Chapter 2. Conditions for higher education, research and innovation in Portugal

This chapter discusses the underlying economic and legal conditions in Portugal that shape its higher education, research and innovation system – its network of institutions and policies created by government that aim to develop advanced skills and knowledge, and link them to firms and communities. It starts with a brief discussion of recent macroeconomic developments, looking at factors such as growth dynamics, productivity and industrial structure, outlining the country’s major economic challenges. In addition, this chapter presents an overview of the structure and performance of the Portuguese Higher Education Research and Innovation (HERI) system in terms of funding and human resources and reviews its outputs in terms of participation, attainment and returns. It then explores the inputs of the research and innovation system and reviews its performance, notably in terms of academic impact and innovation indicators. The chapter focuses particularly on recent evolutions, highlighting progress and identifying bottlenecks.

    

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

Note by Turkey: The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the “Cyprus issue”.

Note by all the European Union Member States of the OECD and the European Union: The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.

2.1. Macroeconomic performance

Portugal’s gross domestic product (GDP) began rising in the 1960s and, after a period of economic turmoil following the Carnation Revolution of 1974, had started to converge with the European Union average by the late 1980s. Growth slowed in the early 2000s, and the 2008 financial crisis brought the process of economic convergence to a halt. While GDP started to grow again in 2014, the effects of the crisis are still being felt in terms of social and economic well-being: the financial crisis increased poverty and deepened inequalities through increased unemployment.

While it is difficult to disentangle the multiple forces that have affected Portugal’s relatively low growth performance, several factors can be identified as potential contributors:

  1. 1. productivity remains low and total factor productivity, in particular, has been stagnant since the 1990s

  2. 2. the sectoral composition of the economy is also not conducive to high growth performance: the manufacturing sector – which has historically played an important role in boosting growth in converging economies elsewhere in Europe – is comparatively small and specialised in low and medium-low technology sectors, limiting productivity

  3. 3. unemployment increased considerably during the crisis and, despite significant improvements in recent years, the overall level of qualification of the Portuguese workforce remains low by international comparison

  4. 4. barriers to investment, including limited access to investment capital, make it harder for firms to upgrade their activities.

In this context, increasing skills levels and the capacity of the Portuguese economy to innovate as a means to increase productivity have been identified as key priorities for public policy in the country (OECD, 2017a).

2.1.1. GDP growth, inequalities and well-being

Portugal’s GDP per capita was 73% of the OECD average in 2016 (Figure 2.1). It was on a path of convergence towards the OECD average in the mid-1980s and again in the mid-1990s. During this period the catch-up process was slow, and driven principally by an expansion of the service sector and low-to-medium added value exports (Solsten, 1993). Portugal’s growth trajectory began diverging from the OECD average in the aftermath of the crisis, going from 78% of the OECD average GDP per capita in 2009 to 72% in 2015.

GDP growth resumed in Portugal in 2014 and has been on an upward trend ever since, reaching 2.6% in 2017, almost catching up with the EU15’s annual growth rate and doubling between 2016 and 2017. GDP growth is projected to remain at 2.3% for 2018 and 2019, driven by domestic consumption and exports (OECD, 2017b). Portugal’s GDP per capita was 71.4% of the EU15 average in 2016, indicating the country is starting to converge with other Western European economies.

Geographically, growth in Portugal has been concentrated in six of the country’s 30 statistical regions (TL3 level), including the Lisbon and Porto metropolitan areas. These six regions together contributed to 87% of the overall GDP growth between 2000 and 2013 (OECD, 2016a).

Figure 2.1. GDP per capita, Portugal and selected countries, 1970-2017
picture

Note: Calculations are based on GDP per capita in current prices, current PPP. Values before 1995, and OECD figures are estimated. Data for 2016 and 2017 are provisional.

Source: Based on OECD (2018), OECD National Accounts Statistics (database), https://doi.org/10.1787/data-00017-en (accessed on 02 August 2018).

Income inequality is high in Portugal. The country has the 12th most unequal income distribution in the OECD, largely as a result of high unemployment and related poverty levels, rather than high wage dispersion (Pinheiro Alves, 2017). The poverty rate rose in the aftermath of the crisis from 11% in 2008 to 14% in 20141 (OECD, 2017b). Portugal is also characterised by substantial regional disparities. The gap in GDP per capita between the bottom 20% top and 20% statistical regions was the 10th largest in the OECD in 2013, although this disparity decreased since 2008. The gap between top and bottom regions narrowed by almost 10 percentage points over this period, as GDP per capita in poorer regions declined more slowly than in richer regions.

