goods, specialization by geographical area 32
Table 1.10: Spain’s foreign trade performance by geographical area 33
Table 1.11: Geographical breakdown of remittance payments in 2010 and 2011 34
Table 1.12: Foreign Direct Investment transactions in 2010 and 2011.
Breakdown by sector of economic activity 36
Table 1.13: Foreign Direct Investment transactions in 2010 and 2011.
Breakdown by geographical area 37
Table 1.14: International investment position.
Breakdown by sector (% of GDP) 38
Table 1.15: International investment position
Breakdown by instruments (% of GDP) 39
Table 2.1: Top 25 Spanish companies by total shareholder return rate in 2011 44
Table 2.2: Top 10 IBEX 35 companies by total shareholder return rate
(Companies and rates ranked by 2011 figures) 45
Table 2.3: Top 10 IBEX 35 companies by total shareholder return rate
(Companies and rates ranked by 1995-2011 average) 46
Table 2.4: Top 10 IBEX 35 companies by total shareholder return rate
(Companies and rates ranked by 1995-2011 average) 47
Table 2.5: Top Spanish companies by total shareholder return rate in 2010,
relative to companies in the same sector in Euro area 48
Table 2.6: Stock market analysts` recommendations on IBEX 35 companies, 1998-2011 50
Table 2.7: Top 10 Spanish companies by average recommendation from stock market
analysts in 2011, compared to companies
in the same sector within the Euro area 52
Table 2.8: Top 25 Spanish companies by references
in the international financial press, 1995-2011 56
Table 2.9: Top 25 Spanish companies by references in the international financial
press in 20101, by publication 58
9

9. 2012 Yearbook on the Internationalization of Spanish Companies
List of Charts
Chart 1.1: FDI inflows 1980-2011 27
Chart 2.1: Number of references to Spanish companies
in articles published in the international financial press, 1995-2011 55
Chart 2.2: Top 5 Spanish companies by references
in the international financial press, 1995-2011 57
Chart 2.3: Number of references to Spanish companies in articles published
in the international financial press, by publication, 1995-2011 59
List of Boxes
Box 1.1: Commodity price performance in 2011 and 2012 22
Box 2.1: The Total Shareholder Return Rate 42
Box 2.2: Stock market analysts` recommendations 49
Box 2.3: Methodology for compling references to Spanish companies
in the international financial press 53
10

12. 2012 Yearbook on the Internationalization of Spanish Companies
Presentation
This is the sixth edition of the Yearbook on the the managers of Spanish companies who have
Internationalization of Spanish Companies, pu- looked abroad with a spirit of optimism and
blished by the Círculo de Empresarios in con- confidence. And, in particular, I would like to
junction with the University of Pennsylvania’s highlight the efforts of those companies which,
prestigious Wharton School. From the outset, based on a survey of Círculo members, have
the Círculo-Wharton Yearbook has pursued the been distinguished in this Yearbook.
dual objective of gauging the activity of Spanish
companies abroad whilst encouraging those Once again, I would like to thank Wharton
that have not yet made the decision to interna- School, one of the world’s most prestigious
tionalize to take this decisive step, so essential academic establishments in all aspects rela-
for their development and survival. This joint ting to the business world, for its collaboration,
project has resulted in the consolidation of an which is pivotal to the ongoing success of this
excellent observatory of the performance of publication. I would also like to thank everyone
our companies abroad. from Wharton and Círculo de Empresarios in-
volved in producing the Yearbook. And a very
Since the launch of the Yearbook to date, the special thanks to Pablo Isla, the Chair of the
world economy, and most notably Spain’s, have Inditex Group and to Javier Santiso, Professor
been ravaged by one of the worst crises in his- of Economics at ESADE Business School, for
tory. Recovery still remains weak. Despite the their contribution to this new edition.
gloomy outlook, companies that have taken the
decision to venture abroad, or to further their Many thanks to all, and thanks to the loyal
internationalization goals have reaped the be- readers whose interest makes our efforts wor-
nefits of market diversification, even though thwhile.
the global crisis is very much alive.
As stated in previous editions of this Yearbook,
in a highly globalized economy, the quest for
new markets and increased foreign presence
are the most advisable strategies. This 2012
edition discusses clear examples of companies
that have successfully applied these principals.
In this connection, I would like to congratulate
Mónica de Oriol
Chair of Círculo de Empresarios
13

14. 2012 Yearbook on the Internationalization of Spanish Companies
Prologue
In 2011 the world economy continued to reco- of -1.5% and -1.3% respectively, which confirms
ver. However, this recovery was undermined the fragility of the recovery.
by the uncertainties and lack of confidence
which flooded the markets, affecting most no- Despite this complicated economic situation,
tably the developed economies. Consequently, many national companies continue to opera-
world growth fell from 5.1% in 2010 to 3.8% in te abroad, pursing their internationalization
2011, as noted by the International Monetary strategy. In addition, some bolstered their pre-
Fund in its latest report World Economic Out- sence in the rankings of the UNCTAD World
look, October 2012. Moreover, there are fears Investment Report, which refer to the world’s
that the European crisis may worsen the global leading multinationals, and in other well-known
economic scene, which has prompted the IMF league tables such as Fortune Global 500 or
to revise downwards the growth data relating to Forbes 2000.
the world economy for 2012 and 2013.
The sixth edition of the Internationalization
The economic policies implemented by govern- of Spanish Companies Yearbook covers
ments, unilaterally or in a coordinated fashion, these and other phenomena. Through this pu-
helped reduce systemic risk. However, these blication, once again this year, Círculo de Em-
measures need to be strengthened so as to presarios wishes to offer the public an instru-
consolidate the recovery and contain downside ment with which to gain insight into the foreign
risks. The priorities in developed countries con- activity of Spanish companies and the most
tinue to be reform of the financial sector, fiscal significant challenges they face going forward.
consolidation and structural reforms to boost The 2012 Yearbook is structured into two main
potential output. In emerging and developing parts:
countries, it is necessary to introduce greater
macroeconomic discipline, avoiding the build- • The first, which comprises three chap-
up and widening of imbalances. ters, examines the economic context in which
Spanish companies are operating both in Spain
In the specific case of the Spanish economy, and abroad, as well as their achievements and
according to data from the International Mone- challenges.
tary Fund, while GDP improved slightly (0.4%) in
2011, forecasts for 2012 and 2013 predict falls
15

