Figure 1.--This is a bumper car attractionm at a fairground in Lisbon (1965). Some people are there just to watch. These children are hardly the poorest. Their clothes are quite good, not the old patched clothes we still see in Portugal at the time. It was still very common for children to go barefoot which was unusual in Europe at the time. Most of them are barefoot, but we also see plastic sandals and even some chiklren wearin shoes. Long pants were common, also unusual for European boys. .

We do not know much about the Portuguese economy in ancient times. All of Iberia was part of the Roman Empire. After the fall of Rome, the Iberian Peninsula was overwealmed by the Germanic tribes and became part of the Visagoths (Germanic tribe) seized control of the region as the Roman Empire fell (5th century). Portugal at the time did not exist as a separate kingdom but was just part of the Visigothic kingdom. We do not know much about the economy under the Visigoths. The Visitogothic ruling class lived apart and heavily taxed the Hispano-Roman population. The Moors overwealmed the Visigoths (8th century). Again the economic picture is not fully understood. As the Reconquista began (8th century), the Iberian Peninsula is often described as an economic and cultural bright spot of Europe. We are not sure about Portugal specifically. As European maritime techhnology and geographic understanding grew, Portugal as the most westerly country in Europe had a great advantage. The same Islamic outburst that brought the Moors to the Iberian Peninsula, had created the Caliphate in the Middle East and later the Ottoman Turks. This imposed Islamic states between the East and the West, curtailing trade. Prince Henry the Navigator championed a maritime outreach to reestablish trade with the East. Success came with the Portuguese rounded the Cape of Good Hope (late-15th century). The result was great wealth and a vast colonial empire. At roughly the same time this occurred th Jews were expelled and the Protestant Reformation rocked Europe. The Portuguese response like that of Spain was to intensify the Inquisition. The resulting supression of intelectual thought led both Portugal and Spain to become European backwaters just at the time that intelectual fermant and economic expansion was remaking Western Europe. Both Portugal and Spain beneffitted from overseas empires, both the expanding trade and resources of the colonies. Spain obtained large quantities of gold and silver. The Portuese did not find the bullion they soufght, but in addition to the expanding trade with the East they were able to obtain slaves, sugar, and other goods. Neither country (Portugal or Spain) profited as one might expect. Here the Inquisition and stifeling of free thought was a factor. Funding overseas voyages abnd building empires was expensive. The Crown and others in both countries had to borrow heavily from banks in Italy and Germany. While the loans from Jews could be canceled by eliminating the Jews, this was not possible with Christian bankewrs. And large quantities of the income from empire was used to buy goods from northern Europe where the quickening intelectual environment and the development iof capitalism was creating manufacturing industries. Portugal itself remained lasrgely unchanged, basically a rural agricutural country. Thus while the English and Dutch envied the Portugese and Spanish their vast empires, in the end these countries benefitted indorectly through trade. And Portugal remained a basically arrarian society into the 20th century. A Socialist Revolution showed some hope of reinvigirating the country (1975). Portugal joined the European Union gaining access to extensive delopment funds (1986). Portugal with these funds seemed to prosper, but this was largely illusionary. EU aid has proved no more effective in modernizing Europe than it has in modernizing former Europeabn colonies in Africa. Socialist governments created welfare state, but not a strong economy to support the various entitelents. The Portuguese today are the least educated in Europe. Less than 30 percent have complete high school. And the dropout rate is the highest in Europe. [OECD] The public school system is a failure and the country's impending debt crisis will make it very difficult for the Government to take needed steps to improve it. [Forelle, p. A1, 14.] Some industries prospered with low wages, but these industrites like textiles have been undercut by Asian producers. The entry of the much better Eastern Ruropean countries with a population anxious gto shake off Socialist economics has further undercut Portugal. Portugal has borrowed heavily to finance welfare payments, but lenders are increasingly reluctant to lend and the EU willm probably have to bail Portugal out. It is unclear to what extent the Portuguese people will accept the austrity the EU will demand. One primeminister trying to introduce austerity has already lost an election (March 2011)

Chronology

Ancient Era

We do not know much about the Portuguese economy in ancient times. All of Iberia was part of the Roman Empire. The Roman influence, howver, was srrongest on the M

Medival Era

After the fall of Rome, the Iberian Peninsula was overwealmed by the Germanic tribes and became part of the Visagoths (Germanic tribe) seized control of the region as the Roman Empire fell (5th century). Portugal at the time did not exist as a separate kingdom but was just part of the Visigothic kingdom. We do not know much about the economy under the Visigoths. The Visitogothic ruling class lived apart and heavily taxed the Hispano-Roman population. The Moors overwealmed the Visigoths (8th century). Again the economic picture is not fully understood. As the Reconquista began (8th century), the Iberian Peninsula is often described as an economic and cultural bright spot of Europe. We are not sure about Portugal specifically.