The OECD Better Life Index shows Portugal lags behind other OECD countries in terms of income and – to a lesser extent – other key quality of life indicators, such as jobs, education and health. Portuguese citizens also have a low self-perception of their well-being (Figure 2.2). Nonetheless, Portugal ranks above the OECD average with respect to work and life balance, housing, personal security and environmental quality (OECD, 2017b).

Figure 2.2. Well-being outcomes: OECD Better Life Index
picture

Note: Each well-being dimension is measured by one to three indicators from the OECD Better Life indicator dataset. Normalised indicators are averaged with equal weights.

Source: OECD (2018b), "Better Life Index", OECD Social and Welfare Statistics (database), https://doi.org/10.1787/data-00823-en (accessed on 04 May 2018).

2.1.2. Productivity

Aggregate productivity measures the efficiency with which labour and capital are used to produce value in a country. Labour productivity in Portugal is low in international comparison, especially for micro-enterprises (1-9 employees) and large firms (Figure 2.3). Low productivity is pervasive across sectors: out of the 19 NACE (Statistical classification of economic activities in the European Community) two-digit sectors in which Portugal is the most specialised, only five had a productivity surpassing the EU27 average2 (FCT, 2013).

Labour productivity in Portugal was on a path to convergence with advanced (EU15) economies from the 1970s until the 1990s, as a result of increased capital investment, macro-economic reforms and a shift in labour allocation away from agriculture and traditional industries and towards more productive service sectors (Pinheiro Alves, 2017b). Productivity growth has since slowed in comparison to other advanced economies. The contribution of the capital stock to labour productivity growth has declined over the last few years (Table 2.1), as the movement of capital from low to high productivity firms has slowed by half.

Lack of investment is an important bottleneck for productivity growth in Portugal. Total investment significantly decreased in the wake of the last recession: investment in 2015 was over 30% below the 2005 level, with private and public investment accounting for similar shares of the decline (OECD, 2017b). Since 2012, investment has barely exceeded the depreciation of the existing capital stock, meaning there has been virtually no real growth in the productive capital stock. This comes in addition to declining labour inputs (Table 2.1), as employment has fallen due to demographic decline, low labour participation and high unemployment.

Figure 2.3. Aggregate labour productivity by enterprise size, business economy
Value added per person employed, thousands of USD, current PPPs, 2014, or latest available year.
picture

Note: Data for Israel and Mexico refer to 2013. Data for Switzerland correspond to value added per employee. Data for Mexico refer to establishments. Data for Switzerland exclude enterprises with less than 3 persons employed.

Source: OECD (2017), Entrepreneurship at a Glance 2017, OECD Publishing, Paris, https://doi.org/10.1787/entrepreneur_aag-2017-en.

Multifactor productivity growth represents the change in output that cannot be explained by an increase in inputs (i.e. labour and capital) and is assumed to reflect increased use of knowledge, technological or organisational progress and innovation. From the 1970s to the 1990s, growth in MFP in Portugal was higher than that of the EU15, Japan and the United States. However, MFP slowed at the end of the 1990s and has stagnated since (Table 2.1 and Figure 2.4), despite improvements in factors conducive of MFP growth such as educational attainment, investments in R&D and in ICT capital, internationalisation of firms and enterprise creation. Possible factors leading to MFP stagnation include the consumption-based growth model, a focus in the economy on non-tradable sectors (which had low or negative MFP growth) and insufficient investment (Pinheiro Alves, 2017b). Similar trends have been observed in Greece, Italy and Spain, where MFP either stagnated or decreased during the first decade of the 21st century (Dias et al.).

Between 2000 and 2013 productivity increased more quickly in Portugal’s less developed regions – as employment in low-productivity industries declined – than in the economic centres of Lisbon and Porto. This led to convergence in productivity rates across the national territory – a pattern that contrasted with trends in the OECD as a whole, where the 10% most productive regions experienced the fastest productivity growth rates and widened the gap with less productive regions (OECD, 2016b).

Table 2.1. Growth and productivity

Average annual growth rates (%)

2003-09

2009-15

GDP per capita

0.5

-0.1

Labour utilisation

-0.6

-0.9

of which:

Labour force participation rate

0.1

-0.5

Employment rate1

-0.6

-0.6

Labour productivity

1.2

0.8

of which:

Capital intensity (capital stock per labour hour)

1.7

0.8

Multi factor productivity

-0.5

0.0

Note: 1. The employment rate is defined with respect to the economically active population; a positive growth rate corresponds to a decline in the structural unemployment rate and vice-versa. 2. An adjustment variable is added to the decomposition to capture the impact of non-resident workers.

Source OECD (2017a), “Portugal”, in Economic Policy Reforms 2017: Going for Growth, OECD Publishing, Paris. DOI: https://doi.org/10.1787/growth-2017-42-en.

