Key Highlights Presentation of The Impact of Regulation on International Investment in Portugal

1. Fernando Mistura, Economist/Policy Analyst, OECD Investment Division
High-level launch - 20 March 2023
The Impact of Regulation on International Investment in Portugal

2. Analyses trends and patterns of FDI
activity in Portugal
Compares the regulatory setting to
European peer countries and
identifies possible bottlenecks
Proposes policy actions for a more
enabling and competitive
environment for investment
What the
report does

3. ESP
90
100
110
120
130
140
150
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
B. Growth (Index: 2010=100)
PRT CZE EST LTU
POL SVK ESP TOP15
Index 2010=100
Real labour productivity growth
Note: Panel A: real labour productivity based on GDP per total hours worked in national currency, constant prices. TOP15 refers to the 15 most productive European economies (TOP15) in USD million, constant prices, 2015 Purchasing Power Parity over the period 2011-21. Panel B data correspond to the share of machinery and equipment and weapon
system (transport equipment, ICT equipment and other machinery, equipment and weapons) and intellectual property products (computer software and databases, research and development assets, etc.) in total net fixed assets. Total net fixed assets include construction assets (dwellings and other buildings and structures) and cultivated biological
resources in addition to the above-mentioned assets. TOP15 in Panel B excludes Switzerland and Iceland due to the lack of data.
Source: Panel A: OECD, Productivity Statistics Database. Panel B: OECD, Structural Analysis database; OECD, Annual National Accounts database.
5%
7%
9%
11%
13%
15%
17%
19%
21%
23%
25%
B. Machinery, equipment and intellectual property assets,
% of total net fixed assets
0
50
100
150
200
250
300
350
A. Net capital stocks per worker
USD thousand, constant prices, 2015 PPPs
PRT CZE EST LTU
POL SVK ESP TOP15
5%
7%
9%
11%
13%
15%
17%
19%
21%
23%
25%
B. Machinery, equipment and intellectual property assets,
% of total net fixed assets
0
50
100
150
200
250
300
350
A. Net capital stocks per worker
USD thousand, constant prices, 2015 PPPs
PRT CZE EST LTU
POL SVK ESP TOP15
Machinery, equipment and intellectual property assets, % of
total net fixed assets
Investment is needed to support long-term productivity growth

4. Foreign Direct Investment can be a vehicle for capital renewal and the
modernisation of the economy
0
10
20
30
40
50
60
70
80
90
100
PRT CZE EST LTU POL SVK ESP TOP15
A. Inward FDI Stock, 2015 and 2021 (% of GDP)
2021 2015
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
140%
160%
PRT CZE EST LTU POL SVK ESP TOP15
B. Inward FDI Flow, by type, average, 2015-21
Equity (excl. R.E.) Reinvested earnings Debt
Inward FDI Stock, 2015 and 2021 (% of GDP)
• Inward FDI stocks reached 71% at end-2021, among the
highest levels in the OECD and the benchmark group
• FDI activity has been historically concentrated in
services sectors but is increasingly flowing into ICT,
renewable energy and manufacturing
• Manufacturing has accounted for a sizeable portion of
recent FDI activity, but remains fairly overlooked by
foreign investors
• Digital technologies and infrastructure has attracted a
significant amount of FDI, but there is room for more
when compared to the benchmark group
Note: Inward FDI stock and flow data on a directional basis, excluding resident special purpose entities.
Source: OECD, International Direct Investment Statistics.

5. Foreign firms
contribute to
Portugal's
economy Higher wages to women;
7.3% higher wages to high-skilled workers
More IT training for employees;
1.1 to 2 times greater uptake of digital technologies
Significant investment in renewable energy: 96% of all
cross-border M&As in the energy sector in 2012-22

6. How do regulation and the broader business
environment affect investors?

7. Firms call for a
more services-
oriented
approach
Continue simplifying business
licensing and permit processes
Reduce tax compliance time
and costs
Ensure that investment incentives
are accessible and effective
view administrative delays and red
tape as obstacles to operations
3 in 4 investors

8. Better business
regulation and
a more efficient
justice system
Make broader use of regulatory
impact assessments and private
sector engagement in law-making
Further reduce the length of
court proceedings
Nearly 2 years and 4 months
The time required to resolve an
administrative court case
More than 7 times as long as in Lithuania

9. Ensure an
attractive
labour market
for investment
Raise awareness of incentives
for employee training
Improve the efficiency of entry
processes for non-EEA talent
Continue to lessen labour
market duality along the nature
of employment contracts
of foreign investors view visas and
residence permits for foreign workers
as an obstacle to operations.
60%

10. Contacts
Investment Regulatory Reviews Team:
francesca.spinelli@oecd.org
fernando.mistura@oecd.org
laura.kuusela@oecd.org
Further information
Full report and highlights of the report
(ENG/PRT) available here: oe.cd/4Vu
Image credits:
© Getty Images : aiisha5; ulldellebre; Jacek_Sopotnicki;
SeanPavonePhoto; rweisswald; Sean3810
via Unsplash : Angel Ceballos; André Lergier; Daniel Seßler