Catalonia : “The power-house of Spain” : FDI and location determinants

Abstract

Catalonia has succeeded in attracting large flows of FDI. It is the main recipient of FDI to Spain with more than 3000 multinationals operating in the region. Determining factors have been its long industrial traditions, its strategic geographical location as a EU member-country, a pro-business Catalan government, a low-cost location, a diversified business structure, efficient and skilled labour force, and capacity to attract foreign talent, along with a high quality of life. FDI has enabled the region to take advantage of the advanced technology that many of the larger MNEs bring with them; economic benefits from clustering of companies such as better access to suppliers and other complementary activities, creation of jobs, among other effects. Due to its innovative potential, it has attracted services companies from many different fields as well as automotive design centres. The structure of the thesis is as follows. Part 1 introduces Catalonia, with basic facts about the region, trade history and economic indicators. Part 2,3 and 4 lay out the basic features of the theory which the thesis is based upon. Part 5 presents the analysis, while part 6 describes some of the effects of FDI. Part 7 looks at new economic geography and Catalonia, and 8 gives a brief discussion and conclusion.