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Portugal Economic Growth, 1960-73 and 1981-90
There was a striking contrast between the economic
growth and
levels of capital formation in the 1960-73 period and in
the
1980s decade
(see Table 4, Appendix).
Clearly, the
pre-revolutionary period was characterized by robust
annual
growth rates for GDP (6.9 percent), industrial production
(9
percent), private consumption (6.5 percent), and gross
fixed
capital formation (7.8 percent). By way of contrast, the
1980s
exhibited a pattern of slow-to-moderate annual growth
rates for
GDP (2.7 percent), industrial production (4.8 percent),
private
consumption (2.7 percent), and fixed capital formation
(3.1
percent). As a result of worker emigration and the
military
draft, employment declined during the earlier period (by a
half
percent annually), but increased by 1.4 percent annually
during
the 1980s. Significantly, labor productivity (GDP
growth/employment growth) grew by a sluggish rate of 1.3
percent
annually in the recent period compared with the extremely
rapid
annual growth rate of 7.4 percent earlier. Inflation, as
measured
by the GDP deflator, averaged a modest 4 percent a year
before
the revolution compared with nearly 18 percent annually
during
the 1980s.
Although the investment coefficients were roughly
similar (24
percent of GDP allocated to fixed capital formation in the
earlier period; 26.7 percent during the 1980s), the
overall
investment productivity or efficiency (GDP growth
rate/investment
coefficient) was nearly three times greater (28.6 percent)
before
the revolution than in the 1980s (10.1 percent).
How does Portugal's GDP per capita compare with the
average
of the twelve members of the EC in the early 1990s, the
European
Twelve (EC-12), during the past three decades? In 1960, at
the
initiation of Salazar's more outward-looking economic
policy,
Portugal's per capita GDP was only 38 percent of the EC-12
average; by the end of the Salazar period, in 1968, it had
risen
to 48 percent; and in 1973, on the eve of the revolution,
Portugal's per capita GDP had reached 56.4 percent of the
EC-12
average. In 1975, the year of maximum revolutionary
turmoil,
Portugal's per capita GDP declined to 52.3 percent of the
EC-12
average.
Convergence of real GDP growth toward the EC average
occurred
as a result of Portugal's economic resurgence since 1985.
In 1991
Portugal's GDP per capita climbed to 54.9 percent of the
EC
average, exceeding by a fraction the level attained just
before
the Revolution of 1974.
Data as of January 1993
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