Portugal tugs at economy knots

Portugal doesn't show up -- not even at the bootom -- of any list of less developed countries. It doesn't even look like one. Its arcades and stores are full of stylish, good-quality consumer goods; and fish, fruits, vegetables and meat fill its market stalls and shops in almost superabundance.

But Portugal has the problems, however concealed, of a less-developed country.

These have appeared through a cloudy mixture of the past five years' political, economic, and social events. First was the revolutionary upheaval of 1974 and the politcal instability of the several subsequent no-majority governments. This conditionwsa further hurt by the loss of lucrative colonial export markets and consequent economic recession at home. And finally there was the influx of more than 700,000 returnees from colonial Africa with no home-country livelihood, housing, or sustaining assets.

As a result, today Portugal has an unemployment rate of about 13 percent, according to World Bank officials, inflation running at more than 20 percent (and perhaps rising), plus a negative balance of payments which is requiring the attention, both theoretical as well as literal, of international budget-planners. On top of these upper-echelon problems ar piled work-a-day economic questions: how to provide more adequate housing; where to sell more exports; how to develop management talent; and how to stimulate the all-important agricultural sector, where production has fallen to a new low.

Still, the 1980 news about the country could be called optimistic.

The December 1979 elections which brought in the country's first majority-party government in six years is regarded by many as a big forward stride. Interim governments, forceful and appealing as they tried to be, could not and did not project the country's long-range future -- in overall planning, in areas of top-level finance or in domestic-foreign economic commitments. Now, with an electoral mandate, the Democratic Alliance, a center-right coalition, should be able to set and meet far-reaching goals.

Even before the December elections, there were encouraging signs that Portugal was trying to turn around. Final figures for 1978 showed the country had reduced its current accounts deficit by 50 percent; and 1979 preliminary totals indicate this trend could continue. bolstering this were increased remittances from Portuguese workers overseas (through homeland incentives), a suprising rise in exports and a surge of tourism (up 96 percent in the first quarter of 1979) caused partly by eliminating visas for visiting Spaniards.

A prime reason for the spurt in exports, many believe, has been Portugal's official application for full membership in the European Community, which could take place as early as 1983. Many businessmen and manufacturers are gearing up, improving both systems and product quality, to compete aggressively with other Common Market nations.

The biggest obstacle to improved production in Portugal, according to many executives and industrial associations, is the lack of trained management. After 1974, not only was there fight of capital from the country, but many owners, managers, and young executives left for employment in places like Brazil and Europe; and most have never returned. Today, Portuguese businesses struggling to revitalize, realize the need to train personnel for middle and top management. Old-line, family-run companies are changing to the modern-day needs of corporate alignment.

Hiring university graduates from Portugal's traditional educational system is one answer. But according to one company director, ". . . even this requires time and up-from-the- bottom instruction. We have no MBA courses and out present graduates -- bright as many are -- have degrees in law, engineering, or they are degree-economists. The acountancy majors, the marketing-oriented analysts, the production-interested people, and others which we need, we will have to train ourselves."

Reaching out for world financial help, Portugal revised its foreign investment code in 1977. Today, is Foreign Investment Institute is inserting magnets inside sections of the US, Japanese, and West German economies. The theory behind this promotional strategy is to encourage these developed countries to become joint-venture partners in the manufacture of products inside the huge European community once Portugal gains full admission. Already several auto manufacturers have shown active interest. There is room, too, for future foreign investment to help improve Portugal's agricultural sector, which at present is stagnated in holdover land reform problems.

All of Portugal's interim governments since 1976 have stressed the need to stimulate and reconstitute the private sector. Earlier political changes caused widespread nationalization of business and industry, and many companies still have government participation in their operations. Gradually, this situation has been changing. Many companies have been returned to private hands, and this is expected to accelerate under the new government. Liberalization of insurance and banking regulations is expected.