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Home > Business Areas > Industry > Sector Overview
 
Sector Overview
 
 
Augusto Mateus Kindly written by
Prof. Augusto Mateus
Portugal's former Minister of Economy
 
     
  The Portuguese Economy and its Paths to Development:
Stability, Corporate Capability, Competitiveness, Innovation and Globalization
 
     
  The goals to be pursued by the policies directed at the Portuguese real economy are, essentially, the creation of jobs and value-added, the fostering of competitiveness and globalization, and the enhancement of national production. 

Laying the groundwork for a modern and competitive economic basis in Portugal by the year 2005 is therefore our major goal. This signifies two things. First, we need to face up courageously to the Portuguese economy's major problems and we need to understand that we have to go ahead with structural readjustment, since a substantial measure of the competitive factors in our economy, in particular the so-called productive sector, is obsolete.

Furthermore, the economies in which we live are economies organized around a rapid response to the market, with quality and low cost. This demands the development of technological capabilities in way of the manufacturing, conception and development of new products and processes, along with innovative forms of organization and management, distribution and marketing, increasingly integrated.

Fostering competitiveness and innovation, in its broadest sense, constitutes one of the key foundations of the Portuguese economy's inevitable structural readjustment process and the creation of new competitive edges. These will need to be sustained and nurtured by a strong corporate capability and drive, adequately skilled in the various management fields, proactively integrating information and communications technologies in different corporate functional areas, and accepting clearly and speedily the logic of competition, in a market that is today globalized, or the logic of cooperation (because there is much to be done, jointly, by the corporate world, and by it and the state, business associations, Portuguese scientific & technological system institutions, universities and professional training centers).

This new approach requires greater and, foremost, better investment, clearly banking on getting more value out of our chain of activities and in the creation of a process making organizations, companies and people skilled.

From the political standpoint, this process requires, on the one hand, a clear and stabilized macroeconomic framework, within which companies, as centers of economic rationality, can adopt adequate strategical behaviour, focusing on the medium and long term economic outcome, and banking on everything that, within a context of instability, they could not bank on because to do so would be irrational from an economic point of view. In other words, on scientific and technological innovation and development, nurturing the organizational, productive and management structure with new information and communications technologies, making them more flexible. While at the same time they focus on that which are their "core competences and business", officially certifying their quality control systems, developing significant training initiatives for human resources, promoting brand image, and in the effective control of commercial and distribution channels.

It is important to highlight, in this respect, that opting for integration into the initial, restricted, nucleus of countries that will embody the third phase of Economic and Monetary Union and the single currency is recognized as the most important strategic political choice for the country in the coming years. Becoming part of this nucleus means occupying a central position in the whole European integration process, bolstering the country's capability to defend its interests in this process, ensuring the long-lasting and sustained reduction of interest rates, ridding their manipulation from being dependent upon the need to guarantee foreign exchange stability in light of the Portuguese economy's structural backwardness and lack of competitiveness, avoiding the additional competitive disadvantages associated with foreign exchange instability and with Portugal being considered less attractive as a target for foreign direct structural investment, that could result from an adverse decision in this domain.

The upgrading of the Portuguese economy, on the other hand, hinges on a set of structural reforms, especially on the level of infrastructures underpinning businesses, and on solid and coherent microeconomic policies supporting investment, and on the reform of the rules framing economic activity.

The defense of economic rationality and of corporate development as a decisive basis for fostering competitiveness and the creation of more and better jobs, must nonetheless confer on private investment and the company, with new labor relations and with more efficient and far-reaching strategic forms of management, a central role in Portugal's economic growth and in the construction of new competitive factors, and of ways to enhance work, production and pay. Aside from which, it must also make international specialization viable and more in tune with world trends, underpinned and supplemented strategically by public investment in the development of a vast network of physical, technological, economic, human and social infrastructures.

Formulating economic policy does not, however, mean producing an elaborate set of interventionist measures, but instead it means the patient, systematic and daring construction of a new set of "ground rules", practices, and measures of an official nature that get entrepreneurs to cooperate actively, in line with their interests and capabilities, in the common goal of creating a competitive and economic base in Portugal.

The microeconomic foundations of sectorial policies in fact suggest that, without ambiguities, they recognize the superiority of companies and the market over the state when it comes to orientating investments and in defining business. From this point of view, economic policy is increasingly horizontal, inasmuch as it does not favor sectors but companies that upgrade and submit good projects, irrespective of their nature. The state's more voluntary interventions are restricted either to industrial sectors in crisis, whereby such actions must be only of a transitory character in favoring corporate readjustment, or for emerging industries (eco-industries, information and communications technologies, capital equipment), in which stronger support and action of a strategic nature is necessary. Another cornerstone in the development of the Portuguese economy is the acceleration and rebalancing of its globalization. This must be undertaken, once and for all, as a national imperative in the upcoming years, as the principal "catalyzer" for us to catch up with developed world circles.

Today, the world is undergoing a globalization process. Therefore, a small economy like Portugal's has to understand that in order to increase its standard of living and productivity in a sustained manner, and so that companies may become more solid, it will have to do so by a very much stronger coordination between markets and seriously put its money on globalization.

Bolstering our ability to get established in external markets and internal competitive ones, by both companies and the Portuguese economy going global, constitutes a fundamental task which can be achieved not just by exporting even more in quantity and value to more and better markets, but also by investing in those markets and developing cross-border partnerships. Since it will be through the fostering of globalization strategies that, more broadly, sustained competitive edges will be guaranteed and that Portugal's own role in the world will be enhanced, especially with regard to Portuguese-speaking countries and those with emigrant communities.

 
   
     
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