Contribution to the Public Discussion of the “Strategic Vision for the Economic Recovery Plan of Portugal 2020-2030”

1. Previous Note

This contribution to the public discussion is made in a personal capacity and does not involve an appreciation of all parts of the document. It will be limited to the areas in which the signatory has had more experience and technical and scientific knowledge.

2. Global Appreciation

In recent years, the opportunity to resume the practice of medium and long-term planning has been discussed, focused on defining orientation strategies for the entire economy and a more binding commitment for the public sector.

It is often said that planning in a context of uncertainty is a useless attitude. Now, it is precisely in this context that the analysis of development options, in a strategy statement work, makes the most sense.

In this context, I believe that the exercise of defining the strategy for the Economic Recovery Plan is necessary, not only for the negotiation of community financing, but also for the orientation of economic agents in Portugal and in their relationship with the world.

I would also like to underline the recommendation made in the document on a more promising articulation between the State (at national, regional and local levels) and business.

The economy as a system is based on the relationships between economic units. However, the role of the State as a guide in public policies, in major structuring projects and as a regulator of the functioning of the economic system, namely with regard to the correction of "market failures", which reduce the efficiency in the allocation of resources, should assume a preponderant role, without taking the place of companies.

3. Modernization of Public Administration and Territory Cohesion

The document rightly establishes a relationship between economic and social development and efficient functioning of the Public Administration.

The effectiveness of public policies depends on its updated reformulation and the State's ability to understand society's problems, define the recipients of public policies and the opportunity (especially their cost) in the respective decision and execution (according to the attributions and competences of each level of public administration).

When talking about the “financial bazooka” of community funds, it is essential that the State know, as a “municitor and shooter”, what is the skill and shooting time for the good use of that “weapon”.

Experience tells us that wasted funding and lost income are largely due to excessive administrative steps and procedures. So far, the services of the European Commission are not a very good example of administrative simplification and find fertile ground for complicity in the creation of bureaucracy in the Portuguese Administration.

Never, like now, and here, a firm political leadership that is aware of the problems and their solutions is needed.

In this sense, this "Strategy" must contain a specific reference to the process of analysis, evaluation and decision of the projects that are part of the Recovery Plan. This document (now under public discussion) has, however, an aspect of sensitivity to the competitiveness of the territory and its importance in making the distribution of income throughout that territory more democratic (equity).

It starts with this, identifying not only the geostrategic insertion of Mainland and Insular Portugal, but also and very especially the endogenous resources in each portion of the national territory and the new role that infrastructures for mobility and trans-European connectivity will have.

I believe that the combination of a modern Administration with the use of Resources should be made relevant, in terms of reform, in the perspective that many administrative procedures have been one of the causes for the waste of resources, for the removal of many investment projects and the aggravation of inequality of opportunities throughout the national territory.

An effective decentralization process (as in most other European countries) is an opportunity for public administration reform. Regardless of the form of this process (which can be configured in the creation of Administrative Regions, under constitutional terms) significant steps must be taken in the reorganization of this Administration. The good practices that already exist are noteworthy, namely those carried out by the Administrative Modernization Agency (AMA) and in a significant number of Local Authorities.

The signatory, having been part of the Independent Commission for Decentralization, created by the Assembly of the Republic in 2018, and coordinated by Eng. João Cravinho, cannot fail, in the scope of this matter, to refer to the Report published in July 2019.

4. Reindustrialization and Diversification of the Country's Productive Base

This theme is one of the most important for a new development and one of the most misleading ones.

I am one of those who consider that the manufacturing industry is one of the sectors that creates the most value, not least because of its capacity for innovation and technological development. The excellent Portuguese engineering also has a highly competitive role in the international context.

Furthermore, the development of this sector makes it possible to contribute to one of the strategic objectives of diversifying the productive base of our economy, which is essential to ensure the sustainability of the economic system and the creation of employment and income. All policies to bring the scientific and technological system (especially universities) and companies closer together are to be fostered, even because of the results that are already evident in many domains.

