Convergence, divergence and policy: Portugal in the European Union

Abstract

This article deals with the connections between economic policy and economic convergence and divergence in the European Union, by looking at the case of Portugal, still today one of its least developed member states. European and domestic economic policies changed across the period here studied, shifting from an emphasis on programmes aimed at fostering investment in infrastructure and knowledge, such as the structural and regional development funds, to policies giving greater relevance to fiscal and financial equilibria. This shift in policies was followed by economic divergence. As the negative correlation between growth and monetarist policies became increasingly salient, electoral shifts and governmental change led to an overhaul of economic policy. One-size-fits-all European monetary policies lowered the potential for integration, whereas a higher level of domestic participation may lead to the opposite effect, opening up the prospect of higher growth and a return to a slower, but more balanced economic convergence. The experience of the periphery may therefore have lessons for the deepening of European integration.

Keywords:

• European integration
• economic policy
• economic convergence and divergence
• Portugal

Acknowledgements

Previous versions of this paper were presented at Assembleia da República; Institute of Social Sciences, University of Lisbon; Kellogg Institute, University of Notre Dame; University of Denver; and Free University of Berlin. I would like to thank comments from participants, as well as from Martin Rhodes, Robert Fishman and two anonymous referees. The usual caveat applies.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Ultimately Prime Minister Sócrates was accused of corruption, tax evasion, and money laundering. He was arrested in November 2014 and indicted in October 2017.

Additional information

Notes on contributors

Pedro Lains

Pedro Lains is Research Professor at the Instituto de Ciências Sociais, Universidade de Lisboa and Visiting Professor at Católica Lisbon School of Business and Economics. He has recently co-authored An Economic History of Portugal, 1143–2010 (Cambridge University Press, 2016) and co-edited An Agrarian History of Portugal, 1000–2000. Economic Development on the European Frontier (Brill, 2017). His main research interests are Portuguese and European economic history and he is presently writing a volume on the history of the Bank of Portugal (1974–2000). [[email protected]]