Alvarenga long term_scenarios_building

Long-term Future of the
Portuguese Economy
a Scenario Building Process

12th October 2012

The Scenarios Roadmap

2

Groundwork

Cenários, Reflexões e Planos Estratégicos de Longo Prazo em Portugal
http://www.cenariosportugal.com/_files/4_compilacaoCenarios.pdf

Projectos Internacionais de Cenários
http://www.cenariosportugal.com/_files/02.Compilacao_de_Projectos_Internacionais_de_Cenarios.pdf

Colecção de Cenários Globais – Selecção e Análise de Projectos Internacionais de Cenários
http://www.cenariosportugal.com/_files/01.Coleccao_de_Cenarios_Globais.pdf

DPP Scanning Docs
http://www.dpp.pt/pt/HorizonScanning/scanning-docs/Paginas/default.aspx

3

Global Scenarios 2050 Workshop

4


A note on methodology I
Workshop metodology: an adaptation
(of a section) of the intuitive-logics
scenario-building approach

5


The future will result from the interaction
between Megatrends coming from the past
and shaping the future, Weak Signals or issues
at an embrionary stage of development,
Wildcards that might surprise us in a positive or
negative way, and Structural Uncertainties that
might take us not just for one but for a plurality
of possible futures.

6

14 Key Uncertainties

8


Four Global Critical Uncertainties selected by the participants

9


3 Scenario Matrixes
(12 potential Scenarios – initial exploration)

10


11

Long-term socio-economic scenarios for Portugal Workshops

12


What might define the future?

What will remain?

Structural limitations?

What can project Portugal?

13

Timeline: The Portuguese Economy in the Global Context

14


10 Uncertainties
(in depth scanning2 » “inputs for discussion”)

15

1 2 3 4
Evolução do Perfil de Posição e Função de Preferências e Apostas ao Conectividade
Especialização da Economia Portugal no Sistema nível dos Relacionamentos (Física e Digital)
Portuguesa Internacional de Transportes Geoeconómicos por parte de Portugal na
e Logística dos Poderes Públicos e Economia Global
(Padrão de Actividades Investidores Portugueses
Exportadoras)

5 6
Padrão de Urbanização
e Organização do Território
PORTUGAL 2050 Evolução das Soluções/
Plataformas Energéticas e
INCERTEZAS POTENCIAIS de Mobilidade

7 8 9 10
Evolução do Modelo de Tipologia e Papel das Intensidade, Impactos Evolução dos Sistemas de
Coesão Social Português Cidades e Gestão do(s) Ensino e Formação em
no Desenvolvimento do País Envelhecimento(s) da Portugal
(Mercado Trabalho; Ensino e População em Portugal
Formação; Protecção Social; (Qualidade, eficiência, eficácia,
Saúde) (Ligação com Sistemas de …)
Pensões e de Saúde)


10 Uncertainties
(co-built » shared)

17

Working with Uncertainties and Configurations

1 2 3 4
Evolution of the Structure and Financial Sustainability of the Political System Model Institutional Capacity Building of
Specialisation of the Portuguese Portuguese Economy the Portuguese Economy and
Economy Society

• Exporting activities and • External imbalances • Evolution of democracy
internationalisation • National debt + private debt • Attractiveness of other solutions • Evolution and credibility of the
• Position in the value chains of goods • Ability and promptness in solving institutions
and services traded internationally financial imbalances • Social capital
• Insertion in the international division
of labour.

6
5 Strategic Leadership and Pro-
Cultural Values and Ability to
Generate Social Capital
PORTUGAL 2050 activity of the Economic Agents

POTENTIAL UNCERTAINTIES • Political System
• Cultural changes • Alignment and mobilisation of the
• Confidence players
• Individual benefit vs. collective (Workshop 2) • Strategic vision and quality of
benefit governance
• Capacity of innovation and societal
change

7 8 9 10
Evolution of the Portuguese Typology and Role of the Cities Generational Uncertainty - how Evolution of the Education and
social cohesion model in Spatial Planning is the next generation going to Training Systems in Portugal
live?
• Territorial cohesion • Human capital
• Redistributive mechanisms • Dynamics of urbanisation • Generational conflicts • Quality and efficiency of the systems
• Labour market • Networks of cities • Generational cohesion and solidarity • Connection and harmony with the
• Education and Training labour market
• Social protection • Training throughout life
• Health


A note on methodology II
an adaptation of the Morphological Analysis
logic to an workshop/participatory context.