Figure 2.4. Multifactor productivity growth in Portugal and selected EU countries, 1995-2016
1995=100 (index)
picture

Note: EU 15 average does not include data for Austria, Greece and Luxembourg.

Source: OECD (2018c), productivity database, https://doi.org/10.1787/pdtvy-data-en downloaded on 2 August 2018

2.1.3. Economic structure

The sectoral structure of the economy has an impact on countries’ growth potential, particularly in emerging economies. As in most OECD countries, service sectors now dominate the economy in Portugal; their share of added value increased markedly between 2000 and 2016 (Figure 2.5) Services made up 75% of value added and accounted for 67% of total employment in 2015 (Corado Simões et al., 2017). Manufacturing has never represented a large share of the value added in Portugal, as resources were shifted directly from the agricultural sector to sectors characterised by low productivity growth (construction, trade, market and non-market services) (Pinheiro Alves, 2017b). The most important sectors of the Portuguese economy in 2015 were wholesale and retail trade3 (25%); community, social and personal services (23%); and real estate, renting and business activities (19 %). Manufacturing accounted for 14% of added value (OECD, 2017d).

Figure 2.5. Value added by activity of Portugal, 1995-2016
Percentage of total value added
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Note: Value added reflects the contribution of labour and capital to production. Value added by activity breaks down the total value added by sector, namely agriculture, industry, utilities, and other service activities. The shares of each sector are calculated by dividing the value added by each sector by total value added. The breakdown of value added by activity has changed considerably over recent decades. The share of agriculture is now relatively small in almost all OECD countries. The share of industry has also fallen while services now account for well over 60% of total gross value added in most OECD countries. Data are under 2008 System of National Accounts (SNA 2008) for all countries except for Chile, Japan and Turkey (SNA 1993).

Source: OECD (2018d), National Accounts of OECD Countries, Volume 2018 Issue 1: Main Aggregates, OECD Publishing, Paris. https://doi.org/10.1787/na_ma_dt-v2018-1-en

In comparison to the average in EU economies, the Portuguese economy has high relative specialisation in sectors4 of low or medium-low technological intensity, both in terms of relative share of value added and employment. Footwear, clothing, air transport and textiles are the highest ranked according to the Value Added Specialisation Index,5 which measures the ratio of the importance of a sector in terms of value added as compared to the EU27 average6 (FCT, 2013). A finer sectoral analysis reveals Portugal’s relative specialisation in 19 NACE 4-digit technology-intensive activities, including manufacture of electronic and transport equipment and chemical products, telecommunication and scientific R&D. However, most of these sectors have a lower productivity performance in Portugal than the EU average in the same sectors (see section 2.1.2). Overall, high- and medium-high-technology sectors represent only around 4% of value added in Portugal.

Exports data confirm this diagnosis. Road vehicles represented the main share of exports from Portugal in 2013-15 (10.4%), followed by petroleum and petroleum products (8.2%) and clothing and accessories (5.8%). Exports have diversified over the past two decades: they were much more concentrated in 1988-90, with clothing and accessories making up 20.8% of merchandise exports followed by textile yarn and fabrics7 (8.7%) and footwear (7.9%) (OECD, 2017b). 75% of Portugal’s exports and 78% of its imports are made within the EU, in particular Spain, France and Germany (European Commission, 2017b).

Virtually all firms in Portugal (over 99%) are SMEs, and in particular micro-enterprises with less than nine employees. SMEs contribute 68.5% of added value in Portugal, above the EU average of 56.8%, and also account for one of the highest shares of employment in the OECD (78.1%) (European Commission, 2017b).

2.1.4. Employment and skills

Unemployment in Portugal has been declining, but remains high at 9% (Figure 2.6 et Figure 2.7) Young people have been particularly affected: one-third of those aged below 24 and more than a quarter of those below 30 were unemployed in 2016 (OECD, 2017b). Long-term unemployment rates are falling more slowly than the general unemployment rate, reaching 6.2% in 2016, following a peak of 10.3% in 2013.

In contrast to other OECD countries, unemployment rates in Portugal for adults who have not completed upper secondary education are similar to those of workers who have attained this level of qualification (10.1%). Adults with higher education have lower unemployment rates (6.6%) as in many countries (Figure 2.7), although the employment rate of young higher education graduates (aged 25-34) fell from 91% in 2000 to 82% in 2016 (compared to an OECD average of 83%). The relatively limited employment advantages for more highly qualified individuals is likely to stem from the difficulty of accessing permanent, secure employment, limited managerial skills in private firms and a lack of co-operation between science and industry, which has hindered creation of knowledge-intensive jobs (OECD, 2017a). Among EU countries, Portugal has one of the highest shares of young workers, including higher education graduates, in temporary contracts (OECD, 2017b). Portugal’s labour market is highly segmented into permanent and temporary contracts due to a large gap in protection between contract types (OECD, 2014a). Substantial labour market reforms undertaken since 2011 have reduced the rigidity of labour markets, but segmentation between long-term and temporary contracts remains (OECD, 2017b).

