When discussing the nature of our exports and imports, one of the ideas that immediately comes to mind is that Portugal exports some of its best human resources.
2011: Shortly explained, the Portuguese Government and the so-called troika (European Commission, International Monetary Fund and European Central Bank) started the application of the Memorandum of Understanding (MoU), translated into austerity policies that were implemented as a consequence of a 78 thousand million euros loan.
Also 2011: That was also the last year over the past 20 in which the trade balance registered a negative value. According to the predictions of the Bank of Portugal – a member of the ECB national banks network –, this scenario might again be a reality in 2020, mainly due to private consumption´s behaviour, as the goods and services balance will suffer a negative decrease of 0,4% of the GDP from 2019 to 2020.
Just like Culture has not reached the desired 1% of State Budget investment in 2019, the difference between what we export and import might not fulfil our hopes in 2020.
Hard political options arise when contemplating what to do under such budgetary constraints, particularly under the circumstances in which we lived in the past where the troika defined and delimited. Nevertheless, let us recall that, according to 2017 data, the current Portuguese interest payment expenditure is 73 times bigger than the current subsidies expenditure. Virtually, no country has 0 debt, but, as a principle, the lower it is, the freer a country is to implement social programmes, pursue public investments and incentivize private initiatives. So, are we taking a better approach towards achieving our priorities, or are our priorities wrong all along?
When discussing the nature of our exports and imports, one of the ideas that immediately comes to mind is that Portugal exports some of its best human resources (many educated in Portuguese public universities), while it mostly imports technology-related products. However, there is much more one can state, even if we take a narrow analysis.
Representing close to 60% of our total exports in 2018, European Union countries such as Germany (10%), Spain (12,8%), France (15,2%), the (soon to be old friend) United Kingdom (15,4%) and the United States of America (6,2%) are undoubtedly Portugal’s strongest trading partners, following a tendency that begun many years ago. In respect to imports, besides the previously stated partners, logically with distinct pieces of the pie, it is important to add The Netherlands and Italy as some of the main points of origin of our imported goods.
Apart from the record-breaker Tourism (representing more than 50% of total service exports), Portugal exports ores and metals (19,8%), machines (14,3%), agro-foods (12,3%) and chemicals and rubber (12,3%). But, for instance, we still have one of the highest quality shoe industries worldwide and we are the world´s leading cork producer. This cannot, per se, feed an entire exporting industry but can certainly open doors to gain even more foreign credibility and allow trade partners to trust us in different markets. As long as we first show them how trustable and high-quality we can be in our specialised areas, we might then be able to enter different markets overseas.
The nature of our imports is likewise that of our imports. However, one must note that out of our total service imports, 25,1% come from transports and 30,3% from tourism, as of 2018.
Recent data depicts that exports increased 3,2% and imports 10,9% in April when compared to the same month of 2018.
The question remains: how can we be more competitive? Well, textbook answers suggest that R&D investment is always a good idea. And it is. Moreover, artificial intelligence and technological improvements that allow economies to become more digitally developed are a must for every country that wants to be competitive. But giving people the right tools not only to feel up to date but also to know how to dominate them is as important as having them. I believe our goal should not be to compete with Germany in producing machines. Instead, we should try to firstly strengthen smaller industries in which we have shown value and, only then, yes, be bold and take risks in other sectors.
Not wanting to plagiarize Milton Friedman in any way, I strongly believe that the social responsibility of any government is to increase general welfare by respecting principles of justice and equity, never compromising future generations with non-sense and non-viable projects, financially speaking. However, public entities must never forget the importance of allowing everyone’s self-determination, whether striving at their own businesses or writing about it.