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The Balance of Payments Constraint and Growth in Portugal: 1951–1984

In: European Integration and the Iberian Economies


  • A. J. Marques Mendes
  • A. P. Thirlwall


The purpose of this chapter is to evaluate the growth performance of the Portuguese economy since 1951 within a balance of payments framework. It will be argued that the working of the foreign trade multiplier can account for most of the growth experienced in the past thrity years or so, and that the slow growth of the Portuguese economy can largely be attributed to poor export performance. In the recent past, export performance has improved but this has been accompanied by large terms of trade and capital flow losses. The deterioration in the terms of trade has been mainly, although not entirely, due to currency devaluation implemented as a component of various stabilisation packages. As far as rectification of the balance of payments is concerned, there has probably been an undershooting of devaluation. At the same time, devaluation may have produced a perverse export specialisation. The capital flow losses have resulted from exaggerated reductions in the current account deficit as a result of the monetary and budgetary policies pursued.

Suggested Citation

  • A. J. Marques Mendes & A. P. Thirlwall, 1989. "The Balance of Payments Constraint and Growth in Portugal: 1951–1984," Palgrave Macmillan Books, in: George N. Yannopoulos (ed.), European Integration and the Iberian Economies, chapter 2, pages 21-39, Palgrave Macmillan.
  • Handle: RePEc:pal:palchp:978-1-349-09712-8_2
    DOI: 10.1007/978-1-349-09712-8_2

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    Cited by:

    1. Anthony Philip Thirlwall, 2012. "Balance of Payments Constrained Growth Models: History and Overview," Palgrave Macmillan Books, in: Elias Soukiazis & Pedro A. Cerqueira (ed.), Models of Balance of Payments Constrained Growth, chapter 1, pages 11-49, Palgrave Macmillan.


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