Factors determining foreign direct investment in the services sector: the case of Spain

Purpose This study aims to investigate the determinants of foreign direct investment (FDI) in Spain’s services sector, which has become the primary destination for inward FDI in advanced economies but remains underexplored in empirical research. It aims to identify how market size, human capital and...

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Detalles Bibliográficos
Autores: Orlando, Giuseppe, Muñoz Guarasa, Marta, Martos Martínez, Clara
Tipo de recurso: artículo
Estado:Versión publicada
Fecha de publicación:2026
País:España
Institución:Universidad de Jaén
Repositorio:RUJA. Repositorio Institucional de la Producción Científica de la Universidad de Jaén
OAI Identifier:oai:ruja.ujaen.es:10953/7555
Acceso en línea:https://doi.org/10.1108/EBR-11-2025-0393
https://hdl.handle.net/10953/7555
Access Level:acceso abierto
Palabra clave:Foreign direct investments
Services
Competitiveness
Human capital
Foreign direct investments, Services, Competitiveness, Human capital, Market size, C23, F21, O52
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spelling Factors determining foreign direct investment in the services sector: the case of SpainOrlando, GiuseppeMuñoz Guarasa, MartaMartos Martínez, ClaraForeign direct investmentsServicesCompetitivenessHuman capitalForeign direct investments, Services, Competitiveness, Human capital, Market size, C23, F21, O52Purpose This study aims to investigate the determinants of foreign direct investment (FDI) in Spain’s services sector, which has become the primary destination for inward FDI in advanced economies but remains underexplored in empirical research. It aims to identify how market size, human capital and trade performance shape investment inflows, offering new evidence on the macroeconomic drivers of FDI in a major European economy. The findings provide insights for policies aimed at attracting high-value, knowledge-intensive service investments and enhancing Spain’s competitiveness within the global services landscape. Design/methodology/approach The analysis uses a new quarterly data set (1996–2023) combining firm-level FDI declarations with macroeconomic indicators. A ridge-regularized log–log regression framework estimates long-run elasticities while addressing multicollinearity and overfitting. The penalty parameter is selected via tenfold cross-validation and verified through rolling time-series validation. Robustness is assessed using ordinary least squares, least absolute shrinkage and selection operator and Elastic-Net estimators. Diagnostic tests confirm model stability and strong predictive performance, allowing consistent interpretation of the key macroeconomic relationships driving service-sector FDI in Spain. Findings Results show that market size is the strongest positive determinant of FDI inflows, followed by human capital and service exports, while imports have a negative effect. Lagged FDI indicates persistence and path dependence in investment flows. These relationships remain stable across alternative regularization techniques, confirming robustness. The findings highlight that domestic demand, skilled labor and external competitiveness attract foreign investors, whereas import dependence may signal competitiveness weaknesses. Overall, the evidence underscores Spain’s potential to strengthen its role as a destination for high-value, knowledge-intensive FDI in services. Originality/value This paper provides one of the first comprehensive macroeconomic studies of FDI in Spain’s services sector using a long quarterly data set and a regularized econometric approach. It integrates multiple theoretical perspectives – market-seeking, efficiency-seeking and human-capital-based investment theories – into a unified empirical framework. By focusing on services rather than manufacturing, it fills a major gap in the Spanish FDI literature. The methodological design offers a replicable approach for analyzing service-sector FDI in other advanced economies and contributes actionable insights for policies promoting sustainable, innovation-driven investment.Emerald202620262026info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionapplication/pdfhttps://doi.org/10.1108/EBR-11-2025-0393https://hdl.handle.net/10953/7555reponame:RUJA. Repositorio Institucional de la Producción Científica de la Universidad de Jaéninstname:Universidad de JaénInglésEuropean Business Review (2026)info:eu-repo/semantics/openAccessoai:ruja.ujaen.es:10953/75552026-06-24T12:41:07Z
dc.title.none.fl_str_mv Factors determining foreign direct investment in the services sector: the case of Spain
title Factors determining foreign direct investment in the services sector: the case of Spain
spellingShingle Factors determining foreign direct investment in the services sector: the case of Spain
Orlando, Giuseppe
Foreign direct investments