The recent events arising from the Covid 19 pandemic demonstrated that the weakness in the industrial sector affected not only the autonomy in the supply of essential products, but also weakened the functioning of the economic system. It should be noted that we are talking about industries with a strong technological base and not components that are already outdated in technical terms and in terms of market demand. This confusion between “industry and pollution” will perhaps be the main cause of prejudice against reindustrialization.

5. Agriculture and Fisheries and Food Production

Portuguese agriculture with its capacity for innovation is perhaps one of the least revealed secrets in our society. The combination of several factors contributed to the relative economic success of this sector, the main one being the qualification of new entrepreneurs and the technical teams that support them.

This capacity for innovation is also being verified in the fisheries sector.

These new capabilities have revealed a high degree of sustainability due to the characteristics of the markets in which these two sectors are inserted (people eat every day!).

At this point, it is also worth mentioning the need to create better framework conditions and to attract investments, in the logic of taking advantage of marine resources, taking into account the importance of the sea for Portugal.

Finally, it should be noted that both agriculture and fishing are extremely competitive for the promotion of tourism in Portugal, and it can even be said that they are part of the tourism product itself.

6. A reference to the specific case of the Algarve

A document of this nature does not have to make more detailed references to specific areas of the national territory. The justification for including this point is to use the signatory's experience in monitoring the development of the Algarve over the past 35 years. I will try to focus the analysis on the issue of diversification of the regional productive base, on the various aspects of tourism and on the new opportunities created in the health sector.

In 1986, a PDR (Regional Development Program) was presented, prepared by the then CCR Algarve, with the aim of framing and justifying community funding.

One of the strategic pillars of this PDR was already the diversification of the productive base and the creation of conditions in the Algarve to attract new investments, using the University, climatic and natural conditions and accessibility as competitiveness factors (namely the International Airport of Faro and regional road and rail links with the rest of the country and Spain).

This strategy was not fully achieved. On the contrary, there was an excessive concentration in tourism, which increased the fragility of the regional economy, which is clearly evident in the current context of the crisis caused by the Covid 19 pandemic.

It seems to me that the proposed strategy for the country, explained in the document under analysis, can be reproduced in the Algarve, with the necessary adaptations.

In fact, tourism is a sector with great potential for Portugal and for the Algarve in particular. Therefore, the continuity of its development must not be neglected. This should, however, include policies to diversify and encourage new upstream and downstream activities (linkage effects).

Agriculture and especially fishing are sectors whose development can be induced by tourism, in a region such as the Algarve, and make, as mentioned above, part of the tourism product, thus contributing to the modernization and growth of trade and catering. Sport and recreational boating are also sectors to be considered.

In addition to these “effects”, which in themselves create a new regional economy, there are opportunities to develop a new technology-based economy in the Algarve (of which there are already examples of successful companies in this area).

However, it is worth mentioning, as a special case, with objective conditions to grow and create value, the development of a new sector that we can call the “health cluster”.

In addition to the general conditions for the attractiveness of innovative projects, the recent possibility of deconcentrating a set of healthcare services in the Algarve creates an objective opportunity for the emergence of that “cluster”.

In fact, the “Algarve Biomedical Centre” (ABC), resulting from the consortium between the University of Algarve (through the Faculty of Medicine and Biomedical Sciences and associated research laboratories) and the University Hospital Center of the Algarve (CHUA), proposed to the Ministry of Health, a collaboration with various institutions under the responsibility of the same.

This resulted in the creation of a Working Group created by order No. 5308/2018 of the Minister of Health, which concluded a report in December 2018, which points to a set of collaborative initiatives, in the Algarve, which involve, in addition to the ABC , INSA (National Institute of Health Dr. Ricardo Jorge), INFARMED, IPST (Portuguese Institute of Blood and Transplantation), DG Health and CPMS (Shared Services of the Ministry of Health).

This “cluster” will not be based only on the administrative deconcentration of those institutions, but will allow a greater capacity for scientific investigation, the development of health tourism and the attraction of companies in the pharmaceutical industry.

Author Adriano Pimpão is Economist, Professor Emeritus of the University of Algarve and former Secretary of State for Regional Development (1995-97)