Portugal must focus on innovation to overcome economic woes

Cuts to higher education, research, science and technology funding in Portugal will make it difficult to exit the economic crisis, warns Miguel Viegas

By Miguel Viegas

25 Sep 2014

Portugal is currently facing one of the biggest challenges in its contemporary history. During its poorly-handled accession to the European Union, for which our economy was underprepared, Portugal started to lose its productive capacity with a subsequent increase in trade deficit. Portugal’s entry into the euro, entailing the adoption of an overvalued good in relation to its productivity, further aggravated the situation, increasing its external imbalance to the point of it becoming unsustainable.

With the arrival of the troika in Portugal in May 2011, the correction of external and internal imbalances became a key objective. Since then, the Portuguese government, beset by the European commission, the European central bank and the international monetary fund, has not sought ways to meet the adjustment objectives relating to foreign debt and government deficit. Regrettably, the government has failed to recall that imbalances arise from a lack of economic growth. Thus, to solve Portugal’s problems, it is necessary to invest, and to do so wisely.

Consequently, what we have witnessed in Portugal is the implementation of swingeing public spending cuts. These cuts principally affect overall government investment, and the education and research sector. Higher education cuts of €14m have already been planned for 2015. Funding for research conducted in Portugal by the Portuguese foundation for science and technology (FCT), will also be cut, once again due to the ongoing evaluation process. In relation to the evaluation process carried out on the FCT, we have found that of the 322 units evaluated, 71 will be left without funding from 2015- 2020 and 83 will only receive between €5000 and €40,000 per year, which does not even cover current spending.

"The stifling of our scientific establishment, which has already led to the emigration of hundreds of top researchers, as well the discontinuation of numerous research projects, truly condemns Portugal to retrogression and underdevelopment"

In view of this situation, which makes exiting the crisis difficult, we recently sent a request to the European commission, as these cuts will also end up conflicting with fundamental objectives agreed by Portugal under the targets of Europe 2020. Its response could not have been clearer. The commission shares our concerns; however, it has said that the evaluation process of the research units is the sole responsibility of member states. As far as we are concerned, we shall use this response to challenge the Portuguese government in terms of the need to focus on innovation as part of the solution to our problems. The stifling of our scientific establishment, which has already led to the emigration of hundreds of top researchers, as well the discontinuation of numerous research projects, truly condemns Portugal to retrogression and underdevelopment. Furthermore, we believe that with the EU and the relaxation of the stability pact declared by the new president of the commission on the day of his election, it is possible to differentiate the various types of government spending.

There is, in fact, worthwhile government spending, as is the case for education and research. There is also unproductive expenditure, which goes directly into the pockets of big businesses as tax breaks or contract counterparts through public-private partnerships, which does great damage to the public purse. We believe that the rules of the stability pact could deal with these different forms of expenditure in another way.