Congratulations are in order for Navarre, the first of Spain’s 17 ‘autonomous communities’ to emerge from recession. Navarre’s GDP rose 0.5% in the third quarter of 2009, compared with a decline of 0.3% for Spain.

The turnaround was achieved thanks to various factors. The construction industry, which is bearing the brunt of the recession on a national level, has had less of an impact on the Navarre economy.

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“The government has taken swift and determined steps to stimulate growth through a package of specific measures,” says Alvaro Miranda, the government’s councillor for economy and finance. “For instance, Navarre was the first region to subsidise the purchase of new cars and this brought an increase of 9.6% in sales in the first 10 months of 2009, while sales for Spain were down 24.4% in the same period. No party has ever achieved an absolute majority in regional elections, so we have a tradition of negotiation and through this we were able to achieve a consensus between the government, employers and trade unions.”

 

Sound fundamentals

Going forward, Navarre can count on a range of solid fundamentals to ensure sustainable recovery. The region devotes 1.9% of its GDP to R&D, placing it second in Spain after Madrid. More than 30% of Navarre’s businesses are engaged in technological innovation activities. About 17.5% of the region’s employment is dedicated to R&D and Navarre holds more patents per capita than any other Spanish region.

In terms of a highly qualified workforce, Navarre ranks 19th among the 271 EU regions according to Eurostat figures, and 34th in GDP per capita. Nearly 37% of the adult population has a university degree, well above the 26.3% OECD average. Navarre’s key agribusiness sector represents 3.5% of GDP, similar to Spain’s; however, productivity per worker, at €38,000 ($51,990) per year, is well above the €31,000 national average.

Given the region’s vast extent of farmland and wilderness, it comes as a surprise to many that Navarre is also Spain’s most industrialised region, accounting for 29.6% of GDP and highlighted by the Volkswagen plant that produces more than 200,000 vehicles a year.

“People here take pride in doing a job right,” says Cernin Martínez Yoldi, the government’s director-general for economic policy. “Business people deliver what they promise and on time, and this is something that investors appreciate. This reliability and no-­nonsense business practice are factors that have attracted more than 120 multinationals to our relatively small region.”

One of these is Aranzadi Thomson Reuters, Spain’s leading provider of integrated information-based solutions for legal professionals. The company, which employs 250 people in Pamplona, is the result of Thomson’s takeover of Navarre’s Aranzadi in 1999 and the US company’s subsequent merger with Reuters.

“At the time of the takeover it might have seemed logical to transfer our operations to Madrid,” says CEO Juan Carlos Franquet. “However, there were many good reasons to remain in Navarre. We have quick access to government decision-makers and they are always open to new ideas. Also, the University of Navarre provides us with an abundance of qualified staff. In any case, given the region’s excellent quality of life, bringing in workers from outside is never a problem.”

 

Key incentives

An investor-friendly administration, quality of life and a highly educated population are factors widely considered as key incentives to invest in Navarre. “People coming from outside appreciate the manageable size of Navarre and the high standard of living,” says Yolanda Barcina, mayor of Pamplona and president of the majority Unión del Pueblo Navarro (UPN) party.

Ms Barcina is tipped to become the next president of Navarre when Miguel Sanz steps down after the 2011 regional elections. “Our jobless level is historically high at 10.53%, but it compares quite favourably with the 18.33% national average. We are also fortunate in that the construction industry [represents] only 15% of the economy, while other regions rely on this sector for up to 50% or 60% of their income.”

Renewable energy, which employs 5000 people in the region, is one area in which Navarre can lay claim to being a world leader. This year the region expects to derive 75% of its electricity generation from renewable sources. Navarre already produces 15% of the world’s wind turbines and is home to global renewable energy names such as Gamesa, Acciona and Iberdrola. Cener, Navarre’s National Renewable Energy Centre, specialises in applied research and the development and promotion of renewable energy.

“We have a cutting-edge technological infrastructure and Europe’s most modern laboratories and installations,” says Cener director-­general José Javier Amendáriz. “In some cases, such as the Wind Turbine Test Laboratory, there is no other infrastructure like it in the world.”

The agency houses its unique Wind Turbine Test Laboratory (LEA) on a 30,000-square-metre site outside Pamplona. Cener focuses on three areas: technology generation through R&D, provision of service and technical support, and technical and financial report and viability assessments for clients. “We consider Cener the ideal partner for investing in R&D and innovation given our international scope, in helping local companies to operate abroad and as a laboratory for testing new products,” says Mr Amendáriz.

Navarre is also a leader in medicine and medical research, reflected in CIMA, the Centre for Applied Medical Research of the University of Navarre. One of CIMA’s most recent initiatives is Digna Biotech, set up to carry research through to applications in treatment and diagnosis.

“This biotech company identifies the results of CIMA’s research at an early stage and protects its intellectual property,” says Francisco Errasti Goenaga, CIMA’s director-­general. “It then arranges the pre-clinical studies, clinical trials and documentation process.” The centre is the only one of its kind in Spain to be financed by private investors. “We needed a centre to take our results through to the university hospital,” says Mr Errasti. “We are looking for investors from abroad to participate in research work that brings results.” CIMA is now planning to build a bioengineering and nutrition centre adjacent to CIMA, which will require partners to invest e10m a year over a 10-year period.

 

Areas of expertise

Agribusiness and wine are also vital to the Navarre economy. CNTA is a technology centre located in Tudela, providing services for agribusiness development. “Our objective is to offer the domestic and international food industry a wide range of services in quality, food safety and technological innovation,” says Héctor Barbarin, the centre’s managing director.

Mr Barbarin says that 15 companies have already taken options on space in CNTA’s 120-hectare agribusiness park and that he hopes to bring the number up to 40 in the next 10 years. “This is an ideal location for food companies looking for synergies in a thriving market,” he says. Tudela’s location is an incentive for investors, as the town is 40 minutes from Zaragoza airport, which operates international flights, and it is connected to the high-speed rail line linking Madrid and Barcelona to the Basque Country and Europe.

Juan Franco, the regional government’s director for international development, says Navarre realised some time ago the need to open its economy to foreign investment and support the export sector. “We designed an international plan called Moderna, covering the period 2008-2011,” he says. The plan defines four strategic clusters, the development of a greener economy, the health sector, human capital and quality of life.

“The plan stresses education and attracting high value-added investment among its priorities. Our objective is to place Navarre within the top 20 European regions in GDP per capita. We are approaching our goal and today Navarre tops the European ranking in human development, measured as education and health as a percentage of GDP.”

 

The cost of this report was underwritten by the government of Navarre. Reporting and editing were carried out independently by fDi Magazine.

To read fDi's interview with the president of the regional government of Navarre, click here