The following OECD assessment and recommendations summarise Chapter 4 of the Economic Survey of Portugal 2006 published on 20 April 2006.
To face global competition the economy needs modernizing
To enjoy durably stronger growth, Portugal needs to move away from traditional labour-intensive low value-added products and increase its specialisation in medium- and high-tech activities. This requires fostering the development of a knowledge-based economy. Improvements in initial education outcomes are not enough to meet the rising and changing demand for skills in today's global environment. Attention needs to be given to the coverage and quality of tertiary education, which are below standard, in particular as regards science and technology, and hence impede the diffusion of knowledge. Finally, Portugal lags in business R&D and innovation, including not only the creation of new products, services or processes, but also the diffusion of existing knowledge. To facilitate the dissemination of knowledge and practices across manufacturing and service sectors and improve the innovation performance overall, specific innovation policies and, more important, framework conditions have to be improved.
This requires providing better tertiary education to a wider public…
Considering both public and private universities and polytechnics, there is overcapacity in higher education. At the same time, access to tertiary education remains very selective. The system is not fully utilised and needs to be re-organised and rationalised, by merging or closing down some institutions and streamlining disciplines taught, in view of challenges for the future. At the higher education level, policies should focus on increasing success rates. This should be achieved by a diversification of education streams and opportunities and quality improvements gained through enhanced scientific capacity and stronger autonomy and accountability of institutions. While supporting higher education is a budget priority in Portugal, the low growth of the economy and the fiscal consolidation requirements clearly limit the amounts which can be spent. Adequate financing could be provided by a combination of budget resources, tuition fees and alliances with enterprises or research centres. Raising fees for tertiary education while developing the loan system (perhaps with repayment contingent on post-graduation income) would be more equitable and raise efficiency. Paying higher tuition fees would make students attentive to the quality and subjects being supplied, thereby putting pressure on higher-education institutions to respond to the needs. Moreover the additional resources would allow the quality of staff and research to be raised, even as coverage broadens.
…and upgrading the workforce competences through adult training…
Once they have entered active life, few adults participate in training activities. Yet returns to training appear to be large in terms of higher income and lower unemployment risk; and firms would also benefit from training workers. There is no need to develop new services, but existing instruments should be rationalised. A comprehensive approach to lifelong learning is desirable, making better use of existing education capacity. To ensure greater participation in lifelong learning, an important step has been accomplished with the development of the national certification system; but its application is only beginning. Government action should focus on extending the application of the certification system, becoming more involved in quality assurance and stimulating demand for training by improving information and guidance about opportunities. The government should implement its plan to provide funding directly to the demand side, including firms and entrepreneurial associations, rather than the traditional financing of operators (supply), and should target its support to low-opportunity individuals.
Participation in continuing education and training1
1. Participation of the labour force (25-64 year-olds) in non-formal job related training within a 12-month period.
Source: OECD, Education at a Glance, 2005.
… as well as fostering innovation through more effective R&D policies
To correct the lag in innovation activity, specific policies can play a role. To enhance their effectiveness, a more systemic approach and greater continuity in policy making are required. It would be desirable to continue to give high priority to R&D, building on the existing system of scientific centres (mostly university-based), and by fostering international partnerships in science and technology and higher education. Also, the effectiveness of spending should be regularly assessed. To strengthen business R&D, where Portugal's weakness is the most obvious, the government provides support through the reintroduction of tax incentives and is promoting the development of the venture capital market. Provided a fair degree of stability and predictability over time is ensured, public support can have positive effects, though international experience suggests that the gains to be expected are generally limited. It is crucial to move ahead to develop strategic cooperation between the private and public sectors as envisaged in the Technological Plan. Much progress is needed to strengthen the links between public research and industry, by facilitating the mobility of researchers, and by providing financial encouragement to the development of scientific networks and partnerships with the international business world.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded. It contains the OECD assessment and recommendations, but not all of the charts included on the above pages.
The complete edition of the Economic Survey of Portugal 2006 is available from:
For further information please contact the Portugal Desk at the OECD Economics Department at email@example.com. The OECD Secretariat's report was prepared by Bénédicte Larre, Stéphanie Guichard and David Haugh under the supervision of Wilhelm Leibfritz.