15. Yearbook on the Internationalization of Spanish Companies 2012
Chapter one offers a brief overview of the glo- two operations involving foreign investment in
bal and national economic framework, and an Spain receive a mention.
analysis of the main characteristics of interna-
tional trade and direct foreign investment for • The second part comprises, on this oc-
the period 2011-2012. casion, two chapters. The first chapter focuses
on the importance of business diasporas, Latin
The second chapter reviews, from the interna- ones in particular, in driving the internationa-
tional standpoint, the performance of Spanish lization of the Spanish economy. This chapter
companies in terms of total shareholder returns, has been written by Javier Santiso, Professor of
equity market analysts’ recommendations and Economics at ESADE Business School.
companies’ coverage in the international finan-
cial press. In general, the situation in 2011 re- The second article in this section, which bears
presents a continuation of the negative trends the signature of Pablo Isla, the Chairman and
from 2010 in relation to stock market perfor- CEO of the Inditex Group, discusses the inter-
mance and, in particular, investment banks’ nationalization experience of this textile group,
equity market analysts’ recommendations. an international leader in the fashion industry.
Shareholder returns fell sharply in outright
terms, although in comparison with the Euro
Area, the drop was less dramatic. Investment
bank recommendations deteriorated steadily,
which, on interpretation, may reflect the antici-
pation of analysts who predict new difficulties
in 2012. Owing to the problems faced by Spa-
nish financial and non-financial companies, the
coverage of Spanish companies in the interna- Belén Romana,
tional financial press increased significantly in General Secretary of Círculo de Empresarios
2011, surpassing the 2006 coverage record.
This part ends with chapter three, in which Cír-
culo de Empresarios recognizes the work of
those Spanish companies which, through their
internationalization, contribute to Spain’s glo-
bal economic reach. There is a special mention
for overseas business operations conducted
by Spanish companies which, according to the
members of Círculo de Empresarios, are espe-
cially significant, and for both medium and lar-
ge companies with an outstanding track record
of internationalization over the past few years.
Lastly, and as a new feature of this sixth edition,
16

18. 2012 Yearbook on the Internationalization of Spanish Companies
1 The world and Spanish
economies
in 2011-2012
Throughout 2011, the world economy slowed down, highlighting the fragility of the reco-
very, especially in the developed economies. Consequently, having closed 2010 with 5.1%
growth, driven by gains in the main production ratios in emerging, developing economies
and advanced economies, the world economy closed 2011 with 3.8% growth, according to
the latest figures published by the IMF (Table 1.1).
IMF forecasts on GDP growth Table 1.1
Source: IMF (WEO October 2012)
Percentage variation
2010 2011 2012* 2013*
World 5.1 3.8 3.3 3.6
Advanced economies 3.0 1.6 1.3 1.5
United States 2.4 1.8 2.2 2.1
European Union 2.1 1.6 -0.2 0.5
Euro area 2.0 1.4 -0.4 0.2
Germany 4.0 3.1 0.9 0.9
France 1.7 1.7 0.1 0.4
Italy 1.8 0.4 -2.3 -0.7
Spain -0.3 0.4 –1.5 -1.3
Japan 4.5 -0.8 2.2 1.2
United Kingdom 1.8 0.8 -0.4 1.1
Canada 3.2 2.4 1.9 2.0
Other advanced economies 5.9 3.2 2.1 3.0
Newly industrialized Asian economies 8.5 4.0 2.1 3.6
Emerging and developing economies 7.4 6.2 5.3 5.6
Sub-Saharan Africa 5.3 5.1 5.0 5.7
Central and Eastern Europe 4.6 5.3 2.0 2.6
Commonwealth of Independent States 4.8 4.9 4.0 4.1
Russia 4.3 4.3 3.7 3.8
Excluding Russia 6.0 6.2 4.7 4.8
Developing Asia 9.5 7.8 6.7 7.2
China 10.4 9.2 7.8 8.2
India 10.1 6.8 4.9 6.0
ASEAN 5 ** 7.0 4.5 5.4 5.8
Middle East and North Africa 5.0 3.3 5.3 3.6
Latin American and the Caribbean 6.2 4.5 3.2 3.9
Brazil 7.5 2.7 1.5 4.0
Mexico 5.6 3.9 3.8 3.5
* Forecasts
** ASEAN 5: Phillipines, Indonesia, Malasia, Thailand and Vietnam.
19

