Portugal’s export decline produced slow growth and heavy debt before 2008

Evidence

Portugal’s two main export industries, footwear and textiles, were clobbered by Asian and Eastern European competition in the 1990s. As a consequence, its trade deficits widened and its competitiveness fell while the services sector, much of which is nontradable, took up the slack. Young people increasingly went into education, temporarily lowering, at the public expense, the unemployment rate, without necessarily increasing skills. As The Economist magazine wryly noted, “The number of lawyers increased by forty-eight percent between 2000 and 2010.” Meanwhile, growth per person averaged 0.2 percent per year over the same period, while combined public and private debts reached over 240 percent of GDP by 2010. — Mark Blyth, Austerity, 193

Categorization

• XREF: The education-as-unemployment-buffer dynamic parallels critiques of service-economy expansion in other periphery states. — connects to: Capital inflows had masked Portugal’s underlying demographic and growth deficits — Mark Blyth, Austerity: The History of a Dangerous…, 194; Germany’s 2008-09 recession was driven almost entirely by collapsing exports — Mark Blyth, Austerity: The History of a Dangerous…, 156; Deindustrialization made Spain’s growth model dependent on external income and debt — Mark Blyth, Austerity: The History of a Dangerous…, 186

Broader Connections

• Germany’s 2008-09 recession was driven almost entirely by collapsing exports #exemplifies (0.78) — Mark Blyth, Austerity, 156
• Deindustrialization made Spain’s growth model dependent on external income and debt #exemplifies (0.72) — Mark Blyth, Austerity, 186