Strengthening FDI and SME Linkages in Portugal

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This report assesses the enabling conditions for maximising the benefits of foreign direct investment (FDI) on SME productivity and innovation in Portugal. It looks at the quality of investment that Portugal attracts and the capacity of Portuguese SMEs to benefit from any knowledge and technology spillovers resulting from these investments. It studies the extent to which FDI-SME spillovers occur through value chain linkages, strategic partnerships, labour mobility, competition and imitation effects. The report provides an overview of Portuguese public institutions responsible for investment, SMEs, innovation and regional development policies, taking a close look at arrangements to ensure multi-level policy coordination, stakeholder consultation and evaluation of policy impacts. It then reviews the mix of government policies that are currently in place to support FDI-SME linkages and spillovers, noting areas for further policy reforms. The last chapter introduces a regional lens, focusing in particular on the regions of Norte and Alentejo. This report is part of a broader European Commission-OECD programme on strengthening FDI-SME linkages and serves as a pilot for future country assessments.


Executive summary

Portugal has been strongly hit by the COVID-19 crisis with a larger fall in GDP than the OECD average, reflecting in large part a significant population of micro-firms with limited capacity to adapt to stringent containment measures, especially in the tourism sector, as well as relatively high exposure to disruptions in global value chains (GVCs). Although the recovery is now in process, with GDP expected to return to pre-crisis levels by mid-2022, there is considerable scope to strengthen the recovery, and reduce vulnerabilities to future shocks by revitalising progress Portugal has made in recent years in developing a dynamic entrepreneurial ecosystem.


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