Oecd Economic Surveys: Portugal 2003 (Oecd Economic Surveys)

Table of contents......Page 5
Basic Statistics of Portugal......Page 8
Assessment and recommendations......Page 10
Portugal’s cycle in the European context......Page 24
Figure 1.  Macroeconomic performance at a glance......Page 25
Table 1. Portugal and the euro area: key indicators......Page 26
Household demand is cooling off…......Page 27
Figure 2.  Contribution to real GDP growth......Page 28
Figure 3.  Aggregate saving and investment......Page 29
Table 3. Labour-market indicators......Page 30
…but inflation remained high......Page 31
Figure 4.  Inflation developments......Page 32
Export performance improved, despite the erosion of competitiveness......Page 33
Figure 5.  Competitiveness indicators and export performance......Page 34
Table 5. Change in the trade specialisation......Page 35
Figure 6. Current and capital account breakdown......Page 36
Direct investment inflows remained strong, but their nature has changed......Page 37
Monetary conditions are becoming somewhat more restrictive…......Page 38
Figure 9. Monetary conditions......Page 39
…and fiscal imbalances are being corrected......Page 40
The outlook is for a modest recovery and risks are mainly on the downside......Page 41
Figure 11. Economic confidence indicators......Page 42
Table 6. Short-term projections......Page 43
Disappointing results in2001......Page 46
Figure 12. Contributions to fiscal consolidation1995-2003......Page 47
Figure 13.  The fiscal policy stance......Page 48
Table 7.  Budget balance in 2001......Page 49
Table 8.  From the initial 2001 budget to the outturn......Page 50
The2002 budget (and supplementary budget): implementation difficulties......Page 51
Box 2. The2002 Supplementary Budget......Page 52
The2003 budget: a restrictive stance......Page 54
The Stability Programme......Page 55
Figure 14.  Fiscal targets......Page 56
Public debt trends and management......Page 57
Figure 15. Public debt scenario......Page 58
Progress with tax reform......Page 59
Box 3. Tax policy initiatives......Page 60
Primary current spending has been rising rapidly......Page 64
Figure 17. Government spending......Page 65
Figure 18.  General government outlays by economic category......Page 67
Box 4. Pension system for civil servants (Caixa Geral de Aposentações, CGA)......Page 68
Figure 19.  Main components of general government outlays......Page 70
Public investment has been boosted by EU membership despite spending freezes......Page 69
…due to flaws in the budget management process…......Page 71
…which have brought efforts at administrative reform......Page 73
Box 5. 2001Framework Law for the State Budget and the2002 Budgetary Stability Law......Page 74
Inefficiencies in human resource management......Page 75
Figure 20.  General government employment and wage bill in OECD countries......Page 76
Table 10.  Wage differences between the public and private sectors......Page 77
Table 11. Trends in general government employment......Page 78
The involvement of private finances is still limited......Page 79
Figure 21. Sub-contracting......Page 80
Table 12. Share of public procurement being openly advertised internationally inEuropean Union .........Page 81
Figure 22. Local government receipts by source of finance......Page 82
Table 13. Central Government transfers and bank liabilities of local authorities......Page 83
Education outcomes do not match costs......Page 84
Table 14. Spending and unit costs at various levels of education......Page 85
Figure 23. Total expenditure on health care......Page 87
Box 7. Transforming public hospitals into corporate entities......Page 89
Table 15. Social benefits and their redistributive effects......Page 91
Strengthening monitoring and control of the budget process......Page 93
Box 8. A synopsis of recommendations to improve public spending efficiency and effectiveness......Page 94
Better matching of resources could enforce local governments’ spending discipline…......Page 95
Setting outcome objectives and increasing incentives for managers......Page 96
Encouraging competition and extending market signals......Page 97
Portugal’s growth performance in comparison......Page 100
Figure 24. Portugal’s growth performance in comparison......Page 101
Figure 25. Private investment share......Page 103
Table 16.  Factors explaining differences in growth rates across OECD countries......Page 104
Figure 26.  The role of skills and labour utilisation in labour productivity growth......Page 105
Upgrading skills and human capital......Page 106
Figure 27. Educational attainment of the working-age population......Page 107
Table Private rates of return to education for men in selected OECD countries......Page 109
Enhancing the stock of human capital......Page 110
Portugal’s labour market performance has been impressive, despite strict regulations......Page 113
Figure 28. Labour market indicators: an international comparison, 2001......Page 114
Figure 29. Employment protection legislation: selected OECD countries......Page 115
Figure 30. Types of employment: an international comparison......Page 116
Recent changes in employment legislation......Page 117
Active labour market policies......Page 119
Figure 31. Labour market policies in OECD countries......Page 120
The general social security system: the reform process has started......Page 121
Box 10. The2002 New Basic Law on Social Security and additional measures......Page 124
Promoting a business friendly environment......Page 125
Figure 32.  Breakdown of labour productivity growth in manufacturing......Page 126
Fostering a knowledge-based economy remains a challenge......Page 128
Figure 33. Science and technology indicators......Page 129
Figure 34. ICT diffusion indicators......Page 132
The institutional design......Page 133
Progress in privatisation and sectoral reform......Page 135
Table 18. The current phase of privatisation......Page 136
Figure 35. Electricity prices in selected OECD countries......Page 139
Figure 36.  Telephone charges in selected OECD countries......Page 140
Concluding remarks......Page 141
Box 11. Implementing structural reform: an overview......Page 142
Box 12. Integrating policies relating to the different dimensions ofsustainable development......Page 145
Air pollution......Page 146
Figure 37. Performance indicators: air pollution......Page 147
Table 19. Atmospheric pollution performance indicators......Page 148
Figure 38. Urban concentrations of atmospheric pollutants inOECDcountries1995......Page 150
Table 20. Selected commitments to air quality......Page 151
Table 21. Road transport: emission standards and emissions......Page 153
Reducing water pollution......Page 154
Table 22. Performance indicators: water pollution......Page 155
Table 23. Water quality in Portugal......Page 156
Working towards the sustainable use of natural resources......Page 158
Table 24. Key indicators of sustainable use of natural resources......Page 159
Table 25. Irrigation: scope and trend......Page 160
Notes......Page 162
Bibliography......Page 177
Glossary of acronyms......Page 183
Annex I.  Local government funding......Page 185
Annex II. Private internal rates of return on education......Page 187
Table A.1. Private rates of return, 1999......Page 188
Figure A.1. Wages differential by level of education and by age......Page 189
Annex III. The 2002 National Action Plan for employment......Page 191
Annex IV. The 2002 Productivity and Growth Programme......Page 193
Annex V. Chronology of main economic events......Page 197