Economics in a picture

 
The growth accounting approach allows to break down the growth differential of Portuguese GDP per capita relative to the European Union (EU) into the contributions of factors of production (labour, human capital and capital stock) and total factor productivity.

During the period 1960-1995, GDP per capita levels in Portugal approached the average levels in the EU15. This real convergence process resulted largely from higher accumulation of fixed capital in Portugal. In contrast, total factor productivity evolved unfavourably compared to the EU average over this period. The real convergence process has halted in the most recent period (1996-2018), in a context of persistent unfavourable developments in total factor productivity and a significant decline in the capital stock contribution. It is noteworthy that human capital contributed positively to the real convergence process throughout the entire period, reflecting a significant improvement in the qualification levels of the workforce in Portugal compared to the EU.

For further details see the Special Issue “Real convergence in the European Union and the relative performance of the Portuguese economy” (in Portuguese only), published in the Economic Bulletin of Banco de Portugal, October 2019.

Prepared by Ana Sequeira and Cristina Manteu. The analysis, opinions and results expressed herein are those of the authors and do not necessarily coincide with those of Banco de Portugal or the Eurosystem.

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