Portugal’s ICT Sector

Missed boat or Golden goose?




                      Alvaro Santos Pereira
The Portuguese are perceived as being
        innately technological
The Background
• Portugal is currently immersed in a serious
  economic crisis
     • Worst economic performance since the...
The success

• Still, Portugal was one of the most successful
  countries in Europe in the postwar period
     • The Portu...
The BIG questions


• What went wrong?

• What can we do to get an end to the crisis and
  reinvigorate the success of the...
What went wrong?

• The euro

• Globalization and new international
  competitors in the traditional industries

• Previou...
What can be done?
• Better economic policy
     • Some improvement in the last few years
     • Lower bureaucracy and refo...
Can the ICT sector be the driving
             force for a brave new world?

• Some of the most successful (and more
  int...
The FACTS

• Undeniably, some of the most interesting
  examples of Portuguese entrepreneurship can
  be found in this sec...
However…

• Are we really sure that the ICT sector is
  progressing as well as it could?

• Are we really sure that the St...
Taking a look at the Facts


• In spite of some improvement, Portuguese
  ICT infrastructure still lags vis-à-vis its
  Eu...
% Internet access is still low
Broadband penetration still lags
E-commerce needs to become
      more pervasive
• On a more positive note, the exports of ICTs
  have increased substantially
Exports of ICT equipment have tripled in
             the last decade
• Still, in relative terms, the performance of the
  ICT sector is not so impressive
The share of ICT employment did
                     not increase

• The share of ICT-related occupations in the total
  e...
ICT-related employment is still small
Portuguese high-tech exports are still
      below the EU average…
Fast growth of high-tech products
   seems to have petered out
The share of ICT in manufacturing value
              added is low
And the share of ICT in total
manufacturing has declined
The share of ICT investment in total
capital formation has not increased in the
               last 10 years
Venture capital is still insufficient

• Venture capital for early and replacement
  investment has increased

• However, ...
Moral of the story

• The ICT sector is one of the most dynamic and innovative in
  the Portuguese economy

• It exhibits ...
What can be done
• Continue to promote entrepreneurship within
  the sector and to develop networking linkages

• Continue...
What can be done (II)
• Constant pursuit of productivity gains
     • Relative low wages cannot be sustained forever witho...
Why the State has to help
• Although Technological Plan is a good start, so far, it has not
  had a major impact in indust...
Renewed
                   incentives/commitment
• ICT sector should be regarded as strategic as the
  renewable energies ...
One last thought

• Portuguese success is certainly more
  guaranteed if we decide to invest in the
  knowledge highway ra...
TEDxEdges Alvaro Pereira 18-09-2009: Portugal’s ICT Sector: Missed boat or Golden goose? (Full Presentation)
TEDxEdges Alvaro Pereira 18-09-2009: Portugal’s ICT Sector: Missed boat or Golden goose? (Full Presentation)
TEDxEdges Alvaro Pereira 18-09-2009: Portugal’s ICT Sector: Missed boat or Golden goose? (Full Presentation)
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TEDxEdges Alvaro Pereira 18-09-2009: Portugal’s ICT Sector: Missed boat or Golden goose? (Full Presentation)

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Portugal’s ICT Sector: Missed boat or Golden goose?

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TEDxEdges Alvaro Pereira 18-09-2009: Portugal’s ICT Sector: Missed boat or Golden goose? (Full Presentation)