Services
Competitiveness
Human capital
Foreign direct investments, Services, Competitiveness, Human capital, Market size, C23, F21, O52
title_short Factors determining foreign direct investment in the services sector: the case of Spain
title_full Factors determining foreign direct investment in the services sector: the case of Spain
title_fullStr Factors determining foreign direct investment in the services sector: the case of Spain
title_full_unstemmed Factors determining foreign direct investment in the services sector: the case of Spain
title_sort Factors determining foreign direct investment in the services sector: the case of Spain
dc.creator.none.fl_str_mv Orlando, Giuseppe
Muñoz Guarasa, Marta
Martos Martínez, Clara
author Orlando, Giuseppe
author_facet Orlando, Giuseppe
Muñoz Guarasa, Marta
Martos Martínez, Clara
author_role author
author2 Muñoz Guarasa, Marta
Martos Martínez, Clara
author2_role author
author
dc.subject.none.fl_str_mv Foreign direct investments
Services
Competitiveness
Human capital
Foreign direct investments, Services, Competitiveness, Human capital, Market size, C23, F21, O52
topic Foreign direct investments
Services
Competitiveness
Human capital
Foreign direct investments, Services, Competitiveness, Human capital, Market size, C23, F21, O52
description Purpose This study aims to investigate the determinants of foreign direct investment (FDI) in Spain’s services sector, which has become the primary destination for inward FDI in advanced economies but remains underexplored in empirical research. It aims to identify how market size, human capital and trade performance shape investment inflows, offering new evidence on the macroeconomic drivers of FDI in a major European economy. The findings provide insights for policies aimed at attracting high-value, knowledge-intensive service investments and enhancing Spain’s competitiveness within the global services landscape. Design/methodology/approach The analysis uses a new quarterly data set (1996–2023) combining firm-level FDI declarations with macroeconomic indicators. A ridge-regularized log–log regression framework estimates long-run elasticities while addressing multicollinearity and overfitting. The penalty parameter is selected via tenfold cross-validation and verified through rolling time-series validation. Robustness is assessed using ordinary least squares, least absolute shrinkage and selection operator and Elastic-Net estimators. Diagnostic tests confirm model stability and strong predictive performance, allowing consistent interpretation of the key macroeconomic relationships driving service-sector FDI in Spain. Findings Results show that market size is the strongest positive determinant of FDI inflows, followed by human capital and service exports, while imports have a negative effect. Lagged FDI indicates persistence and path dependence in investment flows. These relationships remain stable across alternative regularization techniques, confirming robustness. The findings highlight that domestic demand, skilled labor and external competitiveness attract foreign investors, whereas import dependence may signal competitiveness weaknesses. Overall, the evidence underscores Spain’s potential to strengthen its role as a destination for high-value, knowledge-intensive FDI in services. Originality/value This paper provides one of the first comprehensive macroeconomic studies of FDI in Spain’s services sector using a long quarterly data set and a regularized econometric approach. It integrates multiple theoretical perspectives – market-seeking, efficiency-seeking and human-capital-based investment theories – into a unified empirical framework. By focusing on services rather than manufacturing, it fills a major gap in the Spanish FDI literature. The methodological design offers a replicable approach for analyzing service-sector FDI in other advanced economies and contributes actionable insights for policies promoting sustainable, innovation-driven investment.
publishDate 2026
dc.date.none.fl_str_mv 2026
2026
2026
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv https://doi.org/10.1108/EBR-11-2025-0393
https://hdl.handle.net/10953/7555
url https://doi.org/10.1108/EBR-11-2025-0393
https://hdl.handle.net/10953/7555
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv European Business Review (2026)
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Emerald
publisher.none.fl_str_mv Emerald
dc.source.none.fl_str_mv reponame:RUJA. Repositorio Institucional de la Producción Científica de la Universidad de Jaén
instname:Universidad de Jaén
instname_str Universidad de Jaén
reponame_str RUJA. Repositorio Institucional de la Producción Científica de la Universidad de Jaén
collection RUJA. Repositorio Institucional de la Producción Científica de la Universidad de Jaén
repository.name.fl_str_mv
repository.mail.fl_str_mv
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