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Portugal Composition and Direction of Trade
Sources: The Library of Congress Country Studies; CIA World Factbook
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    Portugal's rising share of manufactured goods in total merchandise exports, which reached 80 percent in 1989, was indicative of the country's newly industrialized status. Between 1980 and 1988, exports of manufactured goods increased by 10 percent per year by volume, which was double the rate of its European neighbors, and Portugal gained market share. The country's major commodity exports in 1990 included textiles, clothing, and footwear (accounting for 37 percent of total export value); machinery and transport equipment (20 percent); forest products (10 percent, including pulp and paper and cork products); agricultural products (8 percent, mainly wine and tomato paste); chemicals and plastic products (5 percent); and energy products (about 4 percent). Portugal's comparative advantage appeared to lie with high forestry resources content (wood and cork products, including pulp and paper) and labor-intensive products (textiles, clothing, and footwear). With the participation of multinational firms, Portugal was also gaining competitive strength in the export of automobiles and automotive components and electrical and electronic machinery.

    When compared with the other EC member countries and the United States, Portugal had a strong competitive advantage because of its low wage scale. As an example, 1989 hourly labor costs in Portuguese manufacturing (in United States dollars) averaged approximately half those of Greece (a country with a similar per capita GDP), a third those of Spain, and about a fifth of most other West European countries and the United States.

    Manufactured goods (notably machinery, transportation equipment, and chemicals) accounted for about 75 percent of merchandise imports in 1989, food and beverages for about 10 percent, and raw materials (mainly crude petroleum) for about 16 percent. Portugal imported about 60 million barrels of oil yearly during the late 1980s, but the share of crude petroleum varied between 8 and 20 percent of total imports depending on fluctuations in world oil prices.

    Portugal's commodity trade was increasingly dominated by the EC (see table 9, Appendix). In 1990 the EC member countries purchased nearly 74 percent of Portugal's exports and supplied over 69 percent of its imports; in 1985, the year prior to Portugal's membership in the EC, the EC member counties purchased about 63 percent of Portugal's exports and supplied nearly 46 percent of Portugal's imports. Within the EC, the former West Germany, France, and Britain were Portugal's leading trading partners. But after the accession of both Iberian countries to the EC in 1986 (and the dismantling of trade restrictions between them), Spain suddenly emerged as a significant trading partner, taking over 13 percent of Portugal's exports in 1990 and providing 14.4 percent of the latter's imports. Thus, Spain ranked with West Germany as Portugal's premier national supplier in 1990, ahead of France, Britain, and Italy.

    The relative position of the United States in Portugal's import trade declined sharply from nearly 10 percent of the total in 1985 to 3.9 percent in 1990. Because Portugal heavily imported grain, soybeans, and animal feedstuffs, its adoption of the CAP led to costly trade diversion from former, more efficient sources, mainly the United States, to higher-cost continental EC member countries. On the other hand, Portugal's full membership in the EC would permit its manufacturers to capture a larger share of exports to EC member countries at the expense of lower-cost exporters from Latin America and East Asia; similarly, Portuguese producers of quality wine were expected to gain market share at the expense of wine producers in Southern Mediterranean countries that were not fully integrated into the EC. In both these cases, trade diversion would favor Portuguese entrepreneurs.

    Portugal's trade with the previous Escudo Area (its former African colonies) had fallen sharply since the revolution. Still, a restructured Angola under a competent, non-Marxist regime could once more offer Portugal significant opportunities for two-way trade in the late 1990s. The share of Portuguese imports supplied by the Organization of the Petroleum Exporting Countries (OPEC), which amounted to over 17 percent in 1985 (the year before the collapse of world oil prices), shrank to below 7 percent in 1990.

    Data as of January 1993

    NOTE: The information regarding Portugal on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Portugal Composition and Direction of Trade information contained here. All suggestions for corrections of any errors about Portugal Composition and Direction of Trade should be addressed to the Library of Congress and the CIA.

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Revised 10-Nov-04
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