19. Yearbook on the Internationalization of Spanish Companies 2012
Growth in the euro area slowed down in 2011 and forecasts for 2012 point to negative growth
(-0.4%). This evolution has been strongly influenced by the performance of the financial mar-
kets, affected by the debt crisis in the euro area. Tensions in the markets increased notably
from summer 2011, on becoming systemic, and amid growing fears of feedback between
sovereign risk, bank risk and loss of economic dynamism in several countries in the euro area.
In Spain, financing terms became tougher and bond yields reached all time highs. The eco-
nomic situation was very complicated. In 2011, average annual growth stood at 0.4%, and
negative growth has been forecast for 2012 and 2013. The contribution of internal demand
was once again negative (-1.9%), while for the fourth consecutive year, the contribution of net
external demand was positive (2.3 pp).
In this context, the IMF warned of the persistence of global downside risks. The con-
cern is that the deepening of the crisis in the euro area may trigger a widespread shift towards
lower risk assets or that political uncertainty may cause a hike in oil prices. Furthermore,
the implementation of excessively restrictive measures may lead to a situation of sustained
deflation or a prolonged period of very subdued activity in some of the major economies.
According to this Organization, other latent risks include turmoil on the global bond and world
foreign currency markets due to high budget deficits in Japan and USA, and a rapid slowdown
in the activity of some emerging economies.
Economic policy measures taken to date have helped reduce the systemic risk. However,
in the face of persistent uncertainty, these measures need to be strengthened so as to con-
solidate the recovery which has been weak so far and to contain downside risks. In the short
term, this involves stepping up efforts to tackle the crisis in the euro area, reducing fiscal
austerity in response to the downturn in activity, and maintaining lax monetary policies and
ample liquidity for the financial sector.
In the long term, the challenge consists in improving medium term prospects for the major
advanced economies. The priorities continue to be reform of the financial sector, fiscal con-
solidation and structural reforms to boost potential output.
In the case of emerging and developing economies, there is a need to gauge the macroeco-
nomic policies so as to tackle the downside risks of the advanced economies, by controlling
the overheating pressures resulting from greater activity, credit growth, and volatile capital
flows, as well as high commodity prices and the recurrence of risks related to energy prices
(Box 1.1).
The IMF, in its latest report World Economic Outlook, has broadly revised downwards fore-
casts for 2012 and 2013. World growth will fall by 0.2% in 2012 and 0.3% in 2013. The Euro
Area will also experience negative growth in both periods, of -0.1% and -0.5% respectively. In
the specific case of Spain, the economy will contract by 1.5% in 2012 and 1.3% in 2013.
In this scenario, world trade suffered a severe setback in 2011, posting a volume growth of
5%, compared to 13.8% in 2010.
According to statistics compiled by the World Trade Organization (WTO) and published in the
World Trade Report 2012, in 2011, Spain maintained its position as the 18th largest exporter of
goods in the world (with a share of 1.6% of the world total) and in relation to imports, Spain clim-
bed a position, ranking 15th (holding a share of 2%). With regard to trade in services, Spain ad-
vanced a position to rank 8th for exports (3.4%), and remained in 14th place for imports (2.4%).
20

20. Yearbook on the Internationalization of Spanish Companies 2012
Regarding foreign direct investment (FDI), global inflows grew 16% in 2011, surpassing for
the first time the average for the three years preceding the outbreak of the world economic
and financial crisis (2005-2007), but not exceeding the high of 2007.
According to the data published in the World Investment Report 2012 by the UNCTAD, in 2011,
Spain recovered the status it had lost in 2010 as a net foreign investor (in terms of FDI). This
can be accounted for by the sharp drop in FDI inflows (-27.7% compared with 2010), while
outflows stabilised. In 2011, Spain retained 15th position in the world ranking of FDI flows
received and 14th in terms of outflows of this kind of investment.
As to cumulative FDI, Spain maintains a relatively stable position. With 3.1% of the world to-
tal, Spain fell two places to 9th position, losing ground to China and Brazil, in terms of stock
received. And with 3% of the world total, Spain ranked 11th in terms of stock abroad, losing a
position to Canada.
Finally, setting aside the doubts regarding the future of the world economy and of Spain’s in
particular, some Spanish companies have decided to start or to continue their internationa-
lization processes, a clear exponent of which are the operations and companies mentioned
in Chapter 3 of this Yearbook. This is fully consistent with the role played by the Spanish eco-
nomy on the international stage, since its activity in the various areas of the world economy
surpasses even its contribution to global GDP, which in 2011, fell below 1.8% in purchasing
power parity terms.
The rankings of the world’s top multinationals published in WIR 2012 underpin this idea.
Among the top 100 non-financial multinationals, three are Spanish companies, holding the
following positions in terms of assets abroad: Telefónica (ranked 10th), Iberdrola (25th) and
Repsol (47th) (Table 1.2).
Other well-known league tables confirm this impression. There are 8 Spanish companies in
the Fortune Global 500 index of leading worldwide companies. There are 28 Spanish compa-
nies in the Forbes 2,000 index, which refers to the top 2,000 global companies.
Spanish non-financial multinationals among the world’s
leaders by international presence, 2011 Table 1.2
Millions of dollars and number of employees Source: WIR 2012, UNCTAD
Assets Sales Employees
Abroad Total % of total Abroad Total % of total Abroad Total % of total
Telefónica S.A. 147,903 180,186 82.1 63,014 87,346 72.1 231,066 286,145 80.8
Iberdrola S.A. 88,048 134,702 65.4 23,211 44,896 51.7 19,436 31,885 61.0
Repsol YPF S.A. 58,336 98,634 59.1 44,115 83,572 52.8 26,441 46,575 56.8
21

21. Yearbook on the Internationalization of Spanish Companies 2012
Box 1.1 Commodity price performance in 2011 and 2012
Any analysis of the global economic situation must include a look at commodity
price performance, in view of its enormous impact in a number of areas, from glo-
bal inflation to access to food in developing countries.
World commodity markets lost some momentum in 2011. Prices fell for most of the
year, with the exception of the crude oil price. In the first quarter of 2012, commo-
dity prices picked up, but in general terms, they remain below the levels recorded
at the end of 2010.
Index of commodity prices
(2005=100) Source: IMF
230
210
190
170
150
130
110
90
70
2005M12
2006M12
2007M12
2008M12
2009M12
2010M03
2010M06
2010M09
2010M12
2011M03
2011M06
2011M09
2011M12
2012M03
2005M9
2006M3
2006M6
2006M9
2007M3
2007M6
2007M9
2008M3
2008M6
2008M9
2009M3
2009M6
2009M9
Some of the main factors that account for the fall in prices in 2011 are uncertainty
regarding the short term global economic outlook; a more marked downswing than
expected in emerging and developing economies; a downturn in the Chinese pro-
perty market, increasing concerns over a hard landing in the country; and doubts
as to the continuance of the commodity market boom.
Crude petrol prices performed differently, which was mainly due to heightened
geopolitical risks.
22

