ABSTRACT
The response by Western European countries to the Revolution of the Carnations was an outpouring of loans and technical assistance from governments and international agencies wishing to see democracy established in Portugal. Portugal’s economy was strongly linked to its overseas colonies. Antonio de Oliveira Salazar’s New State was neither capitalist nor socialist. The two main characteristics of the economy were extensive state management and a predominantly privately owned sector that controlled the means of production. During the 1960s, faced with the challenges of the liberation movements in the African colonies, Salazar decided to open up Portugal’s economy to foreign investment in order to spur economic development in the metropole as well as overseas. As foreign investment caused the economy to expand greatly during the 1960s, there were serious problems. By the early 1970s the Portuguese economy had been transformed. A plutarchy of some forty families allied by marriage came to dominate the economic life of the country.
