Portugal

PORTUGAL IS ONE OF EUROPE'S smallest countries, whose expectations of economic growth have increased after joining the European Union in 1986. In 2002, Portugal was also among the first countries to adopt the euro. The economic policies of privatization pursued by the different governments that have ruled the country stimulated a steady growth of Gross Domestic Product (GDP) during the 1990s.

Several state-controlled firms were privatized and entire sectors were liberalized. In 2004, estimated Gross Domestic Product reached $188.7 billion, although in the new millennium, the country has attracted lower foreign funds because of major competition from eastern and central European states and Asian nations. In addition, it has been calculated that the 100 largest companies in the country account for 17 percent of the total GDP, pointing to an imbalance in the distribution of wealth. Despite the positive record of the 1990s, poverty has played, and still plays, an important part in the history of Portugal.

The early history of Portugal, from the Middle Ages to the mid-17th century, was marked by its leading role in the explorations and colonization of the world. Settling Brazil, several African areas, India, China, and Japan, made Portugal a rich nation. Yet, after a disastrous earthquake in 1755 and the defeat inflicted by Napoleon, Portugal began to lose its power. During the 19th century, economic recession affected the country, leading to higher levels of widespread poverty and social unrest.

The economic decline of Portugal continued during the 20th century, when the country was shaken by different coups d'etat and lost all its colonies. The longest regime was the fascist Estado Novo (New State), which Antonio Salazar established in 1933 and the bloodless Carnation Revolution overthrew in 1974. Salazar and his follower Marcelo Caetano proved unable to keep the economic development of Portugal at the same pace as the other European countries.

Thus while Europe enjoyed economic growth, Portugal remained behind, as the regime feared that industrialization would destroy the traditional values upon which it had built its political power. This policy left Portugal one of the poorest countries in western Europe and its citizens were forced to escape poverty by emigrating to other nations.

The phenomenon of emigration started in the 1950s, but took dramatic proportions the following decade when more than one million Portuguese went to take up jobs in northern and central Europe and another million emigrated to the United States. With the restoration of democracy in the mid-1970s and the economic boom that followed, emigration slowly diminished.

In spite of the economic successes of the post-Salazar years, poverty remains a serious problem in Portugal. The economic development that the country has enjoyed since joining the European Union (EU) has benefited only a sector of the population. Poverty still restricts the lives of 20 percent of Portuguese citizens. If the state subsidies received by those considered at risk of poverty are not taken into account to calculate the poverty line, the percentage rises to 26 percent.

Portugal has witnessed the largest income gap among the 15 richest EU members, and it also has had the highest growth in social inequality among western European states. The distribution of wealth has also experienced a geographical imbalance. The big cities of Lisbon and Oporto, along with other urban centers along the Atlantic coast, have experienced steady growth at the expense of the rural, inland areas.

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