20

The Scenarios

Two Long-Term
Scenarios for the
Portuguese
Economy
21

Two Long-Term Scenarios for the Portuguese Economy

A note on methodology III
Scenario methodological note: a more
inductive systematization

22

Two Long-Term Scenarios for the Portuguese Economy

A note on methodology IV
C1: “Welcome”
C1 - Summary
C1 – Global Framework (GF_A)
C1 - Introduction: Structural Steps in the Functioning and
Positioning of the Portuguese Economy
C1 – Evolution of the Specialization Profile
C1 – Strategic Leadership, Institutional Capacity Building and
Social Capital
C1 – Scientific Potential and Education and Training Systems
C1 – Spatial Planning and Role of the Cities
C1 – Physical and Digital Connectivity
C1 – Energy and Environment
23

Scenario no. 1
“Welcome”

24

“Welcome”
In spite of the major structural forces limiting the international
positioning of the Portuguese economy still hindering the success of the
attempts for achieving transformation, Portugal manages to position
itself at an international level as a Tourism/welcoming country, based on
its “classic” comparative advantages and with the capacity for organising
its territory as a whole, reclaiming buildings and planning the cities.
Several and recurring economic problems occur but our collective
capacity to manage the short term and find answers ends up succeeding,
step-by-step, in rebalancing the situations. The combination of the gains
in urban planning with the dynamics of cultural and creative industries
constitutes an important and complementary contribution in the logic of
the “innovative welcoming” in the same way as activities associated
with active aging, including the development of market niches related to
the health/pharmaceutical industry.

25

Global Framework of the “Welcome” Scenario
• Rise of Large Eastern
Economies, with
particular impact of
the Chinese Economy
• Oligopolistic world
•…

(Geo)economy

Competition
• Increase in the world
• Resources/
• Different approaches population
• Regulation/Rules
to technological Technology • Markets/Regional Demography • Aging of the
Innovation Influence/Models population in the
•… • Socio-economic developed countries
References •…

Environment/
Sustainability

• Pressure on water
resources
• Increasing need for
Energy
•…
26

“Welcome” - Synthesis
 Portugal was able to implement important changes to improve the functioning and positioning of
its economy (containment of the chronic external deficit and ability to plan and organize its
territory);
 Portugal wasn’t able to successfully bring about some needed structural changes (concerning
internal imbalances endemic in nature and the way by which its economy integrated itself in the
globalisation process, with the virtuous exception of tourism);
 Expectations created with the balancing of public accounts defrauded by Portugal’s inability, in
adverse international environment, to become more attractive and central;
 Some ability for the generation of "endogenous" skills;
 Inability to attract FDI capable of leveraging change in the production profile;
 Structural reforms begun, but slow to implement in a context of major budget tightening;
 Constant monitoring by financial markets;
 Portugal reveals the capacity for short-term response in very difficult situations, but is never able
to do the same for long term;
 Economic course of action characterized by proximity and quick return investment in activities
and sectors where Portugal has comparative advantages with poorly skilled yet specialized
labour;
 Exception being the promotion of the health cluster in niche markets, driven by tourism to
accommodate the elderly population of developed countries, more demanding in health care. 27

“Welcome” Scenario – Tourism Segments
Nautical Tourism Golf
City and Short Breaks  To consolidate the strong
 To invest in the docking conditions
 To improve accessibility to Lisbon / international projection as a golf
and in the building of ports and destination
Porto
harbours, marinas and recreational  To build more high quality golf
 To improve the tourist experience,
ports in the priority areas. courses (by famous architects) and
particularly in Porto by structuring
 In the cruises segment, to improve with a diversified offer
thematic itineraries, diversifying
the conditions of the terminals and  To ensure annual golf tournaments
entertainment events
to create new routes with high international projection
 To stimulate golf practice in Portugal

