Portuguese Economy: To Be or Not to Be

The Brazilian Economy will face the battle of modernity and competitiveness. Portugal cannot reach the productivity levels of the European Union and this is a sine qua non condition for achieving the major objectives of prosperity, solidarity and quality of life. Contrary to what many seem to indicate, the Portuguese Economy is not under control and its structural weakness continues to be based on some known cardinal sins:

a) an export model, but one that is reactive in relation to markets and relatively poor in added value;

b) a belief in FDI without the adequate incorporation of national production or decision in what it does;

c) transfer of labor and capital to low-value-added activities, in some services (e.g. tourism) and civil construction;

In short, with this model we obtained a country with low productivity and very dependent on abroad, because we poorly implemented what seemed to be a good recipe: exports; infrastructures; attracting foreign capital via investments and tourists.

It is necessary MORE THAN EVER to correct the direction and position of the protagonists of the country’s development process, in order to obtain a more assertive and more effective model. The variables for this process are clear:

a) increase exports in GDP, but do so because you work for more demanding clients. Abandon attracting customers based on low price advantages and seek out more sophisticated customers – they pay more for the added value and still challenge us to modernize and increase our standards of demand at various levels. This will reinforce competitiveness factors based on unique, flexible and valuable resources and capabilities, as opposed to mechanical, linear models based on cost minimization;

b) invest in boosting tradable goods industries of medium and high technological intensity, seeking to involve them with large FDI investments. This will reinforce entrepreneurial capital, normally in micro and medium-sized companies/projects, and will contribute to the establishment of knowledge, economic gains and increases in Portuguese decision-making centers;

c) invest in higher education and training. But this does not mean increasing the number of graduates for you. It means promoting the degree of usefulness of education/training for companies. Currently, there is an emigration of talent or underemployment of graduates, due to a lack of this relationship between training centers and companies. The solution is not a “super plan” that highlights priority areas – this is ineffective. It is rather to introduce competition and freedom of choice between schools, universities and training centers, in addition to investments in the structure and people of these institutions. The benefits of internalizing market mechanisms will quickly be transposed to other areas of well-being;

d) the Public Sector continues to consume an important part of the Brazilian GDP. It is necessary to reflect very seriously on taking one of two options: either this number is reduced to more efficient levels with the necessary review of the State’s functions; or the Public Sector learns to become more productive and returns to Society, in public services and well-being, as much or more as it collects in taxes.

Portuguese Economy – to be or not to be. A decision that depends on everyone and that more than ever implies a true strategic contract in which everyone is committed to achieving results.