22. 2012 Yearbook on the Internationalization of Spanish Companies
World oil demand in 2011 was lower than expected owing to weaker global activity.
However, the supply disruptions in major oil-producing economies (particularly
Libya) interruptions due to maintenance and other reasons in non-OPEC oil produ-
cing countries led to supply shortages which pushed up prices.
Additional production by other OPEP members, primarily Saudi Arabia, and the
weakening of demand enabled the matching of supply and demand at the end
of the last quarter. However, at that time, the oil stocks of the OECD economies
and the surplus capacity of the OPEC had fallen below five-year averages. At the
same time, geopolitical risks increased, pushing up the precautionary demand for
stocks. These events took place in a context of persistent oil shortages. In these
circumstances, price increases are inevitable.
Forecasts point to little improvement in conditions in the oil markets, since supply
from non-OPEC countries is only expected to increase moderately in the short
term. On the basis of the future prices for oil, it is anticipated that spot prices will
drop gradually but remain above the average level until 2012-13. Since inventory
stocks and surplus capacity are below average, the upside risks for oil prices re-
main a cause for concern, in spite of the downside risks for oil demand and global
economic growth.
International trade 1.1
Global trade slumped in 2011, following the significant mi and the nuclear accident in Japan or the floods in
recovery in 2010. Thailand).
The reasons that account for this fall include in par- As a result, trade growth in 2011 was below average.
ticular financial and economic uncertainly at interna- According to the WTO the volume of global trade in
tional level (negative growth recorded in the European goods grew 5% (in real terms), compared to 13.8% in
Union or the debt crisis in the euro area), civil strife 2010 (Table 1.3).
(rioting in North African countries, especially in Lib-
ya) and natural disasters (the earthquake, the tsuna-
23

23. Yearbook on the Internationalization of Spanish Companies 2012
Table 1.3 GDP and trade in goods by regions, 2009-2011
Annual percent change at constant prices Source: WTO Secretariat
GDP Exports Imports
2009 2010 2011 2009 2010 2011 2009 2010 2011
World -2.6 3.8 2.4 -12.0 13.8 5.0 -12.9 13.7 4.9
North America -3.6 3.2 1.9 -14.8 14.9 6.2 -16.6 15.7 4.7
US -3.5 3.0 1.7 -14.0 15.4 7.2 -16.4 14.8 3.7
Central and South America a
-0.3 6.1 4.5 -8.1 5.6 5.3 -16.5 22.9 10.4
Europe -4.1 2.2 1.7 -14.1 10.9 5.0 -14.1 9.7 2.4
European Union (27) -4.3 2.1 1.5 -14.5 11.5 5.2 -14.1 9.5 2.0
Commonwealth of Independent States (CIS) b
-6.9 4.7 4.6 -4.8 6.0 1.8 -28.0 18.6 16.7
Africa 2.2 4.6 2.3 -3.7 3.0 -8.3 -5.1 7.3 5.0
Middle East 1.0 4.5 4.9 -4.6 6.5 5.4 -7.7 7.5 5.3
Asia -0.1 6.4 3.5 -11.4 22.7 6.6 -7.7 18.2 6.4
China 9.2 10.4 9.2 -10.5 28.4 9.3 2.9 22.1 9.7
Japan -6.3 4.0 -0.5 -24.9 27.5 -0.5 -12.2 10.1 1.9
India 6.8 10.1 7.8 -6.0 22.0 16.1 3.6 22.7 6.6
Newly industrialized countries c -0.6 8.0 4.2 -5.7 20.9 6.0 -11.4 17.9 2.0
Developed economies -4.1 2.9 1.5 -15.1 13.0 4.7 -14.4 10.9 2.8
Developing economies and CIS 2.2 7.2 5.7 -7.4 14.9 5.4 -10.5 18.1 7.9
a
Including the Caribbean
b
It is a supranational organization comprising 10 former Soviet republics
c
Hong Kong, China, Rep. of Korea, Singapore and Chinese Taipei
According to IMF forecasts, real growth in world trade Japan (reducing its exports by 0.5%), disrupting supply
will be even lower for 2012, falling to 3.2%, but will be chains which affected exports from developing coun-
followed by an acceleration in 2013 (4.5%). tries such as China - fewer components were sent,
which led to a reduction in the output of export goods.
As to export performance, Asia, with an increase of
6.6%, was ahead of all the other regions. The increa- As to imports, demand in 2011 was adversely affected
ses of 16.1% in India and 9.3% in China are noteworthy. by sluggish growth in the major economies, its growth
falling from 13.7% in 2010 to 4.9% in 2011. By regions,
Export growth in the developed economies in 2011 ex- the CIS experienced the highest growth (16.7%), which
ceeded expectations, reaching 4.7%, on the back of a accounts for the greater increase in developing eco-
sharp rise (7.2%) in US exports as well as an expansion nomies and the CIS (7.9%), compared with developed
of 5.2% in EU exports. economies (2.8%).
For their part, the results of the developing economies In 2011, exchange rates were considerably volatile,
(including those of the CIS) were lower than forecast, which affected the competitiveness of some econo-
with an increase of barely 5.4%. The factors that con- mies and prompted measures to be taken (Switzerland
tributed to their worst performance in exports were the and Brazil). The fluctuations were largely due to attitu-
interruptions in oil supply from Libya (75% reduction), des towards risk in relation to the sovereign debt crisis
which led to an 8.3% fall in African exports in 2011; the in the euro area.
floods in Thailand; the earthquake and the tsunami in
24