Gastronomy and Wines
Integrated Resorts and Residential  To take advantage of the conditions Sun and Sea Segment
Tourism and natural / cultural resources
 Re-qualify the product with priority
 Growing in quality (Douro, Alentejo and Central
to Algarve
 To promote the creation of resorts Portugal)
 To structure the product  To invest in complementary activities
with associated offers (e.g. golf
 To stimulate the sale of Appellation which strengthen the value proposal
courses and Spas)
for the tourist
 To highlight tourism management of Origin products (wines and
systems focused on resorts cheeses)
 Food Tasting Offer

Business Tourism
Cultural and Landscape Touring Nature Tourism
 To consolidate the offer for large
 To create thematic routes  To improve the infrastructures
congresses in Lisbon and to develop
 To enrich the experience in the main  To improve road signs and the paths
it in Algarve
places of attraction through nature
 To develop the small meetings
 To ensure the adoption of quality  To develop the offer, ensuring the
segment in Lisbon, Porto, Algarve
standards along the whole value preservation of the protected areas
and Madeira
chain

Health and Well-being
 To develop distinctive offers in
Azores and Madeira
 To transform the Spa industry in
Porto, and in the North and Centre
of the country
 To develop well-being equipment
and services in Hotels
 Medical Tourism

28

“Welcome” Scenario – Benefiting Sectors
Support Services
 Certification
Building and Real Estate  Waste management
Logistics and Transportation  Environmental management and
 Rehabilitation of real estate
 Geographical reference systems valorisation
 Requalification of public areas
 Ports  Engineering
 Energy and Environmental
 Mobility  CIT
Certification
 Training
 Marketing
 Organising events

Cultural and Creative Industries Food Industry
 Educative and leisure software  Vegetable and specialty agriculture Equipment goods
 Media and entertainment  Biological products  Leisure equipment
 Design  Gourmet products  Sports equipment
 Architecture  Fishing and aquaculture  Hotel and restaurant equipment
 Advertising  Wine tasting
 Gastronomy competitions and fairs

Health and Community Care
Distribution and Trade Security and Defence
 Telemedicine
 Monitoring of the coastal areas and
 Supermarkets  Community care
of the exclusive economic area
 Shopping centres  Hospitals and private clinics
 Internal security (public and private)
 Luxury goods  Pharmaceutical products related to
 Information Services
aging

29

Scenario no. 2
“We cannot fail”

30

“We cannot fail”

A set of endogenous developments (changes) within the
functioning of the Portuguese economy and society, combine with
some global external driving forces to turn the three decades
subsequent to 2011 unique in growth dynamics, increase in
competitive capacity and sectorial, institutional and societal
reorganisation of our country. In this scenario, there is a
reindustrialisation of the Portuguese economy together with the
development of new activities, namely in high-technology
domains (bio, cogno, nano…) and services of intensive knowledge.
Portugal stands out in the fields of clean energies, sustainable
mobility and new intelligent materials.

31

Global Framework of the “We cannot fail” Scenario
• Rising of large
economies
• Changing to a multi-
polar world
•…

(Geo)economy

Competition
• Speeding up of • Increase of the world
change and population
technologic Resources • Aging of the
Technology Demography
convergence Skills population in the
• Ubiquitous Savings developed countries
intelligence • …
• Market
convergence
• …
Environment/
Sustainability

• Pressure over water
resources
• Increasing needs of
energy
• Increasing
importance of the
ecology and
environmental issues
• … 32

“We cannot fail” - Synthesis
 Portugal performs a number of structural changes in the functioning and positioning of its
economy;
 Macroeconomic and microeconomic policies simultaneously stimulate innovation, creativity
and technological improvement moving the economy up in the value chain;
 Containment of labour costs for companies so that the jobs needed to absorb a still abundant
poorly skilled yet specialised workforce could be kept;
 Ability to use "endogenous" resources and skills to attract strategic FDI;
 Ability to work both the short term and the long term;
 Awareness that short term investment wouldn’t be enough to design and build a sufficiently
competitive and innovative economy 20 or 30 years into the future;
 Ability to initiate and develop a number of projects designed to attract to Portugal high value
added, knowledge-intensive activities;
 Ability to tune in and synchronize with the more dynamic and innovative clusters and regions of
the world economy (Europe, USA and Asia), bearing in mind the pro-active and selective
manner in which Portugal, without forgetting its history, culture and natural integration into
the European, Iberian and Portuguese speaking countries, positioned itself among these
different regions and actors.
33

