The Community of Madrid, located in the geographical centre of the Iberian Peninsula, has become the most important business and service site in southern Europe. The region has undergone significant modernisation and improvements during the past few years, enhancing the excellent opportunities for business expansion and partnerships.

Accounting for only 1.6% of Spain’s territory and 13.7% of its population, Madrid produces 17.5% of GDP. Its consistent economic growth (an average of 3.9% in the past 10 years) and per capita income are well above Spanish and EU ratios, and this gap is expected to increase in the future.

Advertisement

The region attracts a large percentage (67%) of FDI inflows for Spain and is considered one of Europe’s top cities for business location. There are many factors and reasons supporting such strong confidence from abroad.

Market size

With 5.8 million inhabitants, the region is Spain’s leading consumer centre. Due to its strategic location, Madrid has also become the key economic centre in the Iberian market and Europe’s main link with South America and northern Africa. Hence, it provides direct access to 55 million customers in the peninsula and the best physical and cultural connections with another 560 million people in Latin America and the Magreb.

As the capital of Spain, Madrid is home to almost all administrative offices for the country, and is the preferred location for most large Spanish companies and almost all multinationals’ operating in Spain. It is also the country’s financial and stock market centre.

Transport infrastructure

Transport quality in the region is ensured by a toll-free network of peripheral highways and railways. Madrid also has the advantage of a national road and rail system that reaches out from the city in all directions, making the whole peninsula accessible in less than a day.

Strong efforts have been made in the past few years to build up the Coslada Logistics Centre, the largest of its kind in Europe, near Barajas airport. It includes a dry port that connects Madrid by rail to Spain’s four main harbours (Barcelona, Bilbao, Valencia and Algeciras), which process more than 140 million tons of goods a year. This system favours intermodality with most consignments made at price-of-return, diminishing considerably the price per kilometre.

Barajas, which 36 million passengers went through in 2003, is the main international airport in the peninsula and the fifth largest in Europe. It is being enlarged to make it one of the main European hubs – a strategic link between Latin America and Europe, with 25% of flights between the two continents departing from Madrid. The enlargement will double the airport’s capacity for 2007.

Workforce

Madrid offers a highly qualified, committed and adaptable workforce at significantly lower costs than the rest of western and northern Europe. And the workforce is very young: nearly 70% of the working population is under 45 years old.

The region’s active population is constantly growing, mainly due to domestic and international migration, and is currently 2.6 million. A high percentage (30%) has been educated to degree level. The unemployment rate has decreased to 6.2% (at September 2004), the lowest in Spain, and is expected to follow this downward trend for at least the next two years. The region has been classified as the European region with the best job creation and economic growth prospects (European Chambers of Commerce Survey, 2004).

Economics and politics

Madrid offers a stable environment and has produced higher economic growth than the country’s average for many years. Its income per capita ratio (128%) is the highest in Spain and well above the EU-25 average (100%).

Rating agencies Standard & Poor’s and Fitch have provided Madrid with some of its best ratings both in the short term (A-1+ and F1+) and long term (AA and AA), with stable outlooks. These ratings reflect a consistent social and economic profile that is driven by a rich and well-diversified economy, dominated by the services industry and backed up with a solid industrial base.

Research and development

Madrid accounts for 31% of Spain’s annual R&D costs (2002), almost doubling the national average in relation to GDP. The total amount has grown by 89% since 1995 and almost half of the expenditure comes from the private sector. The region is geared towards cutting-edge technological services.

The Community of Madrid is Spain’s undisputed centre for high technology. It is home to the most innovative sectors, such as aeronautics, pharmaceuticals, precision instruments and, importantly, a broad and diversified telecommunications network. It accounts for nearly 30% of all Spain’s component production and 31% of domestic scientific production. The growth of the hi-tech sector has included the creation of four new scientific and technological parks, where services and amenities are available.

Among other features, Madrid is a university town with seven public universities and eight private ones, with 250,000 students a year. Collaboration between education centres and private entities is highly encouraged, producing significant results.

Quality of life

Madrid is the fifth city in Europe in terms of quality of life for employees (European Cities Monitor 2004). In addition to the highest per capita income in Spain, the region offers a first-class education system in several languages and among the best working and living conditions, with a welfare index 24% above the national average. The region’s residents benefit from an extensive social security coverage supported by a universal and comprehensive health care system.

Madrid also offers a broad range of cultural and leisure activities. This includes access to a wide variety of sports (ranging from skiing to golf), and museums, theatres, operas, concerts and theme parks expand the region’s attractiveness to people of all ages. An extensive range of bars, restaurants and cafes are open day and night. And Madrid’s pleasant climate makes it easy to enjoy all these possibilities

Local support

Analysts rank Madrid as the second city in Europe in terms of improvement efforts. That partly explains why more than five million people visit the area annually (70% for professional reasons) and Madrid remains the top national conference destination. A strict policy of constant improvement has made the region the top destination in southern Europe for foreign companies considering expanding or setting up operations in the area.

The government offers a full range of incentives, whose dual purpose is to fulfil the expectations of investors and to promote economic development. PromoMadrid was recently established as the one-step official information source and consulting bureau for all companies considering investing or expanding activities in Madrid, offering free and confidential services.

 

KEY DATA, 2003

GDP: €129,702m

GDP growth: 3.4%

GDP per capita: €24,392

GDP by sector agriculture 0.2%

industry 23.7%

services 76.2%

Population: 5.8 million

Inflation: 2.6%

Unemployment: 6.2% (as at 09/04)

R&D: 1.9% of GDP

Source: PromoMadrid