24. 2012 Yearbook on the Internationalization of Spanish Companies
Nominal trade flows were also affected by recent eco- With regard to exports of goods, in 2011, China retai-
nomic shocks. In 2011, the value in dollars of world ned its world leadership (Table 1.4). It has gradually
trade in goods rose 19% to reach 18.2 trillion dollars, distanced itself from the US and Germany to hold a
exceeding the high (16.1 trillion dollars) attained in 2-point lead in terms of share of total world exports,
2008. A substantial proportion of this growth was due with a share of 10.4%.
to the increase in commodity prices.
The share held by the developing and CIS economies
in the world total rose to 47% in the case of exports
and 42% for imports.
Main exporter of goods, 2011 Table 1.4
Billions of dollars and by percentage Source: WTO
Percentage as Annual percentage
Rank Value
per global total variation
China 1 1,899 10.4 20
United States 2 1,481 8.1 16
Germany 3 1,474 8.1 17
Japan 4 823 4.5 7
Netherlands 5 660 3.6 15
France 6 597 3.3 14
Rep. of Korea 7 555 3.0 19
Italy 8 523 2.9 17
Russia 9 522 2.9 30
Belgium 10 476 2.6 17
United Kingdom 11 473 2.6 17
Hong Kong, China 12 456 2.5 14
- National exports 17 0.1 14
- Reexports 439 2.4 14
Canada 13 452 2.5 17
Singapore 14 410 2.2 16
- National exports 224 1.2 23
- Reexports 186 1.0 10
Saudi Arabia 15 365 2.0 45
Mexico 16 350 1.9 17
Chinese Taipei 17 308 1.7 12
Spain 18 297 1.6 17
India 19 297 1.6 35
United Arab Emirates 20 285 1.6 30
25

25. Yearbook on the Internationalization of Spanish Companies 2012
Likewise, China increased its proportion of total world it continues to close this distance in the ranking of the
imports (Table 1.5), attaining a 9.5% share and conso- top importers of goods.
lidating its second position behind the USA. However,
Table 1.5 Main importers of goods, 2011
Billions of dollars and by percentage Source: WTO
Percentage as per Annual percentage varia-
Rank Value
global total tion
United States 1 2,265 12.3 15
China 2 1,743 9.5 25
Germany 3 1,254 6.8 19
Japan 4 854 4.6 23
France 5 715 3.9 17
United Kingdom 6 636 3.5 13
Netherlands 7 597 3.2 16
Italy 8 557 3.0 14
Rep. of Korea 9 524 2.9 23
Hong Kong, China 10 511 2.8 16
- Imports-reimports 130 0.7 16
Canada a 11 462 2.5 15
Belgium 12 461 2.5 17
India 13 451 2.5 29
Singapore 14 366 2.0 18
- Imports-reimports 180 1.0 27
Spain 15 362 2.0 11
Mexico 16 361 2.0 16
Russia a 17 323 1.8 30
Chinese Taipei 18 281 1.5 12
Australia 19 244 1.3 21
Turkey 20 241 1.3 30
a
Imports according to FOB values
Finally, as far as trade in services is concerned, the growth owing to the fact that Egyptian exports in tra-
value of world exports increased 11% in 2011 to 4.1 vel-related services dropped by over 30%.
trillion dollars, with marked differences in the annual
growth rates of the various countries and regions. For The proportion of trade in services in total trade in
instance, African exports were seriously affected by goods and services stood at 18.6%, the lowest level
the rioting in the Arab countries and experienced zero since 1990.
26

26. 2012 Yearbook on the Internationalization of Spanish Companies
Foreign direct investment 1.2
According to estimates published by the United they rose 21% with respect to 2010, reaching 748
Nations Conference on Trade and Development billion, but are still 25% below the average attained
(UNCTAD), which is the main source of statistical data between 2005 and 2007. In spite of this progression,
on this subject, in spite of the throes of the world eco- developing and transition economies taken together
nomic and financial crisis and the debt crisis, in 2011, accounted for over half of global FDI (45% and 6%
global Foreign Direct Investment (FDI) flows exceeded respectively). In the first group, FDI inflows increased
the average level attained in the period prior to the 11%, reaching a record figure of 684 billion - 10% in
world economic and financial crisis, reaching 1.5 tri- Asia, and 16% in Latin American and the Caribbean.
llion dollars. The actual growth rate was 16%. However, And in the transition economies, the increase was
the level remains 23% below the 2007 record. 25%, to 92 billion. Africa and less developed econo-
mies experienced a fall in FDI inflows for the third con-
Some of the factors that boosted this growth were hig- secutive year. In Africa, the regression is essentially
her profits earned by multinationals and the relatively explained by divestment in North Africa (specifically to
strong growth of developing economies. Egypt and Syria, due to political instability).
The inflows of this kind of investment increased across
the board in 2011 (Chart 1.1). In developed countries,
FDI inflows 1980-2011 Chart 1.1
Billions of dollars Source: UNCTAD
Developed economies
2,500.0
World
Developing economies
Transition economies
2,000.0
1,500.0
1,000.0
500.0
0.0
2004
2002
2003
2000
2005
2006
2007
1994
1984
2001
2009
1987
1989
1990
1991
1993
2008
1986
1988
1992
1997
1980
1982
1983
1985
1995
1998
2010
1981
2011
1996
1999
27

