Portugal Has Changed More Than We Think

Portugal Has Changed More Than We Think

There are readings that draw our attention to a specific piece of news. Others become interesting because, when we put together several numbers and trends, we begin to see a reality that is not always evident in the daily debate.
That was the feeling I had when reading the September issue of AICEP´s Portugalglobal magazine. More than any isolated data, what caught my attention was the image of a Portuguese economy quite different from the one we still often use to describe the country.
It does not mean that our problems have disappeared. Portugal continues to face well-known difficulties in productivity, wages, the size of companies, housing, bureaucracy and the ability to execute. But focusing exclusively on these weaknesses can also prevent us from perceiving a transformation that is happening before us.
An economy much more open to the world
In 2007, Portugal exported around 54.7 billion euros in goods and services. In 2025, this value reached 133.9 billion. Exports went from 31.2% of GDP to 43.7%.
Foreign investment has also gained another dimension. At the end of 2025, the stock of foreign direct investment in Portugal reached 213.7 billion euros, equivalent to about 70% of GDP.
These numbers tell an important story. In less than two decades, Portugal has become a much more international economy.
Part of this transformation was born, curiously, from one of the most difficult periods in our recent economic history. The financial crisis and the debt crisis forced many Portuguese companies to look for foreign markets because the domestic market practically disappeared. What started as a necessity ended up, in many cases, definitively transforming the business culture.
Today there are thousands of Portuguese companies for which the market is no longer Portugal. It is the world.
But we´re not just exporting more
This is perhaps the point that caught my attention the most.
In 2025, around 44% of Portuguese exports of goods already corresponded to products classified as medium and high technology, worth close to 35 billion euros. Since 2021, these exports have grown by an average of 7.5% per year.
Cars and components, electrical equipment, electronics, precision instruments, information technologies and pharmaceutical products are today a significant part of what Portugal sells to the world.
This does not mean that traditional sectors are disappearing. On the contrary. Textiles, footwear, furniture, ceramics, agri-food or construction materials continue to be fundamental. Many of them have, in fact, made an extraordinary transformation, adding design, technology, sustainability, brands and services to the industrial capacity they already had.
What is happening is something different. The Portuguese economy is becoming more complex.
Traditional Portugal was progressively joined by a Portugal of engineering, software, health, mobility, aeronautics, space, defense, energy, artificial intelligence and technological services.
There is a Portuguese industry that we know little about
Another issue of the magazine is particularly revealing.
Metalworking and engineering represent around 25 billion euros of exports, more than 200 thousand workers and presence in more than 200 markets. Mobility adds a huge industrial chain linked to cars, components, two-wheeled vehicles, railways and intelligent transport systems.
When we talk about the Portuguese economy, however, this is rarely the image we convey.
Portugal is often presented through tourism, real estate, wine, footwear or, more recently, startups. All are important. But between the traditional economy and the new digital economy there is a huge industrial base that employs thousands of people, exports tens of billions of euros and is integrated into the value chains of some of the largest international companies.
Maybe we need to get to know this Portugal better.
Stop competing only on the price
Then there is a second transformation that I consider even more important.
For decades, a relevant part of the Portuguese proposal to attract investment was based on a relatively simple idea: Portugal offered a European location with competitive costs.
This advantage helped to industrialize and internationalize the economy and continues to be important. But it can hardly be the economic strategy for the coming decades.
If we want higher wages, we cannot build our competitiveness on low wages.
If we want to increase productivity, we need to produce things with greater value.
And if we want to attract better investment, it is not enough to ask how much capital enters Portugal. We need to ask what kind of investment we are attracting and how much value remains in the country.
An industrial unit is important. But it becomes much more interesting if we add engineering, research, product development and national suppliers to production.
A technological center is important. But it will have an even greater impact if it develops intellectual property, trains people, creates companies around it and brings decision-making capacity.
The goal should be to progressively rise within international value chains.
The next competition will be much more demanding
Portugal has some interesting advantages for this new economy: Atlantic location, European integration, renewable energy, infrastructure, universities, engineering capacity, stability and an increasingly international generation of professionals.
But having advantages does not automatically mean knowing how to take advantage of them.
Competition for investment is changing rapidly. An industrial, technological, or artificial intelligence project may require huge amounts of energy, connections to the power grid, fiber, prepared land, skilled workers, and fast permitting processes.
This is where one of the biggest differences between having potential and being able to transform it into real savings begins.
We may have excellent engineers, but we need to be able to retain them. We can produce renewable energy, but we need networks capable of transporting it. We may have a strategic location, but we need infrastructure. We may want large investments, but we must be able to decide and license within deadlines compatible with international competition.
The quality of implementation will increasingly be an economic policy in its own right. The real goal is
salaries In the end, all this discussion about exports, investment, technology and industry should serve a fairly simple objective: to create an economy capable of paying better wages.
Wages do not increase sustainably just because we want them to. They need more productive companies, more qualified workers, greater investment and economic activities capable of generating more value for each hour worked.
That is why what Portugal exports, the companies it can create and the investment it can attract are so important.
The greater the knowledge, technology, engineering, intellectual property and decision-making capacity that we can maintain in the country, the greater the possibility of increasing the value created per worker.
Perhaps we need to update the image we have of Portugal
There is a Portuguese tendency to discuss the country through its problems. Some are serious and urgently need solutions. Recognizing what is working does not diminish them.
On the contrary, it helps us to understand where we should insist.
Portugal is not the economy it was when the financial crisis began. We export much more. We are present in more markets. Our industry has become more sophisticated. New technological sectors have emerged. International investment has increased and we have started to compete in activities where twenty years ago we would hardly have imagined finding Portuguese companies.
We are still far from where we can go.
But perhaps this is precisely the most interesting conclusion I have drawn from this reading.
For many years we have asked how Portugal could become a more international, technological and productive economy. Part of this transformation has already begun.
The challenge of the coming years is no longer just to change the Portuguese economy. It is to understand the change that has begun, accelerate it and ensure that the value created by this transformation remains more and more in Portugal.