A generous programme of grants and incentives, a unique taxation system and leadership in innovation and education are the ingredients that enabled the Spanish region of Navarre to more than double its inflow of foreign investment last year.

Navarre is one of the most advanced of the 17 autonomous communities that comprise the Spanish nation. Its GDP grew by 2% in 2014 compared with 1.4% for the whole of Spain, while per capita GDP stood at €28,358, nearly €6000 above the national average. Unemployment – at 14.92% – is the lowest of any Spanish region, while 6000 of Navarre's available workforce are university graduates.

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On the rise

Foreign investment rose to €28.5m in Navarre in 2014, after it had pulled in €11.1m in 2013, according to government figures. José María Montes, director for investment at Navarre business development agency Sodena, says a significant portion of new foreign investment was in the paper industry. Irish paper packaging supplier Smurfit invested €27m in new machinery to boost production at its plant in Sangüesa, and now exports 51% of its output, Luxembourg-domiciled Lecta spent €34m in a move to boost its exports, and Sweden’s SCA shifted a significant part of its production facilities from Barcelona and Seville to Navarre, which represented an outlay of €71m.

Mr Montes cites Navarre’s special tax regime as one of the factors attracting investors to the region. “We set our own corporate tax rates and offer fiscal incentives for investment in R&D, as a result of which on a per capita basis Navarre is Spain’s leading region in this area,” he says. Corporate tax is currently set at 25% for large companies, compared with 28% for the rest of Spain. More than 120 companies with foreign participation now operate in Navarre, a region with less than 2% of Spain’s population and area. 

The automotive sector, biomedicine, renewable energy and agribusiness are the main areas in which the Navarre government sees investment potential. “Cinfa outside Pamplona [Navarre's historic capital] is Spain’s leading generic medicine laboratory,” said Mr Montes. “CNTA, located less than an hour south of Pamplona, is the top food technology and standards institute [in Spain], while we also have the country’s most advanced alternative energy centre. This ties in closely with Pamplona’s three outstanding universities, which offer 94 different degrees.” With regards to the numbers of qualified personnel in science and technology, Navarre is now the leading region in Spain and 19th in Europe.

Innovative thinking

This year, Ikea launched a new form of sales service in Spain as part of its plan to introduce a fully fledged internet store in the next two to three years. The heart of the system is a pick-up point located just outside of Pamplona. The company’s sustainability director, Arturo García, says that this initiative allows Ikea “to reach a greater number of people without renouncing the development of our main channel, the Ikea story as we know it”.

Spain's star investment in 2015 will come from Volkswagen, which has announced a €4.2bn outlay on its Spanish assembly plants over the next four years. The German automaker’s Pamplona plant, which employs 4565 workers and exports to Germany, Italy, France and the UK, is expected to receive €800m of the total outlay.

“Investors appreciate the accessibility of [Navarre's] government officials,” says Mr Montes. “If someone requests a quick meeting with the president of the regional government, we can usually organise it for the following morning.”