Early Moderrn Era

As European maritime techhnology and geographic understanding grew, Portugal as the most westerly country in Europe had a great advantage. The same Islamic outburst that brought the Moors to the Iberian Peninsula, had created the Caliphate in the Middle East and later the Ottoman Turks. This imposed Islamic states between the East and the West, curtailing trade. Prince Henry the Navigator championed a maritime outreach to reestablish trade with the East. Success came with the Portuguese rounded the Cape of Good Hope (late-15th century). The result was great wealth and a vast colonial empire. At roughly the same time, the Portugues Monarchy like the Spanish expelled the Jews (1492). Shiortly after the Protestant Reformation rocked Europe (1517). The Portuguese response like that of Spain was to intensify the Inquisition. The resulting supression of intelectual thought led both Portugal and Spain to become European backwaters just at the time that intelectual fermant and economic expansion was remaking Western Europe. Both Portugal and Spain beneffitted from overseas empires, both the expanding trade and resources of the colonies. Spain obtained large quantities of gold and silver. The Portuese did not find the bullion they soufght, but in addition to the expanding trade with the East they were able to obtain slaves, sugar, and other goods. Neither country (Portugal or Spain) profited as one might expect. Here the Inquisition and stifeling of free thought was a factor. Funding overseas voyages abnd building empires was expensive. A major problem for Portugal s the small populationm. The Crown and others in both countries had to borrow heavily from banks in Italy and Germany. While the loans from Jews could be canceled by eliminating the Jews, this was not possible with Christian bankewrs. And large quantities of the income from empire was used to buy goods from northern Europe where the quickening intelectual environment and the development iof capitalism was creating manufacturing industries. Portugal itself remained lasrgely unchanged, basically a rural agricutural country. Thus while the English and Dutch envied the Portugese and Spanish their vast empires, in the end both the English and Dutch benfitted indirectly through trade. Boththe Sutch and Porugues faced difficulties competing against larger countris wih more resporces.

Industrial Revolution

Portugal which had led Europe's maritime outreach became one of Europe's riches countries beiniing Europe's road to dominance in world affairs wih a vast colonial empire with possessions in Asia, Africa, and South America. Vast wealt flowed into the country, phemonal given the cuntry's small population. The wealth was, however, just as in Spain not invested in developing a productive modern economomy. Portugal gradually declines and by he 18h cenury despie having an empire had become one of Western Europe’s poorest countries. his was reflected in extremely low levels of educaion and literacy. Agriculture as in oher countries dominated the ecobomy and asmall number of families owned much of the land, although we do not yet have deails. The contry was dominaed by Mercanilist poicies and great power competition into the 18th century. The Indudstrial Revolution beghan in Brtainn (mid-18h cenury) and on the Continnt after the Napoleonic Wars (early-19th century). We also see other developmnts leading to modern Europe. such as representation democracy, public school system, civil liberties, major scientific discvoveries, and mucvh more. While most of Westrrn Europe changd, Portugal and Spain did not. Portugal and Spain were desvestated by he Napoleionic Wars. As a result of the Napoleonic War, Brazil declared its indeendence as the Brazilian Empire (1822). This meant the loss of the country's primary colony. Portugal began the traniion from an absolue monarchy to a cnsitutional monarchy with a parlimentary system. A destruictive Civil War ensued (1828-34). The constitutional monarchy made vitually no progress at industrialising and modernising the country. Portugal remained a basically meceival arrarian society into the 20th century. There was very little industrial development. Much of the populion was the landless rural population unable to take advantage of the winds of change sweeping Europe.

