Portuguese firms were the less competitive ones among those from a set of five euro area countries including Portugal, Belgium, France, Italy and Spain, in the period 2008-2018. However, since 2013, there was a recovery trend. This assessment of business competitiveness utilizes a composite indicator based on the distance to the top performer, summarizing six dimensions, namely, return to capital, production costs, productivity, access to resources (physical and human capital), risk and quality orientation.

The lower competitiveness of firms in Portugal was due to a worse performance in the dimensions associated with productivity and access to resources. The results also show that the relative position of Portuguese firms does not change in an analysis by sector of activity or by size. Such an evidence suggests that the competitive gap of Portuguese companies resulted mainly from intrinsic characteristics, rather than industry composition effects.

The relative position of the countries does not change considering only firms with either the worst or the best performance. In particular, the Portuguese companies with the worst performance present a greater gap vis-a-vis those in the other countries.

For more details see article “An assessment of companies' competitiveness in Portugal and in some European countries”, published in the Banco de Portugal Economic Studies, Vol.8, Nº 2.

Prepared by Mário Lourenço, Cloé Magalhães, Fernando Martins, Manuel Coutinho Pereira and Hugo Reis. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.

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