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Lessons of Spain and Portugal
As the European Union strives to integrate new members from Eastern and Central Europe, it faces some of the same concerns raised 20 years ago with the admission of two less developed states from the West: Spain and Portugal.
Letting in two poor countries that had recently shed repressive governments would stifle the Union's economic growth, drain jobs from more developed members and send a wave of immigrants across the Pyrenees, critics said.
Those fears turned out to be exaggerated, in part because they underestimated the transforming effects of EU money. Richer members, principally Germany, provided strong financial support each year to help Spain and Portugal develop and catch up with the rest of the bloc.
Now, as the EU debates diverting much of that aid to the poorer members admitted last year, the experiences of Spain and Portugal offer useful lessons on how to spend the money - and how not to. There is widespread agreement among scholars in both countries that Spain has generally invested the funds more productively than Portugal.
"You can look at it from a number of angles, and you can see that the funds have stimulated the Spanish economy in effective ways," said Paul Isbell, an economics analyst at the Elcano Royal Institute of International and Strategic Studies, a nonpartisan research organization in Madrid. "If you look at Portugal, you don't see the same beneficial effects."
In Spain, the benefits of the funds are evident in the modern infrastructure, improvements in worker productivity, increases in per capita income and an expanding economy.
The funds have also helped Spain soften the effects of some unpalatable structural changes, like liberalizing the labor market and privatizing state-owned industries.
Portugal, by contrast, has mainly used the funds to expand its economy - but without modernizing it to address most protracted problems, including a growing budget deficit, a bloated public sector, rampant tax evasion and inadequate educational system, scholars say.
Instead, political pressure from an influential web of small-town politicians seems to have diverted the money to strengthening infrastructure in rural areas rather than making investments in cities that could have created freer flows of goods and people.
As the former Communist countries vie for subsidies like those that Spain, Portugal and other earlier EU entrants enjoyed, there is little evidence that they are contending with similar pressures from local leaders. But Portugal holds a cautionary tale for countries like Poland, where there are signs that disputes over how to spend the money have cropped up in regional governments, delaying the spending of some structural funds.
"Portuguese economists agree that the country has used the resources as a way to postpone the hard decisions," said Sebastián Royo, a professor of government at Suffolk University in Boston who has written extensively on the integration of Portugal and Spain into the EU.
Now, Portugal's budget deficit is estimated at 6 percent to 7 percent of gross domestic product, government wages account for about 15 percent of GDP, and the country's level of educational attainment is among the lowest in Europe. Since joining the euro zone, which comprises 12 members, Portugal has been reprimanded twice by the European Commission for excessive deficits, while Spain has been a model member.
Portugal's prime minister, José Sócrates, who was elected in February, appears to be committed to enacting the reforms that economists say should have been pursued years ago. But with the Portuguese economy in a slump, the job will be much harder for Sócrates than it would have been for his predecessors.
What is more, the way Portugal has used EU funds appears to have worsened some of its problems. It accelerated government hiring during boom times instead of freezing it, for example.
"As the economy grew very fast, especially in the late 1990s, the public sector became a form of patronage," Royo said.
Today, about one of every seven workers in Portugal is a government employee who, under the Constitution, cannot be fired.
Portugal has made great strides since joining the EU in 1986. Before the EU expansion last year, to 25 from 15, Portugal's per capita income had risen to 75 percent of the EU average, from 55 percent.
Over the same period, Spain's per capita income has increased to almost 90 percent of the EU average, from about 70 percent. The Spanish economy, meanwhile, is speeding into its 12th consecutive year of growth, while Portugal is mired in debt and struggling to pull out of a recession.
Although management of EU funds is only one factor in these differing results, many experts seem to agree that it is a significant one.
While other countries offer clear examples of proper and improper management of EU funds, the similar geographies and histories of Portugal and Spain make it easier to isolate the effects of their recent actions.
Both countries joined the EU in 1986, a decade or so after emerging from dictatorships. Although the two had taken important steps toward modernizing their economies before joining, their economies were still rigid and highly reliant on agriculture at the time.
