In today’s interconnected and globalized world, receiving investments from abroad is a major factor contributing to economic growth for countries all across the world. Spain has recognized the importance of international business and foreign investment by implementing strategies to change the flow of investment. In the late 1990s, many Spanish companies began investing in Latin America and also started a vast amount of business operations there. Now, Spain is looking for investments to flow in the complete opposite direction.
Spain’s Prime Minister, Mariano Rajoy, used a weekend summit meeting to try to persuade Latin American business leaders to invest more in Spain. He mentioned that the location of Spain serves as a great trade platform for companies interested in the rest of Europe and North Africa. Latin America offers many trade opportunities for the recession-hit Spain as economic growth in Latin America is expected to accelerate to 3.9 percent next year. To attract foreign investment from Latin America, Prime Minister Mariano Rajoy has even used Spain’s historical and cultural ties to Latin America.
Spain faces many challenges in attracting foreign investment with its unemployment soaring to 25 percent this year. Also worth noting is the fact that reverse migration is beginning to occur in Spain and the rest of Europe for that matter. Many workers are leaving Spain and are finding jobs in Latin America as the skill gap in Latin America widens due to the lack of skilled workers. Instead of Spanish companies bringing workers back to Spain, many Spanish companies are sending workers to Latin America in order to strengthen their presence in a growing economy rather than a stagnant one. It’s also easy for Spanish companies to raise money in Latin America compared to being shut out of the struggling European financial markets.
The challenges faced by Spain in attracting foreign investment are difficult but the important thing is that Spain recognizes the significance of international relations as a means to economic recovery. Spain realizes that austerity measures are not sufficient in reversing an economic crisis. Economic growth opportunities must also be created and Spain has wisely looked to international business for these opportunities.