European integration and the Dutch disease: Portugal and Spain

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Portuguese and Spanish economies received large sums from the European structural funds and used the significant reduction in interest rates on loans after joining the EU. The cumulative effect of these two factors led to the emergence of an effect comparable to the so-called «Dutch disease». In this case the inflow of funds can be considered as a kind of curse. The article presentsthe presence of Dutch disease in the Portuguese economy and its absence in Spanish. After a descriptive analysis of some of the variablesthe author considered the totality of the necessary equations for the calculation, which took into account the direct and indirect effects of the inflow of funds from the structural funds and the financial costs to the economy. The article revealed that the impact of these factors on the real exchange rate played a fundamental role.

About the authors

J S Andrade

Coimbra University

A P Duarte

Coimbra University


Copyright (c) 2016 Economics

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