Both countries also invested the majority of their EU development funds in the same area: infrastructure. The Portuguese have directed about 90 percent of their funds to building and modernizing highways, airports, railroads and seaports, while the Spaniards have spent about 70 percent on such projects. Yet the results have been vastly different.
"The infrastructure in Spain is nearly first-class," said Isbell, the economist at the Elcano Institute.
Spain's roads and railroads are not only modern but also well laid out, helping to knit the country together so that poorer regions, like Andalusia, in the south, can connect with more developed ones, like the Madrid area.
That development has enticed more companies to set up operations in the poorer regions, where the cost of doing business is often lower, and has made it easier for companies already established there to reduce costs, attract investors and expand beyond local markets.
In Portugal, there is no comparable highway network linking its poorer regions with wealthier ones, increasing the chances that economic growth will continue to be uneven. Portugal has also failed to connect its highway systems to those in Spain, leaving it isolated from the main currents of European commerce.
"In Europe, lots of goods are moved around by truck," Royo said. "If you look at a map of Spain, the roads all go north. Portugal has not had the infrastructure linking it with Europe."
Portuguese infrastructure is not only poorly planned but in surprisingly poor condition, given the amount of money spent on it, scholars say.
"In Spain, you can see the new highways, the airports, the nice roads," said Royo, the professor. "In Portugal, the infrastructure is not in good shape at all. You look around, and you say, 'Where is all this money going?"'
One possibility is that much of the money is finding its way into the pockets of government or industry officials, Royo contends. "Corruption has to be a part of it," he said. "If you are spending all that money and the infrastructure is still poor, how else can you explain it?"
Portuguese officials deny any corruption, but they concede that the funds could have been better spent.
"Portugal's administration of the funds perhaps has not been the most effective, but it has not been a corrupt one," said Crisóstomo Teixeira, a senior policy adviser at the Ministry of Public Works, Transportation and Communications. "Portugal has made investments in small roads to improve mobility of people in small towns. If you do that, you don't have much money left for big, modern highway systems. The mayors of small towns here have pressed hard for roads in their areas. That is politics, not corruption."
As the 10 states admitted to the EU last year from Central and Eastern Europe start down the path toward further integration, they are not expected to receive nearly as much aid as Portugal and Spain have. From 2004 to 2006, the new members have together been allotted a little more than 20 billion, or $24 billion, about the same as Portugal alone was apportioned for 2000 to 2006. Spain's share for this period was more than 55 billion.
In the next budget, for 2007 to 2013, funds for the new members are expected to increase, while Spain and Portugal's shares will dwindle. But as Spain and Portugal have made clear, the degree to which new members successfully develop their economies and integrate them into Europe depends more on the individual states than on Brussels.
Renwick McLean
Letting in two poor countries that had recently shed repressive governments would stifle the Union's economic growth, drain jobs from more developed members and send a wave of immigrants across the Pyrenees, critics said.
Those fears turned out to be exaggerated, in part because they underestimated the transforming effects of EU money. Richer members, principally Germany, provided strong financial support each year to help Spain and Portugal develop and catch up with the rest of the bloc.
Now, as the EU debates diverting much of that aid to the poorer members admitted last year, the experiences of Spain and Portugal offer useful lessons on how to spend the money - and how not to. There is widespread agreement among scholars in both countries that Spain has generally invested the funds more productively than Portugal.
"You can look at it from a number of angles, and you can see that the funds have stimulated the Spanish economy in effective ways," said Paul Isbell, an economics analyst at the Elcano Royal Institute of International and Strategic Studies, a nonpartisan research organization in Madrid. "If you look at Portugal, you don't see the same beneficial effects."
In Spain, the benefits of the funds are evident in the modern infrastructure, improvements in worker productivity, increases in per capita income and an expanding economy.
The funds have also helped Spain soften the effects of some unpalatable structural changes, like liberalizing the labor market and privatizing state-owned industries.
Portugal, by contrast, has mainly used the funds to expand its economy - but without modernizing it to address most protracted problems, including a growing budget deficit, a bloated public sector, rampant tax evasion and inadequate educational system, scholars say.
