Review of the book “The causes of Portuguese backwardness”, by Nuno Palma

Nuno Palma’s book seeks to explain why Portugal is poor in relation to Europe, despite having had a favourable trajectory in the 17th century. The central thesis of this study is that the extraction and shipment of Brazilian gold in the 18th century acted as a ‘resource curse’. This influx of gold precipitated a cycle of currency appreciation and domestic price inflation, culminating in deindustrialisation and a decline in competitiveness. The review hypothesises that Palma’s interpretation of the negative impact of Brazilian gold on Portuguese industry appears to be more applicable to the first half of the 18th century than to the entire century, or the subsequent period. Palma’s analysis does not address the significant rise in colonial trade during the late 18th and early 19th centuries, thereby overlooking its pivotal role in the development of Portuguese industry. The author puts forward the argument that the Empire did not make a significant contribution to the economic prosperity of Portugal. Moreover, the policies enacted by the Marquis of Pombal proved to be detrimental, particularly the expulsion of the Jesuits, which hindered advancements in education, a fundamental element in the pursuit of development. The modern economic growth of Portugal appears to have occurred exclusively between 1950 and 2000, driven by industrialisation, literacy, and European integration. The review hypothesises that the late demographic transition in Portugal could be a contributing factor to the country’s underperformance.

Keywords:
Brazilian gold; Resource curse; Economic backwardness