Relation/compatibility between PT Long-term Socio-economic Scenarios (C1 + C2)
and the Global Framework (GF)
C2: “We cannot fail”

Unexplored combination: in C2: “We cannot fail”: in a
a tense and unstable world, growing and highly
with the “western world” going competitive world, Portugal
through a difficult transition, manages to (re)position itself
the external “levers” for the in the new technological and
transformations underlying C2 innovation waves that feed a
are, in most part, absent. global, integrated and very
dynamic economy.
GF_A: Unstable world in a
troubled transition; reactive, GF_B: Highly competitive
with protectionist tendencies globalisation; economic
and an increase of the growth with effective ability
national and macro-regional for global coordination and
specificities (political, C1: “Welcome”: in a world action
economic and so on) going through a difficult and
unstable transition which
Unexplored combination:
tended to reinforce the
possible scenario but less
peripheral nature of Portugal,
ambitious than C2 (our option
our country focused with
was, in this case, to “exalt”, for
success on its comparative
clarity purposes, the built
traditional advantages:
Scenarios)
“amenities”/natural resources,
cheap labour /”circumstantial”
access to the markets.

C1: “Welcome”
34

Quantification
» not forecasts, but possible evolution patterns of the variables.

» The scenario period was divided into two periods with distinct
characteristics:

- 2011-2020, a closer time horizon in which, although the degree of
uncertainty is very high, the historic trends still have considerable weight.
Therefore, a reflection with some detail about the sectorial evolutions is
possible.

- 2021-2050, a much more distant period, in which the prospect of the
variables’ evolution is related mainly with the perception of their
relationship with the main trends and “structural characteristics” of each
Scenario.

35

Quantification
International Scenarios Quantification
Average annual rates of change in volume (%)

Estima Scenario C1 Scenario C2
te “Welcome” “We cannot fail”

2011- 2021- 2011- 2011- 2021- 2011-
2006-
20 50 50 20 50 50
10
GDP 0,9 1,2 1,5 1,4 1,8 1,9 1,9
Europe (a) Population 0,4 0,1 -0,1 -0,1 0,2 0,0 0,1
GDP per capita 0,5 1,1 1,6 1,5 1,6 1,9 1,8
World (b) GDP 3,6 3,0 2,8 2,9 3,9 3,5 3,6
(a) 2006-2010 = EU27: Source: European Commission (“Economic Forecasts”, Spring and Autumn 2011) and DPP.
(b) 2006-2010: Source: IMF (World Economic Outlook, September 2011) and DPP.

Scenarios Quantification for Portugal
Average annual rates of change in volume (%)
Value on Estimate Scenario C1 Scenario C2
2005 “Welcome” “We cannot fail”
2006-10 2011-20 2021-50 2011-50 2011-20 2021-50 2011-50
GDP (market prices)
157 999 0,5 0,2 1,5 1,2 1,2 2,9 2,4
(Million € at 2006 prices)
Total GVA (base prices)
135 511 0,8 0,2 1,5 1,2 1,2 2,9 2,4
Households Private Consumption of
residents over the territory 99 867 1,3 -1,1 1,4 0,7 -0,3 2,7 1,9
Resident Population (annual average)
10,5 0,2 -0,1 -0,3 -0,3 0,0 0,0 0,0
(Million inhabitants)
GDP per capita
14 977 0,3 0,3 1,8 1,4 1,2 2,8 2,4
(€ at 2006 prices)
Annual real convergence with Europe (c) -0,1 -0,8 0,2 0,0 -0,4 0,9 0,6
(c) Estimated by the relative evolution of the GDP per capita at constant prices. 36

Quantification
Gross Value Added (GVA) Sectorial Scenarios for Portugal
Million €
Average annual rates of change in volume
at 2006
(%)
prices
Sectors A80 Base Estimate Scenario C1 Scenario C2
Link to Scenarios / Short explanation notes
Year “Welcome” “We cannot fail”
2006-10
2005 2011- 2021- 2011- 2021-
20 50 20 50
Agriculture and Concerns with the reduction of food dependency in the two scenarios; C1 – Specialities agriculture connected to
1 fishing 1+3 3 021 0,1 0,0 1,5 0,7 2,1 tourism; C2 – Focus in the technological conversion and in the progress of the value chain.

