The role of foreign direct investment in an old industrial region: The case of the Basque country and Japanese FDI

Foreign direct investment (FDI) has been used as a tool to improve the competitiveness of countries or regions affected by a structural crisis focused in the industrial sector. Spain, in general, has implemented this strategy successfully. However, the inflows of FDI in Spain have been concentrated in the most dynamic regions: Madrid and Catalonia especially. The Basque Country, typified as a declining old industrial region, has not benefited from this inflow owing to its low attraction for foreign investors. Furthermore, the sectors in which FDI is located are mature ones. The result is that FDI in Spain is increasing the gap between the growing and the declining regions. This fact is clearly detected when the case of Japanese FDI is analysed: Japanese FDI in the Basque Country is scarce and marginal when compared with that directed to the regions of Madrid and Catalonia.