ABSTRACT
This chapter argues that Portugal’s economic troubles of the last quarter of a century result from a combination of a specific ‘Portuguese problem’ with a wider ‘European problem’, and that the latter did not begin with Economic and Monetary Union (EMU), but rather with the efforts in the mid-1980s to increase economic integration within the European Economic Community (EEC). Responsibility for Portugal’s problems of slow growth and external imbalance can only be attributed to EMU in the sense that the monetary union project was the culmination of the stronger efforts at integration in which the EEC/European Union (EU) became involved from the 1980s onwards. The Portuguese economy had great difficulties in adapting to the wider competition of the European environment from the beginning of its membership and, as a consequence, it became one of the least open within the EU. The outcome of these difficulties was the longest divergence period since the 19th century.
