Economics in a picture
The competitiveness of the Portuguese economy improved between 2014 and 2020, but it stays still below the best performances in the EU
Competitiveness is a diffuse concept, and its quantification encompasses a very wide range of phenomena. The classic way of assessing competitive conditions relies on scoreboards, but in recent years composite indicators became popular tools. Their design should take into account some aspects. Firstly, it is necessary to define an indicator that assesses a countries' relative performance within a reference group. Another relevant issue concerns the weighting of individual indicators. Having all the above considerations in mind, the composite competitiveness indicator (ICC) combines annual cross-country aggregated data on a set of variables related to competitiveness, namely: i) Macroeconomic stability and income distribution; ii) Education and innovation; iii) Investment and infrastructure; iv) Institutions and markets.
In Portugal, the ICC presented a downward trajectory until 2007. However, between 2014 and 2020 there was a recovery and the ICC returned to levels similar to those existing in 1995. Portugal is far from the levels attained by Sweden and, despite the strong recovery after 2017, the improvement was not as steady as the one observed in Austria or the Czech Republic in the period analyzed. Portugal ranks in the lower tier in the EU but records the greatest progress among this reference group, as compared to 2007 and stays close to Spain and Italy.
For more details see article “The competitiveness of the Portuguese economy: A view from a composite indicator”, published in the Banco de Portugal Economic Studies, volume VIII - nº2.
Prepared by João Amador, Guida Nogueira and Ana Fernandes. The analyses, opinions and findings expressed above represent the views of the author and not necessarily those of Banco de Portugal, Ministry of Economy, Ministry of Finance or the Eurosystem.
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