C1 – The modernisation of processes and product’s innovation promotes the exporting market, stimulating the
2 Forestry 2 652 1,2 1,0 1,5 1,2 2,0 production in articulation with the pulp, paper and paper products sector; C2 – The modernisation of processes
and product’s innovation promotes the exporting market in niche markets.
3 Coal, lignite and peat 5 There is no national manufacture of these products and it is not foreseen.
Concerns with the reduction of oil dependency; the investments made in the refineries on the first decade of
the XXI century, allow an increase of diesel oil exports in both Scenarios; C2 – The technologic pole of the
Crude oil and refined Part of chemical industries, petrochemicals and refineries manages to gradually achieve the goals of linking Matosinhos-
4 659 0,9 0,3 0,8 0,7 1,5
petroleum products 6 + 19 Estarreja-Setúbal-Sines and wins an international dimension, allowing progresses in the nano innovations and
hydrogen production; in the second period, hydrogen wins some importance in the “reform” of the transports
and decentralisation of the power distribution grids.
As the most competitive (price) and sustainable (less emissions) fossil source, natural gas shows a cruise speed
Natural Gas
Part of after the strong boom in the years before the pre-crisis and financial crisis in both scenarios; the bet in the
5 (extraction and 300 5,1 0,3 1,0 0,7 1,5
6 + 35 natural gas exploration in the Algarve basin produces some visible results after 2020, contributing for the
distribution) reduction of the energy dependency in both scenarios.
Traditional mining 7-9
Penalised by the slowing of demand in the crisis years, they lose competitive capacity in C1 and reach a new
6 and manufacturing 10-16 9 346 -1,1 -2,0 0,5 0,5 2,2
technology level plus talents / skills plus innovation in C2.
industries 31-33

37

Quantification
Gross Value Added (GVA) Sectorial Scenarios for Portugal (following)
Million €
at 2006
(%)
prices
Sectors A80 Base Estimate Scenario C1 Scenario C2 Link to Scenarios / Short explanation notes
Year “Welcome” “We cannot fail”
2006-10 2011- 2021- 2011- 2021-
2005 20 50 20 50
During the first period, the strong investments made in the sector in the period 2006-2010, produce effects in both
scenarios; In the second period: C1 – Linking with dynamic clusters such as the cultural and creative industries allows
Pulp, paper, and 17 to keep positive performances and intensify the intra-industrials relationships together with the development of the
7 1 367 0,4 1,5 1,5 1,5 1,5
paper products 18 national forestry and the improvement of partnerships with Brazil and Mozambique; C2 – Strong competition of
paper substitute products, but the traditional national know-how in the pulp, paper and paper products evolves for
more intelligent products related to ICT and to nano technologies (smart paper).
C1 – Dynamism of the pharmaceutical industry, impelled by a
Chemical 20
Tourism focused on health. C2 – In a scenario of changes, innovation resulting from intelligent plastic materials is a
8 Products, rubber 21 1 885 0,4 0,8 2,0 1,1 3,0
push to the sectorial GVA; the health cluster/ pole affirms itself on the international level as leader in some highly
and plastics 22
innovative market niches.
C1 – The evolution of the sector follows closely the construction sector; C2 – During the first period the evolution of
Non-metallic the sector follows the construction sector; in the second period, developing of more intelligent materials (new
9 23 1 680 -1,9 -0,3 1,6 -0,6 2,0
mineral products building materials of high thermal efficiency and /or power generation, namely pavements, bricks and tiles that
capture solar energy).
10 Basic metals 24 451 5,8 0,5 1,0 1,1 3,0 C2 – Bigger growing impelled by the equipment and apparatus and transport equipment sectors.
25
Equipment and 26
11 3 700 2,2 0,0 1,0 1,8 4,4 C2 – Dynamism associated to several equipment, namely in the generation of renewable energies.
apparatus 27
28
C2 – The reconfiguration of the automobile paradigm and of the related industries, around the materials innovation,
Transport 29 efficiency and sustainability (fuel cells, plastics devices) grants a strong stimulus to the sector; in the second period,
12 1 259 -4,9 0,8 0,5 2,0 4,4
Equipment 30 Portugal starts the production of electric vehicles; the aeronautics/ aerospace cluster suffers progresses, benefiting
from the links to leading-edge projects inserted in international networks.

