Portugal - Economic Development after its Entry into the European Union in 1986

Table of Contents

1 Introduction

2 Short Presentation of the Country
2.1 General Information
2.2 Geography
2.3 Chronology

3 Summary of the Economic Situation under Salazar and the Time before the Entry into the European Union in

4 The Economic Development in Portugal after its Entry into the European Union
4.1 Economic Growth
4.2 Labour and Employment
4.3 Infrastructure

5 Conclusion

A Vocabulary List

B References

1 Introduction

Twenty-eight years ago, at the time of the Portuguese revolution, Portugal was considered the poor man of Europe. The revolution in 1974 was the beginning of dramatic political, economical and social changes in the country. In 1986, when Portugal became a member of the European Community (now European Union), the economy began to grow even faster than it had been the case in the years before. “Portugal´s GDP per capita, which had been only 53 percent of the EU average in 1985, has now risen to more than 70% of the EU average by 1997.”¹

As I was living in Portugal´s capital Lisbon from 1984 until 1989, I personally experienced these great changes. I can remember that, e.g., chocolate was not known in Portugal until 1986. I also remember narrow roads which were in an extremely bad condition. Tramways and busses made me feel like in the 19th century. Furthermore, there were a lot of huts, particularly in the northern and in the eastern Lisbon periphery which I passed every morning on my way to school. These huts, in which mostly people from the former Portuguese colonies were living, disappeared between 1986 and 1990.

Also the infrastructure was getting better and better. Many new roads and motorways were built, the tramway- and underground-system was modernised, big shopping-malls were built and you could suddenly buy almost everything (Haribo-Gummibärchen were sold in Portugal in 1986 for the first time and I guess I was the only one who bought them…)

Beside these positive changes I also recognised, that people have changed their behaviour since the 1980´s. When I arrived to Portugal with my family in 1984 the Portuguese seemed to be friendlier than any people I had met before and time did not seem to be important to them at all. People were just living somehow, many of them were happy, some were not but nobody really complained about the fact that Portugal was the poorest country in the western part of the European continent. Of course, the Portuguese are still very friendly, but in my opinion the difference between the busy and hectic Central Europeans and the Portuguese has become smaller. It is also quiet obvious that today the Portuguese do everything they can to improve the economic situation and the standard of living. Portugal wants to catch up. It already has caught up enormously in the past 15 years and I am sure that this positive development will continue in the future.

2 Short Presentation of the Country

It does not happen very often that there is a report about Portugal in the news. What is actually going on in that small country at the western end of the European continent? We know, that Portugal is a wonderful place for holidays. Many people have already been to the Algarve –the coastal region in the South of the country. The region north of the Algarve, the Alentejo, is hardly known by tourists, although it has a lot to offer. And the northernmost regions, Trás-os-Montes and Minho, which are probably the most beautiful parts of the country, seem to be “terra incognita” to almost everybody!

Also the situation of the domestic economy or its development over the past few years, are a mystery to most of us. This chapter is therefore dedicated to the geography and the history of Portugal, after some general information is provided, whilst the following chapters deal with economic figures and the economic development of the country.

2.1 General Information

Official name: República Portuguesa (Portuguese Republic)²

Area: 91,982 km2; (92,270 km2 incl. Madeira and Azores);

560 km (North-South), 215 km max. (West-East)

Land boundaries: 1,214 km (Spain: 1,214 km)

Coastline: 1,793 km

Capital: Lisboa (Lisbon)

Official language: Portuguese

Religions: Roman Catholic (94.8%); Muslims (0.1%); Others (5.1%)

Population: 10,048,232 (July 2000 est.)

Population growth-rate: 0.1% (2000 est.)

Life expectancy at birth: 76 years (male: 72 years; female: 79 years)

Climate: Mediterranean climate; cool and rainy in the North,

warmer and drier in the South

Political Structure:

Portugal is structured in 18 “Distritos” and

2 “Regioẽs Autónomas” for administration purposes:

Continente (Continent) /”Distritos”:

NORTE (North): CENTRO (Centre):

Bragança Coimbra

Guarda Leiria

Vila Real Castelo Branco

Viseu Santarém

Aveiro Lisboa

Braga

Porto SUL (South):

Viana do Castelo Portalegre

Évora

Ilhas (Islands) / Setúbal

“Regioẽs Autónomas”: Beja

Faro

Açores + Madeira

2.2 Geography

For the economic development of a country its nature is of great importance. For that reason, before discussing the economy, the geography of Portugal should shortly be described.

Portugal is situated in the south-west of the Iberian Peninsula. “Cape Roca” (“Cabo da Roca”) north-west of Lisbon, is the westernmost point of the continent.

With nearly 92,000 km2 , Portugal´s surface is less than a fifth of the one of its neighbour Spain.

Portugal has approximately 10,000,000 inhabitants whilst Spain has not much more than 39,000,000.3

Portugal can geographically be divided into two very different parts: In a low or hilly and dry South and a North with mountains and often heavy rainfalls. The South has always been the land of the big landowners and of the cork oaks.

But the South is also known for its wheat. In the

North, in contrast, the farmers usually only own

a very small piece of land and due to this fact, a

modern agricultural cultivation is almost

impossible.

Because of the dryness and the structure of property, the South is less densely populated than the North of the country. Also the Portuguese coastal areas can be subdivided into a cooler, often stormy west-coast (with, e.g., north-winds in July) and a warmer south-coast (Algarve), which can be compared with coastal-regions of the Mediterranean Sea. The south-coast is therefore much more interesting for the international tourist-industry.

The economical and industrial areas of Portugal are the agglomerations of the two coastal cities of Lisbon and Porto (20% of the population lives in Greater Lisbon).

Already in the year 1300, Portugal existed in the same territorial form as today, thus Portugal is the oldest country in Europe. The country came into being, when the Iberian Peninsula was conquered by Christian knights. Henry of Burgundy, who later became duke of North-Portugal, had separated himself very early from the Spanish kingdom of León. In many battles against the Arabs and the Spanish, Henry of Burgundy had created the country in the borders of today until 1300. Spain remained the unloved neighbour for a long time. For that reason, Portugal economically orientated itself towards the sea. The trade with Great-Britain and the former Portuguese colonies played a very important role. Europe was “further away” from Portugal than, e.g., Angola or Mozambique.

When Portugal finally gave up its colonies in 1975 and particularly after the entry into the European Union, Portugal had to change its orientation. This new orientation towards the European neighbours surely especially affected the economy of the country.

[...]

¹Department of State, United States of America, Portugal 2000: Country Commercial Guide, http://www.state.gov/www/about_state/business/com_guides/2000/europe/portugal00_02.html, 27/06/02

²Portugal, http://www.erdkunde-online.de/1315.htm, 10/06/2002 3

Map: Portugal, http://www.erdkunde-online.de/1315.htm, 10/06/2002