Productivity growth is a central driver of long-term improvements in living standards, fiscal sustainability, and economic resilience. In Portugal, as in many OECD countries, productivity challenges are increasingly structural and reflect persistent gaps across firms, sectors and regions. These gaps are driven less by insufficient innovation at the frontier than by weaknesses in technology diffusion, resource allocation, skills matching and business dynamism. At the same time, emerging forces such as digitalisation, artificial intelligence, the green transition and population ageing are further increasing the complexity of productivity dynamics.
In this context, productivity outcomes depend not only on individual policy measures, but on how effectively policies across different domains interact, are prioritised and are sustained over time. Strengthening productivity therefore requires a coherent and integrated approach to policymaking.
Over the past decade, Portugal has implemented a wide range of pro‑productivity policies, contributing to improvements in policy settings and to a partial closing of the productivity gap with the OECD average. However, further advances are needed to boost productivity and sustain recent productivity improvements. In particular, the absence of a dedicated framework to synthesise evidence and support coordinated policymaking limits the overall impact of policy efforts. This calls for a better understanding of complementarities across policies to strengthen their effectiveness and ensure consistent follow‑up.
Against this background, the report examines how Portugal could boost productivity by strengthening pro-productivity institutions and policymaking. The report is structured as follows. Chapter 1 provides an overview of productivity dynamics at the aggregate, sectoral, regional and firm-level, showing the need to address key structural productivity challenges, including high within-industry dispersion, weakening business dynamism, and inefficient resource allocation. Chapter 2 provides a stocktaking of pro‑productivity policies implemented between 2015 and 2025, highlighting that Portugal has pursued a broad and sustained policy effort, while pointing to challenges related to effectiveness, complementarities and coordination. Chapter 3 assesses the institutional framework for productivity analysis and policymaking, drawing lessons from Portugal’s previous Productivity Council and current arrangements, and identifying gaps in coordination, prioritisation and follow-up. The assessment identifies institutional entry points for strengthening synergies and complementarities across pro-productivity policies. Building on this analysis, Chapter 4 outlines a roadmap for the establishment of a renewed Productivity Council, proposing design principles and actionable steps to strengthen the translation of productivity analysis into coordinated and impactful policymaking, drawing on OECD practices.