Instead, political pressure from an influential web of small-town politicians seems to have diverted the money to strengthening infrastructure in rural areas rather than making investments in cities that could have created freer flows of goods and people.
As the former Communist countries vie for subsidies like those that Spain, Portugal and other earlier EU entrants enjoyed, there is little evidence that they are contending with similar pressures from local leaders. But Portugal holds a cautionary tale for countries like Poland, where there are signs that disputes over how to spend the money have cropped up in regional governments, delaying the spending of some structural funds.
"Portuguese economists agree that the country has used the resources as a way to postpone the hard decisions," said Sebastián Royo, a professor of government at Suffolk University in Boston who has written extensively on the integration of Portugal and Spain into the EU.
Now, Portugal's budget deficit is estimated at 6 percent to 7 percent of gross domestic product, government wages account for about 15 percent of GDP, and the country's level of educational attainment is among the lowest in Europe. Since joining the euro zone, which comprises 12 members, Portugal has been reprimanded twice by the European Commission for excessive deficits, while Spain has been a model member.
Portugal's prime minister, José Sócrates, who was elected in February, appears to be committed to enacting the reforms that economists say should have been pursued years ago. But with the Portuguese economy in a slump, the job will be much harder for Sócrates than it would have been for his predecessors.
What is more, the way Portugal has used EU funds appears to have worsened some of its problems. It accelerated government hiring during boom times instead of freezing it, for example.
"As the economy grew very fast, especially in the late 1990s, the public sector became a form of patronage," Royo said.
Today, about one of every seven workers in Portugal is a government employee who, under the Constitution, cannot be fired.
Portugal has made great strides since joining the EU in 1986. Before the EU expansion last year, to 25 from 15, Portugal's per capita income had risen to 75 percent of the EU average, from 55 percent.
Over the same period, Spain's per capita income has increased to almost 90 percent of the EU average, from about 70 percent. The Spanish economy, meanwhile, is speeding into its 12th consecutive year of growth, while Portugal is mired in debt and struggling to pull out of a recession.
Although management of EU funds is only one factor in these differing results, many experts seem to agree that it is a significant one.
While other countries offer clear examples of proper and improper management of EU funds, the similar geographies and histories of Portugal and Spain make it easier to isolate the effects of their recent actions.
Both countries joined the EU in 1986, a decade or so after emerging from dictatorships. Although the two had taken important steps toward modernizing their economies before joining, their economies were still rigid and highly reliant on agriculture at the time.
Both countries also invested the majority of their EU development funds in the same area: infrastructure. The Portuguese have directed about 90 percent of their funds to building and modernizing highways, airports, railroads and seaports, while the Spaniards have spent about 70 percent on such projects. Yet the results have been vastly different.
"The infrastructure in Spain is nearly first-class," said Isbell, the economist at the Elcano Institute.
Spain's roads and railroads are not only modern but also well laid out, helping to knit the country together so that poorer regions, like Andalusia, in the south, can connect with more developed ones, like the Madrid area.
That development has enticed more companies to set up operations in the poorer regions, where the cost of doing business is often lower, and has made it easier for companies already established there to reduce costs, attract investors and expand beyond local markets.
In Portugal, there is no comparable highway network linking its poorer regions with wealthier ones, increasing the chances that economic growth will continue to be uneven. Portugal has also failed to connect its highway systems to those in Spain, leaving it isolated from the main currents of European commerce.
"In Europe, lots of goods are moved around by truck," Royo said. "If you look at a map of Spain, the roads all go north. Portugal has not had the infrastructure linking it with Europe."
Portuguese infrastructure is not only poorly planned but in surprisingly poor condition, given the amount of money spent on it, scholars say.
"In Spain, you can see the new highways, the airports, the nice roads," said Royo, the professor. "In Portugal, the infrastructure is not in good shape at all. You look around, and you say, 'Where is all this money going?"'
One possibility is that much of the money is finding its way into the pockets of government or industry officials, Royo contends. "Corruption has to be a part of it," he said. "If you are spending all that money and the infrastructure is still poor, how else can you explain it?"
