It is a strange question to ask. Regardless of what ‘development’ really means, most people would say Portugal is undoubtedly a developed country. After all, the small western European republic is part of the EU since 1986. However it is not what it looks like after visiting the website of the country’s Business Development Agency (AICEP), a key institutions for captation of (relevant?) foreign investment within the country’s Ministry of Economy and Innovation. On their website one doesn’t take long to notice that the agency is erroneously promoting the Portuguese workforce as the cheapest of EU. Wasn’t that a policy of developing countries? A strategy that helped many countries, most notably the East Asian tigers, hook up with the developed world, learn from it and upgrade? The current reality tells us a different story. The days when cheap labour was a competitive advantage are gone, even for developing countries.
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A website is extremely important, there’s no need to explain that. So why does AICEP’s website seem abandoned? If a student, an investor, a public servant, let’s say anyone who wants to know about the institution visits the website will find, among many others, the following situations:
a) The website claims “Portugal has the lowest labor costs in the EU…” and ‘proves’ it by showing a graph from 2005 including countries such as Poland, Slovakia or Latvia, among others, with lower labour costs. Weren’t they part of the EU in 2005? Yes, they were.
b) One of the four main sections of the same website is the ‘newsroom’. This section has three “news”, and the first is related to the start of the agency under the new administration on the 1st of July, 2007! Furthermore, the sorting system of these ‘news’ is quite peculiar since the oldest of the three comes in the middle!
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Evans (2005) in his article entitled “The Challenges of the Institutional Turn” brings up some ideas on institutions:
“The possibility of institutions that are disadvantageous to long-run development emerging for idiosyncratic reasons that have little to do with any kind of overall “efficiency” or “social return” and then getting “locked-in” is all too plausible.”
“Once institutions take hold, they are likely to endure even if they have a long-run negative effect on development, crowding out the possibility for the emergence of more efficacious institutions.”
“If existing institutions provide differential returns to some portion of society, which consequently has a special vested interest in their maintenance, then the problem gets worse. If that segment is also differentially powerful, which is highly likely if not axiomatic, the problem is even more intractable.”
Let us hope it’s not the case of AICEP.
6 comments
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March 8, 2009 at 14:57
Ana
The site will soon be proud to announce that Portugal has the lowest minimum salary of the EU… at last we are number 1 in something!
February 16, 2009 at 11:32
Dan Mihalache
Romanians and Bulgarians go to Portugal to work, so, Portugal HAS NOT the lowest labor costs in the EU.
The official sites never show the reality; they are made by people who are in a fog with their own country (that is valuable everywhere, not only in Portugal or Romania; remember the face of Bush when he heared about the first plane that struck the twins).
Best regards, Dan, http://danmihalache.wordpress.com
February 2, 2009 at 22:20
Rosemarie Malik
Over the past 15 years, I am aware through my own experience, of hundreds if not thousands of clothing and shoe manufacturers based in Northern Portugal joining the exodus from Western Europe to cheaper manufacturing bases in North Africa and Asia. Due to the lack of long term vision and hypnotized by the mantra
” globalisation” there was no negociation or encouragement given to the leaving investors. Hundreds of thousands of low skill workers found themselves without jobs. The story has been repeated all over Europe and today we are facing crippling welfare expenditure, irrevocable poverty and increasing crime statistics. Europe is facing a self made crisis that is comparable to closing the stable door after the horse has bolted. Our governments were so busy sitting in the counting houses inventing new ways of taxing their citizens that they failed to see that people with no jobs and no hope do not fill the coffers of the treasuries. The current banking crisis is just a symptom of the lack of vision. Somebody tell me how our citizens are going to pay off the trillions of euros of credit card debt. I can see the next news paper headlines.” Plastic crunch”. But why should we be fearful? Our governments must surely have more hundreds of billions of euros stashed away somewhere for the rainy day. …….the money that was not forthcoming to provide fiscal incentives to European companies to remain in Europe and build a future for our beautiful and desperate continent.
January 20, 2009 at 17:11
fabper
Matt, those are very important points you’re mentioning.
The question of branding Portugal a little better is being put forward by the agency I’ve mentioned, but, it seems only through massive and expensive advertisement campaigns that, in my opinion, are easily ‘caught’ and forgotten by little details as the ones I’ve mentioned on the post. Those remain as spikes in any attempt of changing the country’s image. The agency is responsible for three key areas: 1.Tourism, 2. Attracting Inward Foreign Direct Investment and 3. Internationalization of the Portuguese Economy, but there’s no comprehensive branding plan coming out of it, as it should. All the campaigns are sophisticated but not large in scope and solid enough to raise the whole level up to something resembling quality. You’re definitely right when mentioning the northern countries serious self-promotion.
You’re third point is particularly important and I intend to write my thesis on that subject. Portugal is the major trade partner with any on the Portuguese-speaking African countries, but that’s all, just trade. There are no major long-term commitments to the former colonies, which, as I will try to explore with my thesis, might be forcefully caused by the weak institutional framework in Portugal promoting such investments.
Miguel, maybe you’re right, but although I start with a negative title, I deny it in the first few lines of the post and throughout the text I’ve proposed change as I’ve tried to mention some specific alarming problems of the website that could be changed.
Thanks both for the valuable comments.
January 20, 2009 at 17:10
Miguel
Self-criticism is a great thing, and the post is well written.
However, I cannot help but wonder whether this article doesn’t end up doing the same bad service to the country as the aforementioned official Web site. The title alone is very negative.
January 20, 2009 at 17:06
Matt
First, It appears to me that Portugal has still not caught up with other developed nations in terms of Marketing itself as a developed nation. Fixating on cheap labor promotes the idea that Portugal is both undeveloped and therefore unproductive. Whether this is true or not, is nonetheless the message that is being put forward.
Portugal needs to take a page from its northern cousins and take self-promotion seriously. After-all, it’s not about the reality but perception that will either make or break foreign investment. If Portugal wishes to interest North-American or Asian investors they need to eliminate these negative perceptions. In terms of tourism, for example, what good is it to attract bargain hunters looking for a cheap getaway, when the target should be tourists looking to spend. Less tourism, doesn’t have to mean less revenues if Portugal can leverage it’s world renown history & Hospitality. Portugal needs to focus on abolishing the word ‘Cheap’ from it’s branding.
Second, Portugal needs a strategy in place to develop all regions, and not just the Lisbon area. Currently the disproportions in earnings and development in different regions is inexcusable and is further adding to loss in productivity/image in/of the country. It appears that there isn’t a master plan in place to develop the country holistically, instead each new government seems to be concerned with propping up specific regions over others .
Third, Portugal needs to leverage its historical ties with countries like Brazil to encourage direct investment from those countries, it’s mind-boggling that there hasn’t been a prolonged action plan in this direction.
One positive is that Portugal seems to be taking education seriously, which is something countries like the US and Canada can learn from. The North American model that ‘No Child Is Left Behind’ is creating a nation of illiterate High School graduates. Although the graduation numbers may look good on paper, the consequences are severe. The Portuguese seem to be staying away from this by introducing child safe/portable laptops with the aim of continuous education, which is very promising for future generations as well as investing in Internet ‘Connected’ learning institutions.
I could go on, but that’s it for my rant…
Cheers