27. Yearbook on the Internationalization of Spanish Companies 2012
As to FDI outflows, flows towards advanced countries by the increase in the number of mega-operations (for
rose sharply by 25% in 2011, reaching 1.24 trillion do- more than 3 billion dollars) from 44 in 2010 to 62 in
llars. This increase is essentially explained by reinves- 2011, which is a reflection of the increase in the value
tment of profits from US multinationals (82% of total of assets on the stock markets and the greater finan-
outflows), mergers and acquisitions of the European cial capacity of buyers.
Union, and Japanese purchases in North America and
Europe favoured by the appreciation of the yen. New investment (greenfield) stayed around 904 billion
(more than two thirds invested in developing and tran-
Investment from developing countries fell 4% to 384 sition economies), and continues to outstrip mergers
billion, while their share of global outflows remained and acquisitions, as has been the case since the start
high at 23%. FDI from Latin America and the Caribbean of the crisis.
fell 17%, essentially due to the repatriation of capital
owing to financial considerations (exchange rate, in- On a corporate level, in 2011, despite the turbulent
terest rate etc.). In the case of East and Southeast economic situation, important operations were per-
Asia, the flows stagnated, while those from West Asia formed throughout the globe, as evidenced by the
rose to 25 billion. UNCTAD ranking of the largest mergers and acquisi-
tions in the world (Table 1.6).
By sectors, FDI flows rose in three production sectors:
primary, manufacturing and services. In the service Finally, forecasts regarding performance of FDI flows
sector, FDI recovered in 2011 after falling in 2009 and have improved continuously from 2008-2009, while
2010, to reach 570 billion. Similarly, investment in the still being subject to macroeconomic and financial
primary sector changed trend, reaching 200 billion. conditions. Due to economic uncertainty, UNTCAD
The share of both sectors increased at the expense forecasts point to a slowing of the upward trend.
of industry, where investment in the following areas is Growth in FDI is expected to slow, leveling off in 2012
noteworthy: the mining and chemical industries, uti- at around 1.6 billion dollars. Longer term forecasts, for
lities, transport, communication and other services. 2013 and 2014, indicate a moderate rise to 1.8 trillion
and 1.9 trillion, respectively.
By FDI entry modes, cross-border mergers and acqui-
sitions rose 53% in 2011 to 526 billion dollars, driven
28

28. 2012 Yearbook on the Internationalization of Spanish Companies
Major cross-border mergers and acquisitions worldwide in 2011 Table 1.6
US$ billions Source: UNCTAD, WIR 2012
Objective Buyer
Ranking Amount
Company/ country /sector Company/ country
GDF Suez Energy International Power PLC
1 25.1
(Belgium) Natural gas transmission (United Kingdom)
Weather Investments Srl VimpelCom Ltd
2 22.4
(Italy) Telecommunications (Netherlands)
Genzyme Corp Sanofi-Aventis SA
3 21.2
(United States) Biological products, except substance analysis (France)
Nycomed International Management GmbH Takeda Pharmaceutical Co Ltd
4 13.7
(Switzerland) Pharmaceutical products (Japan)
Petrohawk Energy Corp BHP Billiton PLC
5 11.8
(United States) Oil and natural gas (United Kingdom)
Foster´s Group Ltd SABMiller Beverage Investments Pty Ltd
6 10.8
(Australia) Beverages (Australia)
Centro Properties Group BRE Retail Holdings Inc
7 9.4
(United States) Property (United States)
Reliance Industries Ltd BP PLC
8 9.0
(India) Oil and natural gas (United Kingdom)
Skype Global Sarl Microsoft Corp
9 8.5
(Luxemburg) Software (United States)
Morgan Stanley Mitsubishi UFJ Financial Group Inc
10 7.8
(United States) Bank holdings (Japan)
Spain’s foreign sector 1.3
A) Analysis of the Balance of Payments: current account
and capital account balance
Spain’s external imbalances continued their course of ad- The lower recourse to external funding can be explained
justment in 2011. According to the data compiled in the broadly by the decline in investment, to 22.1% of GDP
report on the balance of payments 2011 (Table 1.7), pu- (against 23.3% in 2010), since gross national savings fell
blished by the Bank of Spain in 2012, the funding requi- moderately to 18.7 % of GDP (0.6 pp less than the previous
rements for Spain’s economy from external sources, year).
measured as the overall balance of the current and capital
account, fell further in 2011 (by 22%) to 3% of GDP (practi-
cally one point lower than in 2010).
29