  1. 1. Portugal’s ICT Sector Missed boat or Golden goose? Alvaro Santos Pereira
  2. 2. The Portuguese are perceived as being innately technological
  3. 3. The Background • Portugal is currently immersed in a serious economic crisis • Worst economic performance since the early 1900s • Many of the country’s traditional industries display several competitiveness problems, while other sectors are no longer competitive
  4. 4. The success • Still, Portugal was one of the most successful countries in Europe in the postwar period • The Portuguese economy had the second highest rate of growth in Europe after WWII • In spite of current crisis, the country is no strange to success
  5. 5. The BIG questions • What went wrong? • What can we do to get an end to the crisis and reinvigorate the success of the Portuguese economy? • Can the ICT sector be the driving force behind economic recovery? • Can the ICT sector be a cluster of excellence in Portugal?
  6. 6. What went wrong? • The euro • Globalization and new international competitors in the traditional industries • Previous economic model no longer viable • Inadequate economic and fiscal policies
  7. 7. What can be done? • Better economic policy • Some improvement in the last few years • Lower bureaucracy and reform of the Justice system • Investment in the quality of human capital • Improved incentives and better rewards to innovation • More incentives to entrepreneurship
  8. 8. Can the ICT sector be the driving force for a brave new world? • Some of the most successful (and more interesting) examples of Portuguese entrepreneurship emerged in the ICT sector • Can these examples be emulated by others? • How? • What can the State do to help?
  9. 9. The FACTS • Undeniably, some of the most interesting examples of Portuguese entrepreneurship can be found in this sector • Undeniably, there has been great progress in the last decade • Undeniably, the idea of a Technological Plan is a good one
  10. 10. However… • Are we really sure that the ICT sector is progressing as well as it could? • Are we really sure that the State is helping the sector as well as it should?
  11. 11. Taking a look at the Facts • In spite of some improvement, Portuguese ICT infrastructure still lags vis-à-vis its European counterparts
  12. 12. % Internet access is still low
  13. 13. Broadband penetration still lags
  14. 14. E-commerce needs to become more pervasive
  15. 15. • On a more positive note, the exports of ICTs have increased substantially
  16. 16. Exports of ICT equipment have tripled in the last decade
  17. 17. • Still, in relative terms, the performance of the ICT sector is not so impressive
  18. 18. The share of ICT employment did not increase • The share of ICT-related occupations in the total economy did not increase in the last decade:
  19. 19. ICT-related employment is still small
  20. 20. Portuguese high-tech exports are still below the EU average…
  21. 21. Fast growth of high-tech products seems to have petered out
  22. 22. The share of ICT in manufacturing value added is low
  23. 23. And the share of ICT in total manufacturing has declined
  24. 24. The share of ICT investment in total capital formation has not increased in the last 10 years
  25. 25. Venture capital is still insufficient • Venture capital for early and replacement investment has increased • However, and in spite of the extraordinary dynamism shown by ICT entrepreneurs, venture capital is still inadequate for a sector (and a country) that aims to become a golden cluster.
  26. 26. Moral of the story • The ICT sector is one of the most dynamic and innovative in the Portuguese economy • It exhibits an unusual degree of entrepreneurship for Portuguese standards • It is a sector that aims to compete internationally and is able to do so • However, it is still not a national champion, as it could be – Technological Plan is not helping as well as it could
  27. 27. What can be done • Continue to promote entrepreneurship within the sector and to develop networking linkages • Continue to innovate and compete internationally • Continue to improve human capital in order to solve supply shortage of skilled individuals
  28. 28. What can be done (II) • Constant pursuit of productivity gains • Relative low wages cannot be sustained forever without the threat of brain drain of most productive individuals • Consolidate • Sector is constituted mostly by SMEs • Go Public • In order to grow, companies need to enter stock markets • Sector could attract more foreign and national venture capital firms
  29. 29. Why the State has to help • Although Technological Plan is a good start, so far, it has not had a major impact in industry • Focus of the Technological Plan should be redirected to promote the emergence of more entrepreneurs as well as to increase the support for start-ups • If we really believe that the sector has a bright future ahead, then the State should support and nurture its development • How?
  30. 30. Renewed incentives/commitment • ICT sector should be regarded as strategic as the renewable energies cluster • How can the sector be helped? • Unprecedented tax breaks for exporting companies • Unprecedented tax credits for companies that hire new graduates • Unprecedented tax and economic incentives for companies • New lines of credit for ICT companies that want to compete internationally • Unprecedented labor market flexibility (national cluster of excellence)
  31. 31. One last thought • Portuguese success is certainly more guaranteed if we decide to invest in the knowledge highway rather in the construction of additional highways

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