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Competitiveness and convergence in Portugal

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  • Jorge Braga de Macedo

    (Faculdadde de Economia da Universidade Nova de Lisboa e Instituto de Investigação Científica Tropical)

Abstract

The complementary package of macroeconomic and structural policies associated with Portugal joining the European Monetary System in 1992 failed because budgetary control was inconsistent with the new currency regime. In its three sections, this paper focuses on the consequences for growth of this enduring policy failure. Its two main reasons were excessive primary expenditure and state-led wage inflation. Reform procrastination and the reversion of a purely demand-led boom is the main lesson from Portugal on what can be called competitiveness for convergence. Reforms are more likely to fall prey to the second-best argument under ready-made policy packages with scant knowledge about local conditions. A more systemic approach to national economies will include the concept of complementarity as an input into economic advice, as shown in connection with transition by Macedo and Martins (forthcoming).

Suggested Citation

  • Jorge Braga de Macedo, 2007. "Competitiveness and convergence in Portugal," GEE Papers 0004, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Nov 2007.
  • Handle: RePEc:mde:wpaper:0004
    as

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    File URL: http://www.gee.gov.pt/RePEc/WorkingPapers/jbm.pdf
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    References listed on IDEAS

    as
    1. João Amador & Ana Cristina Soares, 2012. "Competition in the Portuguese Economy: a view on tradables and non-tradables," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
    2. Ronald MacDonald & Luca Ricci, 2001. "PPP and the Balassa Samuelson Effect: the Role of the Distribution Sector," CESifo Working Paper Series 442, CESifo Group Munich.
    3. J. Bradford Jensen & Lori G. Kletzer, 2005. "Tradable Services: Understanding the Scope and Impact of Services Outsourcing," Working Paper Series WP05-9, Peterson Institute for International Economics.
    4. Wolfgang Bergthaler & Kenneth H Kang & Yan Liu & Dermot Monaghan, 2015. "Tackling Small and Medium Enterprise Problem Loans in Europe," IMF Staff Discussion Notes 15/04, International Monetary Fund.
    5. Rudolfs Bems, 2008. "Aggregate Investment Expenditures on Tradable and Nontradable Goods," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 852-883, October.
    6. Dwyer, Jacqueline, 1992. "The Tradeable Non-tradeable Dichotomy: A Practical Approach," Australian Economic Papers, Wiley Blackwell, vol. 31(59), pages 443-459, December.
    7. Thierry Tressel & Shengzu Wang, 2014. "Rebalancing in the Euro Area and Cyclicality of Current Account Adjustments," IMF Working Papers 14/130, International Monetary Fund.
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    Cited by:

    1. Barry Eichengreen & Katharina Steiner, 2008. "Is Poland at Risk of a Boom-and-Bust Cycle in the Run-Up to Euro Adoption?," NBER Working Papers 14438, National Bureau of Economic Research, Inc.

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