29. Yearbook on the Internationalization of Spanish Companies 2012
Table 1.7 Balance of payments: balances
% of GDP Source: Bank of Spain
2004 2005 2006 2007 2008 2009 2010 2011
CAPACITY (+)/FUNDING (-) REQUIREMENTS -4.2 -6.5 -8.3 -9.6 -9.1 -4.4 -3.9 -3.0
Current account -5.3 -7.4 -9.0 -10.0 -9.7 -5.2 -4.5 -3.5
Goods -6.4 -7.5 -8.5 -8.7 -8.0 -4.0 -4.4 -3.7
Services 2.6 2.4 2.3 2.2 2.4 2.4 2.6 3.2
- Travel and tourism 3.2 2.9 2.8 2.6 2.6 2.5 2.5 2.9
- Other services -0.6 -0.5 -0.5 -0.4 -0.1 -0.1 0.1 0.3
Income -1.4 -1.9 -2.1 -2.9 -3.3 -2.8 -2.0 -2.4
Current transfers 0.0 -0.4 -0.7 -0.7 -0.9 -0.8 -0.7 -0.6
Capital account 1.0 0.9 0.6 0.4 0.5 0.4 0.6 0.5
FINANCIAL ACCOUNT a 4.1 6.7 8.7 9.6 9.2 5.0 4.1 3.2
Excluding Bank of Spain 5.8 6.9 11.3 8.3 5.9 4.2 2.6 -7.1
Foreign direct investment -3.4 -1.5 -6.0 -4.8 -0.7 -0.1 -0.1 -0.6
Portfolio investment 10.2 6.5 20.3 10.0 0.4 4.3 2.9 -2.3
Other investments -1.0 1.9 -3.2 3.5 7.0 0.5 -0.9 -4.5
Financial derivatives 0.0 0.0 -0.2 0.4 0.6 -0.6 0.8 0.2
Bank of Spain b -1.7 -0.2 -2.6 1.4 2.8 1.0 1.5 10.2
ERRORS AND OMISSIONS 0.1 -0.2 -0.4 0.0 -0.1 -0.5 -0.2 -0.1
a
Variation in liabilities less variation in assets
b
A negative (positive) sign implies an increase (decrease) in the Bank of Spain’s net assets vis-à-vis abroad
In 2011, the current account deficit recorded a new The trade balance in relation to the EMU and the UE
low in the series since 2004, by falling to 3.5% of GDP, was positive for the first time since the mid 1980s.
against 4.5% in 2010. The correction of the deficit is
primarily attributable to the improvement in the trade As to trade flows, exports grew 15% (despite the down-
balance. A contribution was also made by the increa- turn in global trade), against 8.7% for imports. The an-
se in the services surplus and the reduction in the nual coverage ratio (exports/imports) was above 80%.
current transfers deficit, which offset the marked de- Moreover, in light of the performance of exports, the
terioration in the negative income balance, caused by percentage share of Spain in world trade, in real terms,
higher funding costs. As far as the capital account is continued to grow for the third consecutive year.
concerned, the surplus shrank by one tenth, to 0.5%
of GDP. This progression is largely explained by the impact
on exports of accumulated gains in competitiveness-
In 2011, the trade deficit fell considerably, to 3.7% price and competitiveness-cost in recent years. In
of GDP (0.8 pp lower than in 2010), especially due to addition, this effect has been strengthened by the
the marked decrease in the non-energy trade balance growth in the number of international trade relations,
(-69%), since the energy trade balance continued to favoured by the increase in the number of exporting
rise (16%) due to high oil prices. countries, (12.5% in 2012) and by the diversification of
destinations where Spanish companies operate.
30

30. 2012 Yearbook on the Internationalization of Spanish Companies
In terms of the Quarterly National Accounts (CNTR), to this marked progression in exports, capital goods
real exports of goods grew in 2011 by 9.5%. According as well as intermediate goods played an important
to Customs, the increase was 10.1%. Both figures re- role, at the same time, consumer goods showed no-
flect the strength of exports in the context of a down- table recovery (5.4% in 2011), in particular foods and
turn in global trade and, in particular, the strength of other manufactured products. Actual sales of capital
Spain’s export markets. However, while in real terms goods increased by 15.9% in 2011, owing to exports of
the share of Spanish exports in the world total rose, rail and air transport material, and construction ma-
in nominal terms, it fell, due to higher energy costs. chinery. Exports of energy intermediate goods grew
36.7% and non-energy intermediate goods by 10.7%.
By sectors, there were no significant changes in
Spain’s trade pattern in 2011 (Table 1.8). In relation
Foreign trade in goods, specialization by product Table 1.8
% of total Source: Own research based on data from the Spanish Ministry of Economy and Competitiveness
2011
Products Exports Imports
Foods 14.2 10.4
Energy products 7.4 21.4
Commodities 2.7 4.3
Non-chemical semimanufacturing 12.2 7.5
Non-ferrous metals 2.2 1.4
Iron and steel 4.1 3.1
Paper 1.6 1.3
Ceramic products and similar items 1.3 0.2
Other semimanufacturing 3.0 1.5
Chemical products 13.7 14.5
Organic chemical products 1.6 2.8
Inorganic chemical products 0.4 0.8
Plastics 3.8 3.0
Medicines 4.1 4.3
Fertilizers 0.3 0.3
Tanning and dyeing products 0.9 0.5
Perfumes and essential oils 1.5 1.1
Rest of chemical products 1.2 1.8
Capital goods 20.1 17.9
Industrial machinery 5.1 4.6
Office equipment and telecommunications 1.3 4.5
Transport material 5.1 1.8
Other capital goods 8.6 7.0
Automotive sector 15.4 10.4
Cars and motorcycles 10.5 4.2
Auto parts 5.0 6.2
Durable consumer goods 1.7 2.5
Consumer manufacturing 8.2 10.5
Textiles and clothing 4.6 5.9
Footwear 1.0 0.9
Toys 0.3 0.7
Other consumer manufacturing 2.3 3.0
Other goods 4.4 0.7
31

31. Yearbook on the Internationalization of Spanish Companies 2012
By geographical areas (Tables 1.9 and 1.10), as in By sectors, in real terms, imports of consumer goods
2010, it is worth highlighting the growth in nominal fell 2.2% and imports of capital goods by 3.1%. Inter-
terms of sales outside the EU to the OPEC countries, mediate goods sales halted their progression, falling
Russia and associated countries as well as Japan and from 19.1% in 2010 to 2.6% in 2011, owing in particular
China. While exports to the euro area slowed down, to the slowdown in purchases of non-energy interme-
those destined for France and Germany showed sig- diate goods.
nificant progress.
By geographical areas, in real terms, purchases outsi-
Imports suffered a setback, with a real growth rate de the EU (from Russia, Latin America etc.) grew more
of 0.6% in 2011, according to data from the Quarterly sharply than those from the euro area, whose relative
National Accounts, and 1% according to Customs. weighting as a goods supplier for Spain fell further. It
This lower growth is mainly due to weak domestic de- is worth emphasizing the weighting of imports from
mand for consumption and investment, the downturn France, Germany and Italy.
in exports and the increase in prices, in particular of
commodities.
Table 1.9 Foreign trade in goods, specialization by geographical area
% of total Source: Spanish Ministry of Economy and Competitiveness
2011
Regions/countries Exports Imports
EUROPEAN UNION 66.0 52.8
EURO AREA 52.8 42.8
France 17.9 10.8
Germany 10.2 11.8
Italy 7.9 6.6
Portugal 8.0 3.9
REST OF EU 13.3 10.0
United Kingdom 6.4 4.0
REST OF EUROPE 7.6 6.9
Russia 1.2 3.2
NORTH AMERICA 4.2 4.5
US 3.7 4.1
LATIN AMERICA 5.6 6.1
Mexico 1.4 1.4
Brazil 1.2 1.4
Argentina 0.5 0.8
REST OF AMERICA 0.1 0.6
ASIA 7.9 19.8
India 0.6 1.1
China 1.6 7.1
Japan 0.9 1.2
AFRICA 5.4 8.9
Morocco 1.9 1.2
Algeria 1.2 2.2
OCEANÍA 0.8 0.5
Australia 0.7 0.3
OECD 77.8 64.2
NAFTA 5.6 5.9
MERCOSUR 1.8 2.3
OPEC 3.9 11.2
32

