Root Causes of Portugal's Underdevelopment
Portugal, a nation with a long and rich history, has faced significant challenges in achieving the same level of economic development as its Western European counterparts. Despite its early achievements during the Age of Discoveries, the country has struggled with underdevelopment and periods of stagnation. This article briefly explores the various causes of Portugal's underdevelopment, focusing on historical, political, economic, and social factors that have contributed to these challenges, including the recent impact of mass immigration.
Historical Legacy and the Decline of the Portuguese Empire
One of the primary causes of Portugal's underdevelopment can be traced back to the decline of its once-powerful empire. In the 15th and 16th centuries, Portugal was a leading global power, pioneering maritime exploration and establishing trade routes across Africa, Asia, and South America. However, the wealth generated from these endeavors was not reinvested into the country's domestic economy in a sustainable manner.
As the empire expanded, Portugal became increasingly reliant on its colonies for wealth, neglecting its domestic industries and infrastructure. This dependency created a fragile economic structure that began to crumble in the 17th and 18th centuries as other European powers, particularly Britain and the Netherlands, emerged as dominant global players. The loss of key colonies, such as Brazil in 1822, further weakened Portugal's economic base. The resulting economic decline, compounded by a backward and corrupt elite and a compromised judiciary, left Portugal with a weakened industrial sector and a lack of diversification, contributing to long-term underdevelopment.
Political Instability and the Estado Novo Regime
Political instability has been another significant factor in Portugal's underdevelopment. Throughout the 19th and 20th centuries, Portugal experienced numerous political upheavals, including the Liberal Wars, the republican revolution of 1910, and subsequent short-lived governments. This instability hindered consistent economic planning and development. The country's tragic participation in World War I also had bitter and enduring consequences.
The establishment of the Estado Novo regime under António de Oliveira Salazar in 1933 marked a period of authoritarian rule that lasted until the Carnation Revolution in 1974. While the Estado Novo brought some stability and economic progress, the regime was characterized by a conservative, isolationist approach that prioritized maintaining traditional social structures over modernization. Salazar's policies, including strict economic control, led to a shy socio-economic progress. Although government accounts improved and public investments in infrastructure were significant, these efforts did little to address the underlying issues.
Moreover, the Estado Novo's colonial policies, particularly the prolonged wars in Africa (Angola, Mozambique, and Guinea-Bissau), drained the country's resources and further isolated Portugal from the rapidly modernizing economies of Western Europe. The regime's reluctance to decolonize and its eventual military defeat in the colonies contributed to economic strain and social unrest, setting the stage for the revolution that would end the Estado Novo regime.
Economic Isolation and Late Integration into the European Economy
Portugal's economic isolation during the Estado Novo period meant that it missed out on the post-World War II economic boom that transformed much of Western Europe. While countries like Germany, France, and Italy were rebuilding and modernizing their economies with the help of the Marshall Plan and through European integration, Portugal remained largely disconnected from these developments.
Portugal's late integration into the European economy is another critical factor in its underdevelopment. It was not until 1986 that Portugal joined the European Economic Community (EEC), now the European Union (EU). By this time, much of Western Europe had already experienced significant economic growth, leaving Portugal at a competitive disadvantage. Although EU membership has brought substantial benefits, including access to structural funds and increased trade opportunities, the country has struggled to fully catch up with its more developed neighbors. Despite receiving over 100 billion euros in EU subsidies and structural funds, Portugal failed to implement necessary reforms and now lags behind traditionally poorer countries like Poland, Romania, and Albania, which have successfully overcome severe communist dictatorships.
Structural Economic Issues and Lack of Diversification
Portugal's economic structure has historically been characterized by a lack of diversification, which has hindered its ability to develop a robust and resilient economy. For much of its history, Portugal relied heavily on agriculture, particularly the production of wine, cork, and olive oil. The industrial sector, when it did develop, was concentrated in a few key areas such as textiles and shipbuilding, making it vulnerable to international competition and economic downturns. The Carnation Revolution of 1974 further exacerbated industrial decline as many industrialists fled the country.
The transition to a more service-oriented economy in the late 20th century did not fully address these structural weaknesses. While tourism, services, and light technology have become important sectors, the economy remains small and reliant on external factors, such as EU subsidies. The lack of a diversified industrial base, sustainable agriculture, and fisheries has made Portugal more susceptible to economic shocks and less capable of generating sustained economic growth.
Education, Human Capital, and Immigration
A significant factor contributing to Portugal's underdevelopment is the historical underinvestment in education and human capital. For much of the 20th century, Portugal had one of the lowest literacy rates in Western Europe, a legacy of the First Republic that the Estado Novo regime did not fully reverse. This lack of investment in human capital has had long-term consequences for the country's economic development.
In recent decades, Portugal has also faced challenges related to emigration and immigration. The country has experienced an influx of immigrants from former colonies and other parts of the developing world. While immigration can bring economic benefits, such as filling labor shortages and contributing to demographic growth, it has also presented challenges in the context of Portugal's underdevelopment.
The mass import of largely unskilled and often illiterate immigrants has placed additional strain on Portugal's already fragile education and social systems. Many of these immigrants have found themselves in low-paying, precarious jobs, contributing to the persistence of poverty and social inequality. The lack of effective integration policies has compounded these issues, leading to social fragmentation and making it more difficult for the country to develop a highly skilled workforce that can compete in the global economy.
Meanwhile, highly educated Portuguese natives have been forced to emigrate due to the lack of well-paying jobs and career opportunities at home. The prohibitive costs of housing and other services further drive this exodus. While Portugal has made significant strides in improving education since the 1930s, challenges remain. The quality of education, particularly at higher levels, is still catching up with more developed nations, and there is a need for greater investment in research and development to foster innovation and economic growth. Without meaningful structural reforms and increased foreign investment, Portugal's brightest minds will continue to emigrate, and the country will remain reliant on EU subsidies.
Geographic and Demographic Challenges
Portugal's geographic location and demographic trends have also played a role in its underdevelopment. Situated on the periphery of Europe, Portugal is somewhat isolated from the continent's economic core, making it more challenging to attract investment and integrate into European supply chains. Additionally, Portugal's population is relatively small and aging, which poses challenges for economic growth and sustainability. The political elite's resistance to reform and maintaining the status quo further exacerbates the country's reliance on EU subsidy handouts.
The emigration of many Portuguese citizens, particularly during the mid-20th century due to the colonial wars, also contributed to the country's underdevelopment. The loss of a significant portion of the working-age population to countries like France, Germany, and Brazil weakened the domestic labor force and reduced the country's potential for economic expansion. In the 21st century, this emigration continues, driven by a lack of reforms and poorly paid jobs, leaving Portugal increasingly reliant on tourism.
Conclusions
Portugal's underdevelopment is the result of a complex interplay of historical, political, economic, and social factors. The decline of the Portuguese Empire, political instability, the legacy of the First Republic and Estado Novo regimes, economic isolation, structural economic weaknesses, underinvestment in education, and challenges related to immigration, geography, and demographics have all contributed to the country's struggles to achieve sustained economic growth.
While Portugal has made significant progress in recent decades, particularly following its integration into the European Union, the legacy of these challenges continues to shape its economic landscape. Addressing these issues through reforms, increased investment in education, fostering innovation, and opening the economy to foreign investment will be crucial for Portugal to overcome its historical underdevelopment and achieve long-term prosperity.
BellsForex Editorial August 26, 2024
