The Galician Regional Government and the Galician Federation of Municipalities and Provinces (FEGAMP) signed a collaboration protocol agreement in October 2017 for the creation of the initiative Ayuntamientos Emprendedores (Enterprising Municipalities). In order to join, municipalities must commit to providing companies with the following advantages: more tax incentives, more administrative simplification and easier access to industrial land.  

Positive evolution of the initiative and percentage of adherents

The Enterprising Municipalities initiative has reached 153 adhered municipalities since its launch in the 2018 financial year. This means that almost half of Galician municipalities are part of the initiative, 49% of the total number. 

In fact, since 2018, the number of participants has increased by 35%, from 113 municipalities adhered that year, to 153 registered municipalities as of September 2022. 

When grouping the municipalities into three population brackets: up to 5.000 inhabitants, 5.001 to 20.000 inhabitants and more than 20.000 inhabitants, the highest percentage of adhesion is recorded in the most populated municipalities. 

Specifically, the percentage of adhesion by population bracket was 49% in the smallest towns, 47% in those of the middle bracket and 52% in those with a population of over 20.000.

Source: IGE (Galician Institute of Statistics): Municipal census of inhabitants. Preparation by the authors.

The Doing Business Office manages and promotes the initiative

The promotion and management of this initiative is the responsibility of the Doing Business Office in Galicia, a unit that carries out activities aimed at spreading the word about Enterprising Municipalities to gain new members in the Investment Assistance System (SAI). Specifically, the Oficina Galicia Empresa website provides information on the advantages acquired by participating municipalities and helps with their adhesion to the system.

While the Office manages and promotes, it has also identified a need for taking things one step further and starting a line of work aimed at analysing the economic impact of this initiative in the different territorial areas involved, comparing the results of the participating municipalities with those of the non-participating municipalities.

The objective of the analysis will be to determine the degree of implementation of the initiative in Galicia and to see in what way the adhesion of a municipality can constitute, or not, a comparative advantage for the establishment of a greater number of business initiatives in municipalities.

 Enterprising Municipalities: boosting the establishment of businesses

This analysis has allowed us to glean a very significant piece of data: the growth rate of the number of companies incorporated at the end of 2021 was more intense in the Enterprising Municipalities than in the territories that do not have such status.

A 23.77% year-on-year increase in the rate of incorporation of companies in the Enterprising Municipalities, compared to a 22.40% increase in the rest of the territories. A comparative advantage of 1.37 percentage points.

Source: IGE (Galician Institute of Statistics): BORME (Spanish Trade Registry Official Gazette) annual data. Prepared by the authors.

 Profile of the best-performing Enterprising Municipalities

Based on this positive overall data, if an analysis is disaggregated by population groups and the results are analysed in detail at the municipal level, a profile could be defined for the Enterprising Municipalities that achieve a greater economic impact on the territory. In fact, the best results are concentrated in municipalities with an intermediate population, which have developed business areas or are close to metropolitan areas.

As a result of this analysis, we can conclude that the adhesion to the Enterprising Municipalities initiative provides the municipalities with an added value that can condition the implementation of new business projects, especially in the localities that belong to intermediate population brackets. In any case, the success of this initiative is determined by the existence of strong business areas and logistics infrastructures that facilitate the entry of supplies and the shipment of processed products, a circumstance that is favoured by proximity to metropolitan areas.