South Africa, November 2008 1 EUSKADI-THE BASQUE COUNTRY A country on the move

1South Africa, November 2008

EUSKADI-THE BASQUE COUNTRY

A country on the move


Vital Statistics Figures

Area 7,234.8 Km2

Population 2,129,338 inhab.

Population density 294.32 inhab./km2

Number of municipalities 250

Official languages Spanish and Basque

Capital Vitoria-Gasteiz

Airports 3

Main ports 2

Technology Parks 4

Doctors (per 1000 inhabitants) 4.9

Number of beds (per 1000 inhabitants)

3.8

Source: EUSTAT.

PHYSICAL, SOCIAL & DEMOGRAPHIC STRUCTURE


STATUTE OF AUTONOMY - LAW 3/1979

The Basque Country has its own Treasury.

It governs, levies and collects all taxes in the Basque Country.

And pays the Spanish State for the services it provides in our country.


HOW STATE POWERS ARE DISTRIBUTED

STATE

Armed Forces

Foreign Affairs

Monetary system

Ports and Airports

Postal system and communications

Foreign trade

Customs & Excise

National rail system

AUTONOMOUS REGION

Tax system

Education and Culture (EITB)

Health (Osakidetza)

Industry & Trade

Transport & Public Works

Police (Ertzaintza)

Housing & the Environment

Agriculture & Tourism

Labour & Insurance

Water

PENDING

Management of the National Insurance Scheme

Vocational Training


GDP per capita market prices 1980-2006 MACROECONOMI C FRAMEWORK: I nstitutions and Economic

I ntegration

3000

8000

13000

18000

23000

28000

Basque C

EU 27

Basque C 3132 3545 3980 4371 4890 5448 6132 6969 7952 9046 9993 10700 11383 11754 12600 13635 14573 15653 17108 18537 20030 20968 21870 23246 25090 26835

EU 27 14600 15400 16200 16900 17800 19000 19700 20400 20700 21600 22400

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

1986 Integration into the European Economic Comunity

1980 New Institutional Framework Statute of Autonomy 1992-1993 Deep Recession:

65,000 jobs lost

1980-85 Industrial restructuring

2002. The euro

1994 Second phase of Monetary Union

1998: Set up of ECB and definitive rates of exchange

1996-2006 Creation of 270,000 new jobs (38% increase)

1982-1986 Sharp I ncrease of Public Spending and public policies

Source: Eustat, Eurostat and ow n

1989-91 Strong apreciation of the exchange rate(peseta)

Convergence in GDP per capita at market prices

THE FIRST ECONOMIC TRANSFORMATION, MACROECONOMIC

CONTEXT


THE FIRST ECONOMIC TRANSFORMATION, MAIN INDICATORS

1986 2000 2007

1. GDP per capita (current prices) 6,132 20,300 30,967

2. GDP ppp (EU15 =100) 90 119.6 140.6

3. Unemployment 21.0 13.7 3.3

4. Productivity (EU15= 100) 132 133.9

5. R&D expenditure % GDP 0.4 1.43 1.65

6. Internet access % population 25 47.4

Source: EUSTAT and own


THE BASQUE COUNTRY TODAY

Human Development

RateLife

expectancyEducation

Rate GDP Rate

Iceland 0.968 0.94 0.98 0.99

Norway 0.968 0.91 0.99 1.00

The Basque County 0.964 0.93 0.99 0.97

Australia 0.962 0.93 0,99 0.96

Ireland 0.959 0.89 0.99 0.99

Sweden 0.956 0.93 0.98 0.97

Human Development


THE FIRST ECONOMIC TRANSFORMATION

“The Basque Country is one of the few regions in Europe that has made significant progress in upgrading its traditional industrial base”

Michael E. Porter


The economy in brief

THE BASQUE COUNTRY IN SPAIN (2007)

EUSKADI, A COUNTRY ON THE MOVE

POPULATION 4.74 %

GDP 6.20 %

EXPORTS 10.40 %

IMPORTS 6.70%

PERCENT OF TURNOVER IN THE INDUSTRIAL SECTOR(Activities according to group. % of Spanish total)

- Metallurgy and manufacture of metal products………….. 21.37%- Machinery and mechanical equipment …………………….. 20.10%

- Rubber industry …………………………………………………. 17.50% - Manufacture of transport material

…………………………...10.62%

9.5%(*)

Source: INE and the Ministry of Industry, Trade and Tourism. (*) 2006


DISTRIBUTION OF GDP* (2007)

BASQUE ECONOMIC STRUCTURE

Basque Country

SpainEuropean Union-27

Agriculture & Fishing

0.80 % 2.90 % 1.90 %

Industry 29.40 % 17.50 % 20.20 %

Construction 9.10 % 12.30 % 6.30 %

Services 60.70 % 67.30 % 71.60 %

Gross added value. Current prices. Source: EUSTAT (Annual accounts for 2007) and EUROSTAT


INDUSTRY - In Spain, the Basque Country accounts for:

BASQUE ECONOMIC STRUCTURE

90%

80%

75%

50% 50%

40% 40% 40%

30%

17%

90% special steels

80% machine tools

75% stamp-forging

50% capital goods

50% casting

40% steel

40% electrical householdappliances

40% professional electronics

30% automotive industry

17% aerospace industry


BASQUE ECONOMIC STRUCTURE- INDUSTRY

AUTOMOTIVE INDUSTRY Essentially components manufacturers, with the exception of

Mercedes Benz and Irizar, S. Coop.