Portuguese officials deny any corruption, but they concede that the funds could have been better spent.
"Portugal's administration of the funds perhaps has not been the most effective, but it has not been a corrupt one," said Crisóstomo Teixeira, a senior policy adviser at the Ministry of Public Works, Transportation and Communications. "Portugal has made investments in small roads to improve mobility of people in small towns. If you do that, you don't have much money left for big, modern highway systems. The mayors of small towns here have pressed hard for roads in their areas. That is politics, not corruption."
As the 10 states admitted to the EU last year from Central and Eastern Europe start down the path toward further integration, they are not expected to receive nearly as much aid as Portugal and Spain have. From 2004 to 2006, the new members have together been allotted a little more than 20 billion, or $24 billion, about the same as Portugal alone was apportioned for 2000 to 2006. Spain's share for this period was more than 55 billion.
In the next budget, for 2007 to 2013, funds for the new members are expected to increase, while Spain and Portugal's shares will dwindle. But as Spain and Portugal have made clear, the degree to which new members successfully develop their economies and integrate them into Europe depends more on the individual states than on Brussels.
Renwick McLean
3 Comments:
Ciclicamente o país acorda, esfrega os olhos e chega à conclusão que é preciso fazer reformas. É uma atitude que parece sensata mas que é torpedeada facilmente com frases estilo «o povo gosta da Bárbara».
Isto é: para alguns políticos reformar é substituir umas caras por outras que, de preferência, sejam mais conhecidas. Talvez por isso o futuro do regime esteja em faces desconhecidas. Portugal gosta de se sentir como uma ovelha e de andar desesperado em busca de um pastor. A reforma do sistema é uma espécie de tabuada da classe política.
A cábula para todos eles é a criação de projectos sem conta, peso ou medida. Só têm de ser grandes. Capazes de asfixiar qualquer ideia de dúvida. Quem é que poderia ser contra quilos de estádios no Euro’2004? Só quem fosse anti-português. Afinal, pelo que se vê, o seu impacto na economia foi puramente marginal. Em cinco anos arderam 20% das florestas portuguesas?
Qual é o drama, se for criada mais uma comissão para analisar os problemas verificados pela última comissão que estudou o caso? Portugal tem perdido capacidade competitiva nas últimas duas décadas? Qual é o problema se começarmos hoje a estudar a resposta a questões que nos deveriam ter motivado há 20 anos? Portugal não precisa de reformas: está na pré-reforma.
Juros, dívidas e crescimento
Quando se trata de justificar as medidas de austeridade do Governo, um dos argumentos mais repetidos é a ameaça da subida das taxas de juro como uma das consequências da deterioração das contas públicas.
Um dos aspectos mais curiosos no panorama da cultura económica em Portugal é a quase unanimidade na defesa do crédito fácil e das baixas taxas de juro. Economistas de elevado rigor alinham facilmente com os esquerdistas mais desbragados na defesa de taxas de juro baixas. Todos comungam da ideia da bondade do crédito barato.
Quando se trata de justificar as medidas de austeridade do Governo, um dos argumentos mais repetidos é a ameaça da subida das taxas de juro como uma das consequências da deterioração das contas públicas. A eficácia deste argumento está suportada na suposta bondade de um nível baixo da taxa de juro. Estas ideias, se bem examinadas, revelam-se erróneas.
É verdade que o estado das contas públicas afecta o nível da taxa de juros. Mas o seu efeito é marginal. Está em causa sobretudo a componente da taxa de juros relativa ao prémio de risco. As outras duas e decisivas componentes da taxa de juro – a inflação e o juro natural derivado das preferências intertemporais dos consumidores - são influenciadas principalmente por factores externos ao país.
