The Portuguese Economy since 1974

The Portuguese Economy since 1974

The Portuguese Economy since 1974

The Portuguese Economy since 1974

Excerpt

Portugal languished as a backwater on the European periphery for three-quarters of a century, marginalised in economic and political, as well as geographical, terms. It remained an essentially small, agrarian country outside the mainstream while enduring Western Europe's longest-lasting dictatorship between 1928 and 1974. This chapter examines the economic legacy bequeathed by the Salazarist regime in the belief that the post-1974 economy cannot be understood without reference to the dictatorship. Indeed, many of the economic problems encountered since the 1974 revolution are attributable to the old regime which had shaped and determined Portugal's economic trajectory for almost half a century.

It is therefore necessary to understand the context in which economic policymaking operated during the 1920s and 1930s. Just as dictatorship or one-man rule was seen as preferable to the political upheaval experienced under the Parliamentary Republic (1910-26), so protectionist, semi-autarkic, socially congealed strategies were favoured as a means of escaping from economic dependence, underdevelopment and social upheaval. They emerged as solutions to a series of contradictions that were core features in Portugal's historical development and which, in crucial aspects, differentiate the country from its counterparts in the rest of southern Europe.

The first, and perhaps the most important paradox, was that while Portugal maintained a far-flung empire and refused to countenance withdrawal, it still performed a semi-peripheral, intermediary role as a broker or conveyer for the wealth generated by English industrial power. The relationship with the United Kingdom had important consequences. First, it severely delayed the industrialisation process in Portugal despite efforts made by, among others, the Count of Ericeira in the seventeenth century and Pombal in the eighteenth. Domestic industrial development was constrained by an alliance between English commercial interests and Portuguese agriculturalists. In return for protection against Spain, the Portuguese signed the Methuen Treaty (1703) which reopened the Portuguese market to English woollen cloth and manufactured goods in return for preferential duties on port wine exports. As a result . . .

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