Portugal: An Exemplar among Emerging Economies

In talking of democratic ideals and their earnest execution, we all think of the usual suspects. So to is the scenario when we talk of innovation, economic acceleration, beautiful cityscapes & enthralling professional opportunities - even social prosperity for that matter. No one’s denying that Australia, Switzerland, The UK, USA or Canada should be recused from the list - far from it. These nations have rightly earned their seat at the table. But the family of developed, burly economies also has one, shy & quiet cousin that has achieved just as much. This quaint alcove, hidden behind the hubbub of industrial powerhouses, exquisite in its ecology and diversity, is Portugal. Portugal has a long, long history of embracing diversity and fostering cosmopolitan communities. It was one of the first nations in Western Europe to abolish slavery in the 1761 - but even beyond that, the humane & cosmopolitan consciousness has carried over to the present. Take a look at any multinational covenant in the last 2 centuries. Then, take a look at what they seek to ensure & inspire. And hold any emerging economy in comparison. This exercise will tell you two things - one, that whether you belong to the eastern hemisphere or western, there is a long way to go in terms of socio-economic balance; and two, Portugal might very well be the model state that Amnesty, UN & Red Cross stole their preambles from. Lazy jokes aside, Portugal belongs to the elite club of liberal, progressive states that have been a beacon of hope for human rights activism, social welfare, creativity & progressive academia. This brings us to the meat of the matter. Portugal comes nowhere near the frequency with which the aforementioned destinations are mentioned in deliberations over institutional efficiency, accountability, eco-sensitive & sustainable growth, diversity, inclusion...the list could go on. But why?

Scandinavian bloc members have long enjoyed the momentum the label has bestowed on them, in the sense that not only did their cultural influences evolve into a brotherhood - but even individually, they have reaped immense benefit, that would have otherwise been foregone, had it not been for upwardly mobile fellows on both sides. Together through many peaks and troughs, each of these nations has frequently been doyenne to its neighbour at one point of time or another. To a considerable degree, this influence marginalised a lot of developments: both cross- pollination, and the visibility of Portugal’s progressive policies, purely by virtue of the bloc’s muscle. Take a glance at the basics of communal inclusivity, that have dominated democratic dialogue on international pulpits. Portugal decriminalised reproductive autonomy, ensured LGBTQ equality, and implemented myriad rehabilitative policy for the betterment of its populace, natural or otherwise. These issues were deliberated upon & brought to public purview long before the current flag-bearers had arrived. Understated as it may be, it is important to note that the Portuguese efforts were being made in the absence of international support that modern democracies take for granted nowadays. As an example, Portugal has taken bold steps to promote women in business and politics. It was the first country in Europe to have gender parity in government, with women holding 51% of cabinet positions. The country also ranks highly on the World Economic Forum's Global Gender Gap Index due to laws guaranteeing equal pay, parental leave for both parents, and bans on gender discrimination. As a result, Portugal now has one of the smallest gender pay gaps in Europe. This progressive spirit lives on even today, through policies that support immigrant rights, environmental protection, welfare and much, much more. It is the reason it’s counted as one of the safest (3rd, to be exact, by the Global Peace Index) countries in the world.

Status Quo

Europe has long experienced the ebb and flow of migration. In the years after World War II, the number of migrants arriving from outside Europe rose substantially. More recently, the European Union has continued seeing sizeable migration inflows from non-EU countries.

The Hurdles Migrants Face

The progressive and flexible policy framework of Portugal has amassed myriad benefits for itself as well as its trading partners. No one can fault the bureaucracy, or anachronistic politics in terms of hindering growth - economic, industrial, professional or humanitarian. Enough with the smalltalk. Let’s get down to the meat & potatoes - Mobility
Portugal is a leader in immigrant integration. It grants citizenship to immigrants' children born in the country and allows immigrants to vote in local elections - both are rare virtues in the coterie of developed nations, but have remained crucial in edifying Portugal’s understated-but-solid position in global fora - whether it’s the industry, or the hearts and minds of the people. Typical socio- economic barriers for immigrants, also endemic to the developed world, are pleasantly absent here. The country has grown by leaps and bounds over the last 3 decades. In 1986, it was the poorest member of the EU. But the unflinching & steady string of political reforms, educational-vocational revamps, renewable energy tech & sustainable development from day one, have borne fruit today. Today, Portugal stands as one of the most future-proof markets in the region. It has also become the leading destination for retirees seeking calm & simplicity (I’m looking at you, America), digital nomads & savvy entrepreneurs. On the HR/labour market side, this economic strengthening has been provided through a fillip to occupation-based migration. Though the majority of the resident population is greying, and reproductive rates are well below the replacement ratio, Portugal’s open-border policies for skilled HR & investors have allowed immigrant-integration like no other nation in the world. Their forward- thinking directive has only added to the robust of the economy, ensuring that it doesn’t tumble under the pressure of welfare spending, and the decreasing domestic-labour force participation. As a demonstration, GDP/capita has quadrupled from 1990, crossing $30,000 as per the most recent assessment of the IMF.

