Portugal

Located in the mid-Atlantic, the archipelagos of the Azores is an autonomous region of Portugal and an European Union Outermost Region. Once central to global trade routes, the Azores are aspiring to regain a prominent international role by leveraging their unique geographical, natural and historical attributes. To that end, this Production Transformation Policy Review (PTPR) Spotlight identifies priority actions in several areas, including scientific research and collaborations, the ocean economy, agro-food and renewable-energy value chains. It shows the importance for EU Outermost Regions, as well as for Small Island Developing States (SIDS), of building resilient international ties. It benefited from an extensive peer review process involving public and private stakeholders from Brazil, Iceland and the United States.

This report assesses the enabling conditions for maximising the benefits of foreign direct investment (FDI) on SME productivity and innovation in Portugal. It looks at the quality of investment that Portugal attracts and the capacity of Portuguese SMEs to benefit from any knowledge and technology spillovers resulting from these investments. It studies the extent to which FDI-SME spillovers occur through value chain linkages, strategic partnerships, labour mobility, competition and imitation effects. The report provides an overview of Portuguese public institutions responsible for investment, SMEs, innovation and regional development policies, taking a close look at arrangements to ensure multi-level policy coordination, stakeholder consultation and evaluation of policy impacts. It then reviews the mix of government policies that are currently in place to support FDI-SME linkages and spillovers, noting areas for further policy reforms. The last chapter introduces a regional lens, focusing in particular on the regions of Norte and Alentejo. This report is part of a broader European Commission-OECD programme on strengthening FDI-SME linkages and serves as a pilot for future country assessments.

Italy’s start-up visa aims to make the national start-up ecosystem more easily accessible to foreign talent, rich with knowledge and skills, and more integrated into global markets. Government reports show that the programme has not yet achieved a critical scale. The analysis of similar initiatives in Chile, France, Ireland and Portugal identifies five gateways for attracting more foreign entrepreneurs, such as an effective policy outreach, smooth inter-institutional co-operation across the migratory process, and the provision of sound support services for a 'soft landing' of entrepreneurs upon arrival. These takeaways may also inform new talent attraction policies targeting remote workers, an expanding group in the context of the ongoing COVID-19 pandemic.

There is a growing international concern about the slowdown in productivity growth, especially as labor productivity enhancements are important drivers of higher generalised living standards. Using administrative data of firms in Portugal between 2010 and 2016, we analyse the relationships between productivity and wages. At odds with neoclassical theory of marginal productivity of labor, we find that two thirds of firms insufficiently raised wages given observed productivity growth. Employing unconditional quantile regressions, we investigate some quantifiable determinants of the productivity-wage gap at different parts of the distributions. Most of the documented dynamics contributed not only to the divergence of productivity and wages but also to the decoupling of productivity and wage growth. We argue that labor market flexibilisation intensified segmentation, providing incentives for non standard contracts. Both dimensions, as well as higher board compensations, international trade and on-the-job training weakened the link between productivity and wages.

In this paper, we focus on the managerial characteristics of micro and small-sized firms. Using linked employer-employee data on the Portuguese economy for the 2010-2018 period, we estimate the impact of management teams’ human capital on the probability of firms becoming financially distressed and their subsequent recovery. Our estimates show that the relevance of management teams’ formal education on the probability of firms becoming financially distressed depends on firms’ size and the type of education. We show that management teams’ formal education and tenure reduce the probability of micro and small-sized firms becoming financially distressed and increases the probability of their subsequent recovery. The estimates also suggest that those impacts are stronger for micro and small-sized firms. Additionally, our results show that functional experience previously acquired in other firms, namely in foreign-owned and in exporting firms and in the area of finance, may reduce the probability of micro firms becoming financially distressed. On the other hand, previous functional experience in other firms seems to have a strong and highly significant impact on increasing the odds of recovery of financially distressed firms. We conclude that policies that induce an improvement in the managerial human capital of micro and small-sized firms have significant scope to improve their financial condition, enhancing the economy’s resilience against shocks.

Twenty-first century governments must keep pace with the expectations of their citizens and deliver on the promise of the digital age. Data-driven approaches are particularly effective for meeting those expectations and rethinking the way governments and citizens interact. This report highlights the important role data can play in creating conditions that improve public services, increase the effectiveness of public spending and inform ethical and privacy considerations. It presents a data-driven public sector framework that can help countries or organisations assess the elements needed for using data to make better-informed decisions across public sectors.

Portugal aims to develop a more innovative, inclusive and productive economy, and to ensure that the ensuing benefits are widely distributed, regionally and socially. This report assesses the extent to which Portugal’s higher education, research and innovation system is well configured to help Portugal achieve its vision of inclusive innovation, and identify which policy options might help it achieve its goals. The assessment and the related recommendations focus on: 1) governance, strategy and funding in higher education, research and innovation; 2) the missions, profiles and use of resources of higher education institutions; 3) undergraduate and master’s level education activities; 4) doctoral training activities; 5) academic careers; 6) high-skill employment and business innovation.