The Turkish-American Professor of economics, Daron Acemoglu, from the Massachusetts Institute of Technology (MIT) that Portugal has identified two problems regarding Portugal’s economic prospects, one of which involves "aspects that are very archaic."
The renowned economist, he is in the world's top ten, said that the main problem is that Portugal is way behind in terms of its human capital because its workforce has not been sufficiently educated, but now it is catching up.
Acemoglu went on to explain that "the second problem is that many aspects of the Portuguese economy are archaic." The economy is not geared to "create jobs, especially jobs with high productivity," said the 46-year old economist who was attending a Deutsche Bank and Catholic University sponsored conference entitled "How to make Portugal more prosperous."
Asked in an interview with 'Expresso' about Portugal's three years of adjustment which has now come to an end, the economist said there had been much positive progress, but stressed that there is still much to be done with regard to the public sector. Also, he warned also that this was not the time for domestic consumption to start rising.
Acemoglu also referred to the adaptation made to the Portuguese economy in the post-financial crisis but that has been using “the strengths that were already there" such as in tourism, agriculture, footwear and clothing which does not create new strengths.
"The reforms that were made in the last three years have been in the right direction, but I see that Portuguese society as a whole has sensed the gravity of the situation and the urgent need of reform."
"What I can say is that the public sector as a whole is too large and inefficient in Portugal. It has to be included in a debate about which parts of government are necessary and which are not."
This is a debate that Prime Minister, Pedro Passos Coelho, has had from time to time, he realises what needs to be done to trim the fat of the state, and then backs down in the face of union pressure and Constitutional Court rejection of his key measures.