StartUps & Commerce

Predictably, these factors have added to the welcoming nature of the country, especially in terms of professional opportunities, investments & B2B commerce. Combined with its attractive visa & mobility programmes (Digital Nomad, D2, D7 etc.), Portugal has become one of the most sought-after destinations among people who look beyond what is displayed on the first Google page. With its widespread acceptance of expats, a laid-back & peaceful culture, access to Schengen members, and (to a lesser, yet still vital extent) pleasant weather, the country is witnessing a surge in youthful go-getters from all over the world coming in, and adding to the richness of the cultural and economic landscape. In this sense, the Portuguese economy provides an extremely atypical & rare combination of developed-world infrastructure and emerging-world growth opportunities. This has led to a lower cost of doing business compared to its peers, supplemented by ease of doing business and a harmonious cost of living. The public authorities, for their part, have also aligned policy framework to facilitate the growth- hunger with a bevy of subsidies, schemes and tax-breaks for enterprises and the enterprising. The full-scale embrace of the open European market, appreciation of knowledge transfer and congenial regulatory environment have catapulted the nation forward farther than anyone could have imagined. All the anachronistic notions of “small market, limited growth” have been put to rest. Portugal is now witnessing a surge in their startup ecosystem, with programmes like the StartupPortugal Visa, which has been an unequivocally resounding success. Domestically too, homegrown startups have done exceedingly well. Lisbon, Porto, Coimbra, Braga - each have a specialised industrial AoI, and have generated an astounding amount of business flow and top-notch incubation over the last decade. The impact?

7 Unicorns have emerged since policy inception, encompassing luxury goods, philanthropy, AI, SaaS, healthcare & fintech - to name a few. Together, they account for a staggering 15% of the national GDP.
IPNIncubadora, a homegrown setup, has matured into the best IT incubator in the world.
Lisbon has earned the label of “the new Berlin” in the IT StartUp vernacular.
It’s known to have one of the best communication infrastructure models in the world.
An optimally-tweaked tax regime has been put in place for FDI & third-country merchants, very welcoming for offbeat & savvy investors.
A steady growth of positive business sentiment & investor confidence post-Covid.
Though not exclusive to startup initiatives, exports have skyrocketed as well. Portugal now sells more goods per capita than economic powerhouses like Canada, Italy or Spain.

Investments

All of these goodies have translated into cold, hard currency too, not just feel-good cosmopolitan vibrance. Portugal has been ranked first by OECD, in terms of inward FDI, accounting for a whopping 71% of its GDP. Investor sentiment is also rebounding after Covid, thanks to the foundational resilience of forward- looking policy initiatives. So even though tourism (the erstwhile breadwinner) took a big hit, the economy is growing at a healthy pace, especially in comparison to other tourism-dependent peers. And by the same token, the country is capitalising on this opportunity to diversify their economic portfolio, reducing a much-needed dependency on just one industry to carry it on its shoulders. It has inspired many novel policy initiatives, like the Active & Youth Employment initiatives, to enhance skilling & vocational training infrastructure, Industria 4.0 to build-up the tertiary sector and FDI Priority, to enhance market competitiveness, plus the long-term National Innovative Agenda 2030, to bolster the ease of doing business & inward investment flows.

Forging the Path Ahead

The aforementioned virtues and initiatives have made Portugal one of the most desirable startup hubs in the world. More and more disruptors, digital nomads and investors are flocking to the nation to take advantage of the manifold benefits it bestows, in both professional and personal spheres. Most impressively, Portugal has set the ball rolling on this concerted economic transformation, while maintaining its commitment to social equality and environmental sustainability. It has one of the lowest inequality levels in the developed world. And where some countries see sustainability, pro-migrant policy and growth as competing priorities, Portugal has proven they can advance hand in hand.