Industrial development in a late and slow developer: Portugal, 1870-1913

Abstract

Between 1870 and 1914, Portuguese industry grew in a sustained manner, although at slower rates than those found in the less developed parts of Europe at that time. The article begins by outlining, in a comparative perspective, the way in which this growth took place and finds that the period from 1891 was not marked by the acceleration that many have supposed. It also casts doubt on the hypothesis which gives prominence to exports as the main explanatory variable for the path of industrial growth. In the short run, industrial output seems to have reacted particularly to financial conditions and, in the long run, to a variety of factors, among which exports. Portuguese industrialisation faced several difficulties. Most sectors had weak linkages to other sectors of the economy, the opportunities offered by import-substitution soon ran out and internal demand was limited owing to low incomes and poorly integrated markets. Colonial outlets were tried, but again the market was small and unsophisticated. Industrial exports to the rest of Europe were the only means to faster industrial growth, but although wages were comparatively cheap, labour productivity was much lower than in the equivalent sectors of Portugal's foreign competitors. The final part of the article analyses some of the reasons for this lack of international competitiveness of Portuguese industries.