284 companies, 44,000 jobs, 16% of the Basque GDP and 28% of the industry’s total state turnover.

Intense internationalisation:

The industry exports 66% of its turnover, mainly to EU countries

Increasing number of production plants aboard

New technological infrastructures:

Automotive Intelligence Centre –currently under construction–

Technology Centre for Competition –opened late 2007-

Foreign investors: DaimlerChrysler, Michelin, GKN, Rheinmetal, Beru, Bridgestone.


BASQUE ECONOMIC STRUCTURE- INDUSTRY

ENERGY “Energy cluster”: made up by energy providers, energy

engineering services and capital goods manufacturers.

Several world leaders in the energy industry have their head offices in the Basque Country, including Iberdrola, the world’s 4th largest electricity provider, and Gamesa, which controls 15% of the world’s wind-power generator market.

Strong international presence, mainly in Latin America, the USA and China (both energy providers and equipment manufacturers).

References: Gamesa 13,000 MW installed in 20 countries; joint venture agreement between Sener and Masdar in the UAE to develop solar concentration plants.

Unique energy projects: the Bahias de Bizkaia Project (cogeneration and regasification plant) and the Petronor refinery coke plant (€810 million investment).


Public bodies

CADEM

Health R&D units

Technology parks

Technology centres

Entrepreneurial

R&D units

BICs

Sectorial R&D centres

UniversitiesCooperative research centres

CIC biomarGUNE CIC biomaGUNE

BASQUE TECHNOLOGY AND INNOVATION NETWORKBASQUE TECHNOLOGY AND INNOVATION NETWORK

82 members82 members


The largest network of Technology Parks in Spain

Encompassing 310 companies

Innovation support system

Network of Technology Parks

BIZKAIA TP

Total surface area: 205 ha

Buildings: 246,000 m2


The University of the Basque Country Science Park is currently being developed

Innovation support system

Network of Technology Parks

ÁLAVA TP



DONOSTIA TP




EXTERNAL TRADE

AN OPEN ECONOMY

Exports and imports 2006, main partners (million €)

1143

466

1838

10736

13793

993

2008

579

8261

9798

0 2000 4000 6000 8000 10000 12000 14000

LA

OPEP

NAFTA

EU-15

OECD

Imports

Exports

Source : Eustat


INTERNATIONALISATION OF BASQUE GROUPS

•61 Basque groups producing overseas: around 230 plants

< 55-1010-20>205Venezuela6India7Morocco8Czech Republic9Poland

11UK12Argentina13Italy15U.S.A.16Germany16France17Portugal22China26Mexico26Brazil

Main countries

Main Countries: Brazil, Mexico and ChinaMain Countries: Brazil, Mexico and China


The challenge of the 2nd Transformation


PROMOTE R&D AND INNOVATION

Innovation strategy: Open innovation- create value, not necessarily things; not only technological innovation but also organisational and marketing innovation•Results orientation: the aim is to transform knowledge into market value•Driven by demand: following the needs of companies

•

Technological strategy:

Transforming traditional industry (increase added value)

Diversification- Development of scientific and technological capabilities for the creation of new sectors


SIZE AND GROUPS FOR COMPETING IN THE GLOBAL ECONOMY

Entrepreneurship• Cultural change and training for nurturing entrepreneurship Better support: BICs:, finance, seed capital Develop a model to foster entrepreneurship Programme for entrepreneurial technological activities with Global Presence

Fostering growth and Size Strengthen financing mechanisms New Capital Development Fund (€400 million) Encourage the creation of new groups and develop existing ones

Internationalisation• Raise companies’ awareness and accompany them in international expansion

Broaden our foreign network of agencies Create Basque Business Platforms in priority countries

Train people and promote cooperation


Five thoughts:

1. We are a small country with one of the highest Human Development Indexes in the world.

2. 2 Self-government, the ability to decide for ourselves, is one of the fundamental keys to wellbeing in the Basque Country.


3. We stand ready to ride the wave of the global economic crisis.

Our philosophy is not to wait, but rather to act and invest.

In order to move forward, we have to meet the crisis “head on”.

4. The Basque Country is an ideal economic platform for foreign firms wishing to access the Spanish and European markets.


5. We are firmly committed to innovation as a lever for ensuring our future and our continued competitiveness on the global market.

As a country, we have set ourselves a strategic objective: “to lead innovation in Europe”.


Two final conclusions:

First conclusion:

Basque companies are seeking to internationalise their activities and branch out into new markets.

We are a reliable and trustworthy partner.

Competing and cooperating forms part of the DNA of Basque companies.


Second conclusion:

As Lehendakari – President of the Basque Country – I can assure you that South Africa constitutes a strategic partner for Basque enterprise.

We are faced with an extraordinary opportunity to collaborate in joint business projects throughout the African continent.


THE BASQUE COUNTRYLocal identity with a global impact

“It is not possible to remain stationary. We can only choose between two possibilities: moving backwards or moving forwards”.

Erich Fromm

Documents

South Africa, November 2008 1 EUSKADI-THE BASQUE COUNTRY A country on the move