The 20th Century

At the turn-of-the 20th century, Portugal was a poor European backwater. Per capita GDP was well below half of the Western European average. 【Bolt and van Zanden】 Only about 25 percent of the population was literate. 【UNESCO, p. 127.】 Among increasing chaos and economic problems the monarchy fell (1910). The First Republic made little progress in solving the country's significant problems (1910–1926). The result was a national dictatorship (1926). Finance Minister António de Oliveira Salazar brought public finances under control. He created a single-party state and economic system, the Estado Novo (1930s). The Portuguese economy stagnated with little economic development. It continued to be dominated by agriculture. Portugal managed to stay out of World War II, but the country actually declined further relative to he rest of Western Europe. The Portuguese GDP per capita declined to only a little above a third of the Western European average (1960). 【Library of Congress】 A Socialist Revolution showed some hope of reinvigorating the country (1975). Portugal granted independence to its colony which meant reorienting is economy toward Europe. Portugal joined the European Union which meant gaining access to extensive development funds (1986). Portugal with these funds seemed to prosper. One assessment maintains that European membership spurred 'strong and steady economic growth'. But this may have been largely illusionary. EU aid has proved no more effective in modernizing Europe than it has in modernizing former European colonies in Africa. Socialist governments created welfare state, but not a strong economy to support the various entitlements. The Portuguese today are the least educated in Europe. Less than 30 percent have complete high school. And the dropout rate is the highest in Europe. 【OECD】 The public school system is a failure and the country's impending debt crisis will make it very difficult for the Government to take needed steps to improve it. 【Forelle, p. A1, 14.】 Some industries prospered with low wages, but these industries like textiles have been undercut by Asian producers. The entry of the Eastern European countries with stronger economies and populations anxious to shake off Socialist economics has further undercut Portugal. Portugal's economy is now a services economy. he are the largest sector witha substantial manufactuing sector. Agriculture had declined in imprance and now a relatively minor, sector, only 3 percent of output.

21st Cenury

Portugal has borrowed heavily to finance welfare payments, but lenders are increasingly reluctant to lend and the EU will probably have to bail Portugal out. It is unclear to what extent the Portuguese people will accept the austerity the EU will demand. One prime-minister trying to introduce austerity has already lost an election (March 2011).

Sectors

Like most other countries, from ancient times was based on agriculture. Portugal has a long coast but it did not lead to thriving commercial sector until modern times as there was idea of any thing but the edge of the world to the east and limited nautical technology precluded exploration. Coastal shipping connected Portugal to the Mediterranean world with the arrival of the Romans. The Romans were attracted by mineral wealth including copper, gold, and silver. Agriculture continued to dominate the economy. The arrival of the Moors changed little (7th century). Agriculture continued to dominate the economy. Fishing increased in importance during the late-medieval era. Portuguese fishermen knew about the Americas before most Europeans, fishing cod off the Grand Banks. This went on before English had any idea of what lay to the west. Until this time, Portugal and Spain was on the periphery of the European economy which had a Mediterranean focus and Byzantine connections to the Silk and Spice Routes. The Ottoman conquest of Byzantium (1453) and the Arab heartland (16th century), this trade was closed off. At the same time Prince Henry the Navigator launched an effort to open a maritime route to Asia to develop direct trade. The Portuguese voyages of discovery were done by sailing south rather than east. Finally Vasco de Gama sounded the southern tip of Africa, opening p the possibility of trade with Asia. And Portuguese navigators and armed merchants created a trading empire that brought immense wealth to Portugal. Like neighboring Spain, however, the wealth was not used to develop a modern economy, but mostly to import luxury goods for the aristocracy and rich merchants. The Inquisition and related expulsion of the Jews damaged the economy. And in the competition for empire, Portugal could not compete with the more powerful European countries. As a result Portugal continued to have a basically agricultural economy. There was an important wool industry, but most producing raw wool not textiles. Wine was also important. As a result of the Napoleonic Wars, Portugal lost its most valuable colony--Brazil (1822). Portugal was largely untouched by the Industrial Revolution. A railroad was created (mid-19th century). Portugal would be more like non-European countries as regards railroads. Iy=t imprted rather tan developing the assiciated industrial sector. Portugal declined into a European backwater. This was largely unchanged until the post-World War II movement towered European integration. Tourism has become important in today's Portugal.

Sources

Bolt, J. and J.L van Zanden. "Maddison Project Database, version 2013". Maddison Project Database. (2014)

Forelle, Charles. "A nation of dropouts shakes Europe," Wall Street Journal (March 25, 2011), pp. A1, 14.

Library of Congress. Portugal Country Studies (GPO: 1993).

Organization for European Economic Cooperation and Development (OECD). Statistics.

UNESCO. "Progress of Literacy in various countries, (1953).

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