Wednesday 24 February 2010

Incentives

There you have it... I have used every economist's magical word: incentives. Me, the only non-economist around here. Basically I just want to agree with Pedro (Pita Barros - so many Pedros, so little time...) that the main challenge for the Portuguese economy is how to produce goods that it can trade efficiently in the international market. My problem with that challenge is that all incentives in place in Portugal point in a totally
different direction: the exchange rate makes the tradable sector shrink; interest rates foster consumption and non-tradables; European support for investment is biased toward infrastructure; and, last but not least, public spending is the big engine of the growth of the non-tradable sector (public administration, education, health-care...). I know what to do: change the incentives structure. I do not know how to do it.

1 comment:

  1. That´s the problem Luciano.
    To make a step foward, How can you increase investment which will turn on the long term into value added creation and employment? How can you increase foreign investment as Portugal has a structural lack of internal investment?
    How can you push private companies to export, not only to our Spanish neiboour but worlwide?

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