Knock Knock Knock, Is Portugal going to stay behind again?

Knock Knock Knock, Is Portugal going to stay behind again?

Reading an article of Prefessor Fernando Alexandre, Professor at School of Economics and Management at Minho university, about the austerity in Portugal, in the online news paper called Eco, I faced a quote that made me thing about Portugal in this new world. Translating into english what he said, in portuguese, one has:
“ We should be discussing other issue. Such as, how to be competitive in a world that lives once again a technological revolution? What to do, to not be left behind? Why is the investment falling since the begining of the XXI century? For what reason the most qualified labor force ever, do not figure out into productivity statistics?”

According to Nuno Palma and Jaime Reis in their last paper, FROM CONVERGENCE TO DIVERGENCE: PORTUGUESE DEMOGRAPHY AND ECONOMIC GROWTH, 1500-1850, Portugal had a long period, almost three and an half century, of both demographic and economic growth. Portugal had one of the highest per capita income in Europe during that period. Unfortunatly, there was a point where the economy of Portugal started to decline, this happened especifically in the modern era of Europe. “Now Portugal is one of the poorest countries in Europe”.

I will not describe here the causes of what happened before. Here, I will try to show what is happing now, and ask if Portugal is going to stay behind again. Some people until today still blame the euro and use the fact of being in the EU to justify the economic problems of Portugal, what, in my point of view,  is not  so realistic when we look to all the picture. In the innovative, fast, competitive and challanger world that we live now, is unrealistic to depend only on the Exchange rate or State Budget (deficits) policies to face the challanges of the country´s economy. We are getting into “Age of the Fourth Industrial revolution, more one Technological revolution”. With countries like China and India, coming over the years with strong development, and with strong presence in all the world market, competition will be higher, and higher along the next times. Only the most produtive countries, those with the sensibility to adapt to or create new games, day after day, will survive to the new world. Making a close look to China, one can see an economy that appeared in the world top economies around the 1990´s, starting from there an exponential growth on GDP (Current US$). 

Now, China is investing across all the world, in the USA, Europe and Africa (Neocolonialism of China in Africa, sarcastically, Donnald Trump has been left behind). Although the Chinese economy has been stagnated, over these last years, its investment is still huge around the world. And, numbers are now pointing to a great growth in China and India´s economy which will lead them to the second and third world´s large economies in 2030, respectively, following the USA which will be the first world large economy. It is true that China has a lower cost of labor comparing with Portugal, so have the eastern EU countries. In the other hand, the Chinese investment on R&D has been growing exponentially since 1996 and reaching almost 350 billion dollar in 2013. 

Note that China´s investment on R&D grows in the same direction with innvestment on education, between 1996 and 2013. As one can see, Portugal being, in the EU(€), has a big challange. The point is to know, how to increase productivity and how to become more competitive. In the last decade, Portugal has been investing a lot in Education, which allows him to have now a very qualified labor force. In spite of that, Portugal still faces the dilema of productivity. The fact is that Portugal did not receive thet real return of its investment in education. So, to have a more productive and competitive economy, Portugal must invest on Research and Development within companies, must invest in colaborations of the centers of knowledge with the companies. I believe that doing that, Portugal will be able to innovate and follow the track. Otherwise, Portugal is going to stay behind, again.

Resumo
Este artigo foi escrito no dia 06/11/2016. Não foi actualizado pela mesma razão dos dois anteriores. A partir do momento em que foi escrito, um radar foi posto (por mim) sobre a questão do crescimento e desenvolvimento da economia Portuguesa.
A ideia principal deste artigo é levar o leitor a pensar se Portugal vai continuar a dormir a beira da praia, assistindo as outras economias tal como a China e a Índia continuando a surfar numa onda que pode tirar partido, a semelhança do que aconteceu na segunda metade do séc., IXX. A verdade é que o mundo hoje está muito mais competitivo e mais agressivo. Muitos debates já tiveram lugar em Portugal, sobre a baixa qualificação da Mão de Obra Portuguesa. Isto reforçava a ideia de que a educação é um factor muito importante para o crescimento e desenvolvimento de uma economia. Portugal investiu bastante na educação durante a última década, porém não o PIB cresceu em média 0%.
O que falhou?

"Eu acredito que se o investimento brutal feito na educação fosse acompanhado de investimento em Investigação e Desenvolvimento, Portugal teria resultados diferentes"  

Príncipe Zanguilo

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Príncipe Zanguilo is a student of economics at University of Minho His interests are Economics, Econometrics, Mathmatics, Languages, Music (Composer, Singer, Beat Maker, Choral Music), and (...)  He will start, from now, publishing in this blog named Aftermath some  opinion reports, about economy and development issues. The reports will be published weekly (every Monday) He will be writing in english, and making an abstract in Portuguese, for every article. He hopes to start making the abstracts also in French and German, as soon as possible. FYI: the first and the second report will be published in Portuguese, with abstracts in english. The only reason is that these reports were written in Portuguese and I avoid a translation to not lose the real sense of the words.    I hope to have your feedback  Príncipe Zanguilo
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