European Economic Integration and Countries in Transition: Lessons from Portugal

Portugal was the least developed country to join the European Communities before the Eastern enlargement. Its economy was characterized by weak commercial ties to Europe, a large agricultural sector employing more than one fourth of the labor force, lacking infrastructure and capital-intensive industries, and having a high illiteracy rate. Integration into the Communities influenced the transformation of Portugal into a modern market economy through three different channels. Firstly, the liberalization brought about by the common market attracted important foreign investments, induced domestic investment activity, promoted the competitiveness of light industries, and consolidated trade relations with Spain. Secondly, the modernization of sectors governed by the specific national or European policies (agriculture, fisheries, banking), was largely affected by the capabilities of the Portuguese administration. Thirdly, the EC Cohesion Policy contributed largely to the convergence with...Show morePortugal was the least developed country to join the European Communities before the Eastern enlargement. Its economy was characterized by weak commercial ties to Europe, a large agricultural sector employing more than one fourth of the labor force, lacking infrastructure and capital-intensive industries, and having a high illiteracy rate. Integration into the Communities influenced the transformation of Portugal into a modern market economy through three different channels. Firstly, the liberalization brought about by the common market attracted important foreign investments, induced domestic investment activity, promoted the competitiveness of light industries, and consolidated trade relations with Spain. Secondly, the modernization of sectors governed by the specific national or European policies (agriculture, fisheries, banking), was largely affected by the capabilities of the Portuguese administration. Thirdly, the EC Cohesion Policy contributed largely to the convergence with other Member States, but did not eliminate the regional disparities inside of Portugal. Most of the findings regarding the effects of the European economic integration prove to be applicable also in case of the Czech Republic and Hungary, undergoing their transformation and Europeanization two decades later.Show less

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European Economic Integration and Countries in Transition: Lessons from Portugal