Structural transformation of Portuguese exports and the role of foreign direct investment: some descriptive analysis for the period 1990-2005
Freitas, Miguel Lebre de
Mamede, Ricardo Paes
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In this paper we use a recent measure of the “income level of a country’s exports” proposed by Hausmann et al. (2007) to characterize the structure of the Portuguese export basket, its recent evolution and the role of FDI in this process. We find that between 1990 and 2005 the improvement in the income content of the Portuguese export basket was achieved through a positive structural transformation effect that more than offset the negative effect of having a significant share of products which have experienced a decline in their income content. In particular, we find that the weight of exports with “high” and “very high” income content increased considerably, with these two classes explaining more than half of the export growth during the period. Analysing the presence of FDI in the different export products, we find that the share of foreign firms in 2005 was higher than average for products with “High” and “Very High” income content. Those two classes of products concentrated almost 2/3 of exports by foreign firms in Portugal in 2005. These and other pieces of evidence suggest that FDI has played a relevant role both in the growth of Portuguese exports and in the increase of their income content.