OECD report highlights positive impact of foreign investment

According to the report released on Monday by the Organisation for Economic Cooperation and Development - OECD, Portugal's regulatory framework has a positive impact on its economy and development, with foreign companies contributing significantly to the country's Research & Development efforts, representing 25% of total R&D.

The same report suggests that Portugal's economic activity and job creation benefit significantly from the participation of foreign investment.

The organisation stated that foreign-owned companies in Portugal, which accounted for only about 2% of all companies in 2020, played a crucial role in the country's economy. They employed 18% of the national workforce, generated 28% of the total added value, and were responsible for 46% of all exports. Moreover, by incorporating Portuguese goods and services providers into export-oriented value chains, foreign firms assist them in accessing new markets and enhancing the competitiveness of their offerings.

The OECD report also highlights that foreign companies have a positive impact on job quality and gender equality. This is because they tend to employ a higher proportion of highly skilled workers in most sectors and pay higher wages than their Portuguese counterparts. In fact, in highly skilled professions, salaries in foreign companies are nearly 7% higher on average.

In contrast, foreign companies provide higher pay to female workers than Portuguese companies, with the median monthly salary for women in foreign firms being €972 in 2020, compared to €796 in domestic companies. Additionally, the report notes that foreign companies employ more women in senior executive roles in several sectors. Furthermore, the OECD emphasises the role of foreign companies in promoting innovation, as well as supporting digital and green transition efforts.

The report states that foreign companies contribute to 25% of Portugal's Research and Development investments. It also notes that they have a higher adoption rate of advanced digital technologies, such as 3D printing, industrial robots, and artificial intelligence (AI), than national companies.

According to the report, foreign companies are more likely to provide training for their workers in technology-related areas. In fact, 62% of foreign companies have provided training in information and communication technologies (ICT) to their employees, while just over a third (36%) of Portuguese companies have done so.

The report highlights that renewable energy has played a significant role in international mergers and acquisitions in Portugal's energy sector, representing 96% of such transactions between 2012 and 2022. This is a sharp contrast to other comparable economies, where the percentage of renewable energy transactions was only 37%.

The report by the OECD analyses the regulatory framework for investment in Portugal and compares it to a group of similar European economies. It identifies potential obstacles to investment and evaluates how creating a more favourable business environment can encourage greater Foreign Direct Investment (FDI) into the country. Additionally, the report suggests several reforms that the Portuguese government could implement to enhance the level of FDI in the economy.

Source: Eco