Reindustrialization of Europe: a danger for Portugal
In recent decades, the world has witnessed a deindustrialization of developed countries and a transfer of production to countries with low prices and without or with low levels of social assistance. Portugal was, obviously, one of the countries chosen to adopt changes from developed countries. Thus we have in Portugal foreign investment materialized in the presence of many multinationals with industrial facilities (Volkswagen, Renault, Boch, Siemens, Continental Mabor, Nestlé, etc.) and several agro-industrial companies.
We can say that Portugal was one of the beneficiaries, if the maintenance of a model of low prices and deficient coverage of social protection can be considered a benefit, from the deindustrialization of developed countries in central Europe. It is a system in which almost everything needed for production is imported and almost all of it exported, the value attributed to Portuguese being only the work of our cheap labor force. A model that makes us one of the poorest countries in Europe.
The pandemic accelerated a process that Trump had already unleashed in the United States, that of re-industrialization with an incentive to return previously displaced production to the country. The geopolitical risks appear to be greater than the cost of re-industrialization.
In data published by Eurostat we learn that Portuguese industrial production has increased little over the years. Concepts 2015 as a basis (100) Portuguese industrial production reached 112 in August 2021. On the other hand, central countries such as Ireland (146), Belgium (135), Norway (129), Netherlands (122), Denmark (128), Finland (117), Spain (116) and Germany (114) saw their industrial production grow more than Portugal.
This week Eurostat published detailed industrial production data for the month of July (see here). The data compares the production of 2021 with that of the same month last year, when it completes in the middle of the pandemic of 2020. The vast majority of countries are recovering at a good pace from last year’s stops. The biggest increases were in Belgium (+29.9%), Ireland (+22%) and Lithuania (+15.4%).
Only three countries experienced falls in industrial production in 2021, the Czech Republic (-1.4%), Malta (-4.2%) and Portugal. Portugal was the one with the biggest drop (-7.2%) compared to last year. A disaster.
The ongoing European re-industrialization process foresees the reinforcement of production in the countries leaving the remaining countries with no or less foreign investment.
In view of the reindustrialization of the central countries, Portugal needs a new investment strategy. Hasn’t been able to draw yet. For the last few years we’ve been stuck waiting. It is not known from what.
With economic elites unable to compete with their counterparts, with companies without an international dimension, Portugal needs a new strategy, based on its own conditions and its own capital, to industrialize and modernize itself. Without that we will continue to define and fall behind. Unfortunately none of this is provided for in the Recovery and Resilience Plan.
