Mapping out your business’s global growth journey? Spain is one destination that’s not to be missed. More and more companies from across Europe and beyond are expanding into the Iberian Peninsula, but why?
As the second-largest country in Western Europe and an integral member of the European Union, Spain is a highly developed, fast-growing nation. Its Ease of Doing Business score places it as the 3rd most attractive country for setting up a business in Europe.
But what are the perks of the Spanish market? Why are businesses flocking to this modestly sized peninsula in south-western Europe? Here are 5 reasons why you should be doing business in Spain.
1. Powerful Economy
Spain is home to the world’s 14th largest economy, the 8th largest in the OECD, and the 5th largest in the EU. With a GDP of 1.3 trillion USD, it counts a population of 46.6 million people. A whopping 82 million tourists also visit Spain annually (2018). Tourism accounts for 16% of the national GDP, as the 3rd most important sector after the industrial and business/banking sectors.
As a member of the EU, Spain enjoys access to the world’s largest market: the European Union, with a population of 500 million and a per capita income of 35,990 USD. Within the EU, businesses and traders benefit from free movement of goods, services, capital, and people. They may also trade without tariffs, and in a strong, singular currency, the Euro.
Also linked to the Spanish trade market are markets across the Middle East and northern Africa, as well as Latin America. These long-standing trade relationships further strengthen the Spanish economy and potential for business growth.
2. International Business & Trade Hub
Due to its well-connected position, Spain remains an open and competitive market. The country has seen consecutive growth in the foreign trade sector over the last five years. This is largely due to improvements in productivity and the moderation of wages.
Spain is the 11th greatest global exporter of commercial services, worth US$115 billion. Services exported internationally from Spain, excluding tourism, reached a value exceeding €63 billion in 2016.
As for its top exports, Spain’s most lucrative assets include cars, followed by refined petroleum oils, automotive parts or accessories, drugs and medicines, trucks, and olive oil.
Spain’s number one import product is crude oil, followed by imported cars, auto parts and accessories, medications, petroleum gases, and refined petroleum oils.
Trade in Spain is also boosted by its numerous Free Trade Agreements. It is a member of both the WTO (World Trade Organisation) and the GATT (General Agreement on Tariffs & Trade) since 29 August 1963. It has also been a Member State of the European Union since 1986.
3. Solid Infrastructure & Networks
The Global Competitiveness Report 2016, published by the World Economic Forum (WEF), ranks Spain in 12th place worldwide in terms of infrastructure and logistical services.
The country is also a leader in advanced IT and telecommunications technologies. It is home to one of Europe’s most important ICT markets.
There are more than 33,000 ICT companies, including digital content agencies, operating in Spain with over 470,000 highly qualified employees. International companies operating in Spain will often enter into joint business ventures with Spanish companies, further strengthening their presence in the region.
4. Focus on Investment, Research & Development
Spain also prides itself on its ongoing research & development (R&D) and investment frameworks. There are numerous financial and tax incentives in place for activities that heavily contribute to the economy. These include non-refundable subsidies, soft loans, or a combination of both.
In Spain, there is a continual emphasis on promoting permanent employment, productive investments, and technological innovation. Whilst Spain may not invest as much into R&D as its fellow EU members (with its expenditure at around 1.2% of GDP in 2015), its focus on innovation has certainly contributed to the growing competitiveness of the market.
5. Flourishing Innovation & Tech Disruption
Indeed, the thriving Spanish innovation ecosystem has given rise to numerous successes and exciting opportunities for both local and foreign players. Catalonia represents a huge part of the Spanish economy and innovation ecosystem, with Barcelona as its capital.
Headquartered in Barcelona are top startups such as Ulule, Glovo, Typeform, Badi, and more. Many of these tech scale-ups have since made their mark overseas, attracting further interest in the Spanish region for foreign investors and founders.
The city is also home to numerous incubators and innovation hubs which promote further knowledge exchange and activity.
Spain has a modern, knowledge-based economy, in which services represent 75% of all business activity. It puts an international focus on innovation. This movement is also powered by Spain’s young, qualified workforce, with highly competitive costs and working conditions in the context of Western Europe.
Curious to know more about Spain? Read more about the Spanish economy, trade, employment, tax and business setup options here. If you’re feeling ready to test the waters of the Spanish market, grab your free e-book on How to Expand Your Business to Spain!
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