Growth in the ‘Cohesion Countries’: the Irish tortoise and the Portuguese hare, 1979-2002

The deepening of economic and financial integration in the European Union has led to different responses from the group of ‘cohesion’ countries. Ireland and Portugal stand out as the two extreme examples, as Ireland caught-up to the forerunners very rapidly after the launching of EMU, in 1992, whereas Portugal lost ground. This paper looks at structural shifts in order to explain the different performances of the two economies. We conclude that Portugal’s labour productivity lag was the outcome of a less favourable structure of employment; that differences in the structure of employment are not clustered in specific industries; and that such structural differences are associated with different factor endowments, namely physical and human capital.Economic growth; structural change; European integration; Ireland; Portugal.

Portugal's Growth Paradox, 1870-1950

From 1870 to 1913, the Portuguese economy expanded slowly and diverged from the European core. Contrarily, in the interwar period, Portugal achieved higher growth and partially caught-up to the levels of productivity of Western Europe. Higher growth in Portugal after World War I occurred in a framework of protection, increasing state intervention, and capital deepening. Agriculture responded more positively than manufacturing, revealing important changes in its structure which favored output with higher levels of factor productivity. Portugal’s pattern of growth across 1870-1950 was not unique within the European periphery, but it contrasted with Latin America’s experience.economic growth, European periphery, state intervention, protectionism.

The power of peripheral governments : coping with the 1891 financial crisis in Portugal

In 1891 a financial crisis led Portugal to abandon the gold standard and to partially default by cutting interest payments on domestic and foreign debt. As a consequence, the country was banned from borrowing in international financial markets, until an agreement with foreign bondholders was reached in 1902. That financial crisis was the result of large current account and government deficits. Yet the abandonment of the gold standard and default were not imposed by financial difficulties only. This paper shows that such options were taken because of the growing domestic consensus regarding the need for a change in monetary policies. The concern about the domestic economy was more important to the Portuguese governments than the fear of a negative reaction of foreign bondholders. Insufficient information about the sustainability of government debt and lack of cooperation between borrowers left the Portuguese governments with space to manoeuvre according to their domestic political interest

The power of peripheral governments : coping with the 1891 financial crisis in Portugal.

In 1891 a financial crisis led Portugal to abandon the gold standard and to partially default by cutting interest payments on domestic and foreign debt. As a consequence, the country was banned from borrowing in international financial markets, until an agreement with foreign bondholders was reached in 1902. That financial crisis was the result of large current account and government deficits. Yet the abandonment of the gold standard and default were not imposed by financial difficulties only. This paper shows that such options were taken because of the growing domestic consensus regarding the need for a change in monetary policies. The concern about the domestic economy was more important to the Portuguese governments than the fear of a negative reaction of foreign bondholders. Insufficient information about the sustainability of government debt and lack of cooperation between borrowers left the Portuguese governments with space to manoeuvre according to their domestic political interests

Regional Incomes in Portugal: Industrialisation, Integration and Inequality, 1890-1980

The analysis of the evolution of the location of economic activity in Portugal between 1890 and 1980 depicts a strong concentration of productive activity in the coastal regions. We estimate data for regional GDP per capita, which show that the evolution of regional inequality followed an inverted U-curve, in line with that observed in other regions of Europe, but with a rather late peak, in 1970. The reasons for this behaviour may be found in the limits to industrialisation in the interior regions and the benefits generated by the agglomeration economies in the more developed coastal regions

Paying for the liberal state : the rise of public finance in nineteenth century Europe

Public finance is a major feature of the development of modern European societies, and it is at the heart of the definition of the nature of political regimes. Public finance is also a most relevant issue in the understanding of the constraints and possibilities of economic development. This paper is about the rise and development of taxation systems, expenditure programs, and dept regimes in Europe from the early nineteenth century to the beginning of World War I. Its main purpose is to describe and explain the process by which financial resources were raised and managed. We analyse nine countries or empires that are considered highly representative of the widest European experience on the matter and discuss whether there are any common patterns in the way the different European states responded to the need for raising additional resources to pay for the new tasks they were performin

Paying for the liberal state : the rise of public finance in nineteenth century Europe.

Public finance is a major feature of the development of modern European societies, and it is at the heart of the definition of the nature of political regimes. Public finance is also a most relevant issue in the understanding of the constraints and possibilities of economic development. This paper is about the rise and development of taxation systems, expenditure programs, and dept regimes in Europe from the early nineteenth century to the beginning of World War I. Its main purpose is to describe and explain the process by which financial resources were raised and managed. We analyse nine countries or empires that are considered highly representative of the widest European experience on the matter and discuss whether there are any common patterns in the way the different European states responded to the need for raising additional resources to pay for the new tasks they were performingNineteenth Century Europe; Governments; Public finances; Taxation;

From an agrarian society to a knowledge economy: Portugal, 1950-2010

This paper surveys the main features of Portuguese economic growth in the last half century, with a particular emphasis on the period after the return to democracy in 1974. It shows that significant structural change and capital deepening were the chief sources of growth in the Portuguese economy until the mid 1970s. From then onwards, human capital accumulation and productivity growth were the main reasons behind Portugal’s economic fortunes. Growth declined between these two phases, as in the rest of Europe. In Portugal, it slowed further after 1990. After surveying the main causes of the slowdown of the Portuguese economy in the last decade, Portugal’s main human capital indicators are compared to other European and OECD economies. While Portugal has made a remarkable transition from an agrarian society to an industry- and service-based economy, the country still has not been able to successfully move on to a knowledge-based economy. Such a transition, however, is instrumental to spur economic growth on and to improve productivity.Economic policies, Economic growth, Human Capital, Portugal

Agriculture and Economic Development on the European Frontier : Portugal, 1000-2000

This chapter follows the steps of renovation of European economic history towards a more unified interpretation of sources of growth and stagnation. To better understand the diversity of patterns of growth, we need to look beyond the study of the industrialization of the core economies, and explore the centuries before it occurred. Portuguese agriculture was hardly ever at the European productivity and technological forefront and the distance from it varied substantially across the second Millennium. Yet if we look at the periods of the Christian Reconquista, the recovery from the Black Death, the response to the globalization of the Renaissance, to the eighteenth century economic enlightenment, or to nineteenth century industrialization, we may conclude that agriculture in this country of the European periphery was often adaptive and dynamic. The fact that economic backwardness was not overcome by the end of the period is no longer the most relevant aspect of that story. Long-term agricultural transformation in Portugal replicate to a large extent what occurred elsewhere in Western Europe, as far as our knowledge of both developments through such a long time span can tell, both in terms of timing and intensity, albeit at a distance. European agrarian transformation was not too different on the southwestern frontier