38

Quantification
Gross Value Added (GVA) Sectorial Scenarios for Portugal (conclusion)
Million €
at 2006
(%)
prices
Sectors A80 Base Year Estimate Scenario C1 Scenario C2 Link to Scenarios / Short explanation notes
“Welcome” “We cannot fail”
2005 2006-10 2011- 2021- 2011- 2021-
20 50 20 50
C1 – The expansion of the national power generation sector suffers strong delays on the beginnings
Electricity (power generation
of the period, due to the economic constraint as well as to restrictions in the electricity exports;
13 and distribution), steam and hot Part of 35 2 518 5,1 1,0 2,1 2,0 4,6
strong focus in energy efficiency; C2 – It is differentiated by the strong focus in electric mobility,
water smart grids, micro generation and related services with a higher value added.
Being one of the most penalized sectors due to the crisis, it only manages to overcome the
difficulties by changing the specialisation profile, directed to the sustainability and use of intelligent
14 Construction 414243 10 304 -3,9 -0,4 1,7 -0,6 1,6 materials, catalysers of market value;C1 – Revitalisation/ reconfiguration of the cities with buildings
renovation; C2 – More penalized by the crisis during the first period; implementation in the second
period of some infrastructures that in the meantime had been postponed.
C1 – Impelled dynamism by Tourism/hospitality; C2 – Associated to the major internal dynamics
55 56 45-
15 Trade, repair and Horeca 25 212 0,3 0,5 2,1 1,0 2,5 and to the central role of services exports, increased by the development of new products and
47
markets’ diversification.
C1 – Transports associated to tourism, with greater dynamism of the water transports (cruises);
Land transport, via pipeline,
49 50 progressive modal shift for smoother ways; C2 – Transports associated to merchandises, benefiting
16 water transport and services 4 373 1,3 0,5 1,5 0,8 2,5
52 the flow of products by sea; dynamism of the individual transport through the electric vehicle in
related with transports the second period.
C1 – More associated to passengers; C2 – More associated to businesses and to light merchandises
17 Air Transports 51 667 8,4 0,7 2,1 1,0 2,5
of high value added.
C1 – Evolution of the ICTs and telecommunication, plus the dynamism of the cultural and creative
Business services
industries impelled by Tourism; C2 - The consolidation of a new wave of globalisation in the period
18 (communications, real estate 53 58-82 33 437 2,7 0,3 1,2 2,2 3,4
after the crisis is based on the evolution of the business services, ICT’s, and financial services;
and financial services ) incorporation of the ICTs in the several sectors associated to telecommunication.
Other services (water,
C1 – Dynamism of the recreational services and health services impelled by tourism; C2 – The
sanitation, public services, 36-40
19 34 680 0,4 0,2 1,5 0,8 2,6 reorganisation of the State and the increasing role of the third sector promote a marked growth in
education, health, recreational 84-99
the second period.
services and others)

39

The Scenarios Roadmap

40

Authors & Participants

Research & Facilitation Team: Workshops Participants:

António Alvarenga (coordination) Ana Maria Fernandes Luís Nazaré
Paulo Carvalho (coordination up to May 2011) Ângela Lobo Manuel Mira Godinho
Ângela Lobo António Manzoni Manuela Proença
António de Melo Pires Maria da Luz Correia
Catarina Rogado Francisco Cordovil Miguel Duarte Ferreira
Fátima Azevedo Guta Moura Guedes Miguel Monjardino
Miguel Déjean Guerra Helena Cordeiro Miguel St Aubyn
Sofia Rodrigues João Caraça Natalino Martins
João Ferrão Nuno Ribeiro da Silva
Jorge Marrão Patrícia Fortes
With the collaboration of: José Emílio Amaral Gomes Pedro Moreira
José Maria Brandão de Roberto Carneiro;
Manuela Proença Brito Stephan Magnus
Ana Maria Dias Júlia Seixas Vítor Bento
Luís Campos e Cunha

41

Thank You
www.cenariosportugal.com

antonio.alvarenga@apambiente.pt

Alvarenga long term_scenarios_building

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