32. 2012 Yearbook on the Internationalization of Spanish Companies
Spain’s foreign trade performance by geographical area Table 1.10
Nominal variation Source: Bank of Spain. Balance of Payments Report
Total
2005-09 2010 a 2011 a
Exports
Total 1.7 17.4 15.4
OECD 0.4 16.2 13.5
EU 27 0.2 15.4 12.6
United Kingdom -5.3 15.1 19.5
Euro area (EMU 16) 0.7 15.0 9.6
Germany 0.7 10.7 12.2
France 1.7 12.4 13.3
Italy -0.3 25.8 4.4
United States -0.3 12.5 20.8
OPEC 9.3 11.0 28.5
CIS and other Central and Eastern European countries b 9.7 26.6 49.5
NIC c 8.4 25.2 1.8
Rest of world 5.6 25.8 17.5
Imports
Total -0.2 14.2 9.6
OECD -2.5 7.7 6.5
EU 27 -2.4 6.9 5.9
United Kingdom -5.0 10.7 -2.2
Euro area (EMU 16) -2.9 4.5 6.7
Germany -3.7 -6.6 10.0
France -5.4 2.0 10.6
Italy -4.7 12.1 2.4
United States 2.4 10.1 12.8
OPEC 6.7 34.9 20.5
CIS and other Central and Eastern European countries b 6.1 23.1 33.2
NIC c -4.6 6.9 -3.5
Rest of world d
6.3 27.2 10.0
a
Provisional data, Department of Customs
b
Including Russia, Ukraine, Belorussia, Moldavia, Georgia, Armenia, Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan, Romania, Bulga-
ria, Albania, Croatia, Bosnia and Herzegovina, Serbia and Montenegro
c
Includes Republic of Korea, Taiwan, Hong Kong and Singapore
d
Does not include items without geographical allocation
33

33. Yearbook on the Internationalization of Spanish Companies 2012
The services surplus increased in 2011 to 3.2% of generated by bonds and debentures and money mar-
GDP (against 2.6% in 2010), owing to the improvement ket instruments. The income deficit associated with
in the surplus in travel and tourism, which grew 2.9%. other investment (loans, deposits and repos) likewise
Non-tourist services recorded a positive balance for increased, and direct investment income surplus mo-
the second consecutive year (0.3% of GDP). derated, due to the greater fall, in absolute terms, in
dividends received than in payments under this hea-
In 2011, both revenue from services and payments for ding.
services grew. However, while the former gathered
momentum (8.7% in nominal terms), the pace of pay- The current transfers deficit fell in 2011 by 18.9%,
ments slowed down (2.5%). Revenue from tourism gai- to 0.6% of GDP, owing to a significant rise in reve-
ned some weighting in terms of contribution to GDP nue (7.9%). By institutional sectors, the public sector
(attaining 4%), largely owing to the diversion of tourists deficit was corrected and the private sector surplus
to Spain on account of the geopolitical instability in widened. The negative balance linked to remittances
the Middle East, and the suppression of hotel rates in from migrants continued its course of correction to
recent years. reach -0.1% of GDP, experiencing a greater increase in
revenue (5.9%) than in payments (0.8%). The difficult
For its part, the income account deficit widened situation of the Spanish labour market and the logi-
significantly in 2011, to 2.4% of GDP. Revenue fell cal reduction in the number of migrant arrivals explain
(8.2%) and payments rose (3.8%). The increase re- this reduction. As usual, remittance payments are
flects, above all, higher external funding costs. By notably concentrated in Latin American destinations
kinds of investment, the deterioration in the balance (Table 1.11).
was broadbased. It is worth highlighting the increa-
se in the portfolio investment income deficit (21.1%)
and, in particular, the deficit in net interest payments
Table 1.11 Geographical breakdown of remittance payments in 2010 and 2011 a
Main destination countries. Percentage of total Source: Bank of Spain
2010 2011 2010 2011
Colombia 17,9 17,7 Morocco 4,1 4,0
Ecuador 12,8 12,9 China 3,5 3,5
Bolivia 8,5 8,3 Peru 3,6 3,2
Romania 5,3 5,0 Brazil 3,5 3,2
Dominican Rep. 4,0 4,8 Pakistan 1,7 1,6
Paraguay 4,5 4,1 Philippines 1,4 1,6
a
The geographical breakdown is obtained based on information reported to the Bank of Spain by currency exchange establishments
In 2011, the capital account surplus fell 12.7% in 2011, the deterioration in the balance linked to the sale and
to 0.5% of GDP. This decrease reflects the reduction in purchase of non-produced non-financial assets.
the transfers surplus of the Public Administrations and
34