Product specialisation, global competition, and industrial decline: Portugal’s path to crisis

A widely held view in economics and comparative capitalism states that the crisis in the eurozone was a crisis of labour cost competitiveness. This view maintains that a divergence in unit labour costs engendered a cleavage between the euro area’s core and periphery. Critics have disputed this and drawn attention to export specialisation, along with global competition, rather than intra-European competition. To make progress on this agenda, this article focuses on structures of production as a source of crisis vulnerability. It advances the notion that countries have unique forms of articulation within global capitalism, and that this matters to understanding national crisis trajectories. Focussing on the Portuguese case, the article scrutinises the interactions between export specialisation, global competition and industrial decline. The article shows that Portugal’s current account deficit developed within a context of industrial change and deindustrialisation, which was facilitated competition from China and Eastern Europe. By stressing industrial patterns and global competition, the article provides a more concrete analysis of production than most accounts of the eurozone crisis.