Portugal, a developed country?
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Update: This post comments a website that no longer exists as it did, therefore the links displayed won't function It is a strange question to ask. Regardless of what ‘development’ really means, most people would say Portugal is undoubtedly a developed country. After all, the small western European republic is part of the EU since 1986.
However it is not what it looks like after visiting the website of the country’s Business Development Agency (AICEP), a key institutions for captation of (relevant?) foreign investment within the country’s Ministry of Economy and Innovation. On their website one doesn’t take long to notice that the agency is erroneously promoting the Portuguese workforce as the cheapest of EU. Wasn’t that a policy of developing countries? A strategy that helped many countries, most notably the East Asian tigers, hook up with the developed world, learn from it and upgrade? The current reality tells us a different story. The days when cheap labour was a competitive advantage are gone, even for developing countries.
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A website is extremely important, there’s no need to explain that. So why does AICEP’s website seem abandoned? If a student, an investor, a public servant, let’s say anyone who wants to know about the institution visits the website will find, among many others, the following situations:
a) The website claims “Portugal has the lowest labor costs in the EU…” and ‘proves’ it by showing a graph from 2005 including countries such as Poland, Slovakia or Latvia, among others, with lower labour costs. Weren’t they part of the EU in 2005? Yes, they were.
b) One of the four main sections of the same website is the ‘newsroom’. This section has three “news”, and the first is related to the start of the agency under the new administration on the 1st of July, 2007! Furthermore, the sorting system of these ‘news’ is quite peculiar since the oldest of the three comes in the middle!
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Evans (2005) in his article entitled “The Challenges of the Institutional Turn” brings up some ideas on institutions:
“The possibility of institutions that are disadvantageous to long-run development emerging for idiosyncratic reasons that have little to do with any kind of overall “efficiency” or “social return” and then getting “locked-in” is all too plausible.”
“Once institutions take hold, they are likely to endure even if they have a long-run negative effect on development, crowding out the possibility for the emergence of more efficacious institutions.”
“If existing institutions provide differential returns to some portion of society, which consequently has a special vested interest in their maintenance, then the problem gets worse. If that segment is also differentially powerful, which is highly likely if not axiomatic, the problem is even more intractable.”
Let us hope it’s not the case of AICEP.