Por outro lado, com uma simplória análise dos interesses de classe julgam compreender a sensibilidade de largos milhões de portugueses supostamente devedores e pensam poder desprezar os também supostamente minoritários credores. Trata-se de um raciocínio arcaico, originário dos tempos medievais, quando os credores eram os ricos e os devedores os pobres. Uma análise mais atenta das economias e das classes sociais modernas indica que os termos estão agora invertidos. Actualmente, os devedores são sobretudo as grandes empresas e os detentores principais do património. Os verdadeiros credores são sobretudo os pequenos aforradores, os detentores de seguros e os beneficiários da segurança social, todos aqueles que acumularam direitos – ou seja, verdadeiros créditos – a cobrar no futuro. Portanto – embora não pareça – os juros baixos não são portadores de mais justiça do que os baixos salários.
Associadas às referidas ideias feitas sobre os juros estão as frequentes diatribes contra o sector bancário. Ouvem-se constantes lamentações dirigidas à banca, acusada de:
– ter demasiados lucros, logo praticar juros elevados;
– não conceder suficiente crédito a projectos inovadores.
Esta percepção atávica do sector bancário conduz à crítica da respectiva exigência de garantias reais na concessão de créditos. Daqui deriva a reivindicação recorrente do direito de receber crédito fácil, barato e sem contrapartidas de garantias.
A banca não é entendida como um sector de negócios com os outros. É visto como um sector social, quando não com vocação a sector público. (Repare-se na quase unanimidade da ideia de conservação da CGD no sector estatal. A proposta de privatização deste banco chegou a figurar, envergonhadamente e por fugazes meses, no programa eleitoral do PSD de onde rapidamente foi eliminada.)
Verificamos a presença de reminiscências, ainda fortes, da animosidade histórica ao negócio bancário e ao juro. Na Idade Média proibiram-se e limitaram-se ferozmente os juros. As perseguições e discriminações daquele tempo não são actos esquecidos e ultrapassados. Os nazis e os comunistas actualizaram no século XX esta concepção, com perseguições bem vivas a estas práticas essenciais ao mercado e ao capitalismo. Mais suave, o moderado e aristocrata Keynes, em longas e irracionais tiradas, desaprovou vivamente o juro, chegando a propor a sua eliminação.
Hoje ataca-se o juro através da expansão do crédito e da manipulação da taxa de juro para valores extremamente abaixo do equilíbrio de mercado. A tradição prolonga-se e permanece tendo frequentes erupções agudas nos partidos mais à esquerda, mas também nos da direita. Chega até ao mais alto nível nas instituições do Estado bem como ao pequeno e médio empresário mais atávico.
Apesar das evidências empíricas, a cultura económica dominante julga que baixas taxas de juro e dinheiro fácil e abundante levam ao crescimento. Apenas a título de ilustração, pode observar-se no quadro incluso a coexistência, nos últimos três anos, da estagnação do PIB com a oferta de dinheiro barato e abundante. Não se pode evitar de concluir que o resultado das reduzidas taxas de juro foi o endividamento acelerado das famílias.
É surpreendente a ligeireza com que se avalia este resultado. De acordo com a análise dominante, o crescente endividamento das famílias e das empresas não é grave porque os seus patrimónios também estão a crescer, sendo estes ainda suficientes para suprir eventuais rupturas. Ora, o que conta, para além do ponto de vista do negócio bancário, não é o património existente mas a capacidade de gerar riqueza – medida pela evolução do PIB – resultante do acto de endividamento.
O dinheiro barato e abundante – tendo aqui o seu lugar os fundos comunitários – ao lado dos baixos salários estão na origem do fraco desempenho da economia portuguesa nos últimos anos. Têm permitido a dispersão dos capitais em actividades pouco produtivas e evitado as reconversões sectoriais que há muito se impõem.
Infelizmente – e com os resultados que estão à vista – a doutrina dominante e há muito em aplicação aponta na direcção errada. Os seus arautos benzem-se pelos baixos juros e fazem figas contra tímidas subidas dos salários. Entretanto fazem juras expiatórias em favor de apostas na incerta educação e da etérea inovação.
O problema económico português não é apenas a ausência de coragem e de liderança política.
Quem disse que os diagnósticos estavam todos feitos?
Claro que há lugar para as grandes análises e para as pequenas, para o rápido e para o lento.
Os políticos são os que têm as maiores responsabilidades.
Cuidado com os tubarões!
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