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Grupo de Estudos Monetários e Financeiros

Estudos do GEMF, N.º 02 de 2013


Portugal Before and After the European Union: Facts on Nontradables

Fernando Alexandre

Universidade do Minho e NIPE

Pedro Bação
Universidade de Coimbra e GEMF

The rise of nontradable sectors has been mentioned as one of the causes of low economic growth and external imbalances in the Portuguese economy. In this paper we describe the main trends and jumps in the evolution of nontradable sectors, since the mid-1950s, using four different databases to shed light on different dimensions of this issue. We show that, despite the pattern of the growth of the share of services being similar to that observed in other developed countries, since the early 1990s it has been significantly larger than in most countries. We find that the shift to nontradables in Portugal has been fast and that it occurred essentially at the expense of agriculture in the period 1953-95, and essentially at the expense of industry in the period 1995-2009. In 2009, the share of nontradables (defined as the sum of services plus construction) in total GVA reached 68%, if we exclude open service sectors, and 81.1%, if we treat all service sectors as nontradable. We also find that more than half of the change towards nontradables since joining the European Union took place in the period 1988-1993. Finally, we show that construction and services facing a strong Government demand  were the main drivers of the increasing weight of nontradables in the Portuguese economy since 1986.

JEL Classification: N60; N70; O14.

Nontradable Sectors; Portugal; Services, Structural Change.

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