Portugal has succeeded in greatly expanding participation in education in the last two decades. As a result, the level of qualification of the Portuguese workforce has improved significantly, in particular among young adults (Figure 2.7). In 2016 about 67% of 25-34 year-olds had attained at least upper secondary education, a significant increase from 24% of 55-to-64 year-olds. The share of young adults (aged 25-34) who have attained higher education has also risen considerably – from 19% in 2005 to 35% in 2016 – although this remains below the OECD average (43%) and EU and national targets. Overall, Portugal still lags behind other OECD countries in terms of overall qualification levels, with a third of young adults not having completed upper secondary education compared to the OECD average of 16%.

Figure 2.6. Unemployment
picture

Note: Panel A Data from 2016 onwards is based on extrapolations. Youth unemployment refers to unemployed persons as a share of active population under 25 years old. Long-term unemployment refers to unemployed persons who have been looking for jobs for 12 months or more as a share of the total active population.

Source: Panel A: OECD (2018e), OECD Economic Outlook No. 102 (Edition 2017/2), OECD Economic Outlook: Statistics and Projections (database), https://doi.org/10.1787/05b705e7-en (accessed on 04 May 2018

Panel B: Eurostat (2018), "Labour Force Survey series – detailed annual survey results", Eurostat Database, http://ec.europa.eu/eurostat/cache/metadata/FR/lfsa_esms.htm (accessed on 9 February 2018).

While the level of qualification of the Portuguese workforce has improved, there is evidence that Portugal faces shortages of higher level technical and professional skills. In interviews with the OECD Review team, employers identified a lack of technical and scientific skills as a barrier to recruitment, in particular in STEM fields.

Figure 2.7. Educational attainment of 25-34 year-olds, 2016
picture

Note: Year of reference differs from 2016 for Argentina, Brazil, Chile, China, India, Indonesia, Ireland, Russian Federation, Saudi Arabia and South Africa. Refer to the source table for more details. United Kingdom's data for upper secondary attainment include completion of a sufficient volume and standard of programmes that would be classified individually as completion of intermediate upper secondary programmes (1% of adults aged 25-64 are in this group). Data for Argentina should be used with caution.

Source: OECD (2017f), Education at a Glance 2017: OECD Indicators, OECD Publishing, Paris, https://doi.org/10.1787/eag-2017-en

2.1.5. Framework conditions for business

Portugal does relatively well in the OECD Product Market Regulation (PMR) indicator, which measures how favourable national regulations are to economic activities. Portugal ranked 12th in the OECD in 2013, the latest edition of the PMR indicator (OECD, 2015a).

Portugal enjoys a dynamic business environment with a high rate of enterprise creation and a reasonably supportive regulatory and incentive environment for entrepreneurs, strengthened by recent reforms. However, the survival rate of young firms is low and business innovation is stifled by limited access to investment, especially among small firms. The country has made strong progress in reducing administrative burdens for business. Procedures for business creations have been simplified and costs and delays have been cut down (OECD, 2017a). Recent measures were introduced to advance these improvements. The Simplex+ programme in 2016, which continued efforts made by the Simplex programme (2006-2011) and the Simplificar Programme (2014), focuses on administrative simplification and e-government. The Aproximar programme aims to improve public service delivery by introducing local kiosks and mobile units to reach low-density areas in complement to the existing network of one-stop shop for public services. Use of online public services has also been promoted (OECD, 2015b).

As a result of these efforts, Portugal ranks 29th out of 190 countries in the 2017 World Bank Ease of Doing Business ranking, close to Spain and France (respectively 28th and 31st) and significantly ahead of Italy (46th). Among the 10 categories of indicators of this ranking indicators, Portugal performs exceptionally well in terms of ease of trading across borders (ranking first). By contrast, in terms of ease of obtaining credit, Portugal compares unfavourably to a lot of countries: it ranks 105th on this indicator.

Another key factor is the ability of businesses to access finance to invest. This is a challenge for Portuguese firms which are still heavily indebted and only have limited access to external credit. This strongly limits the capacity to invest in and upgrade the production capacity of all firms, including high-potential companies. The scope for internal financing has also diminished in recent years as the average profitability of non-financial companies8 declined from nearly 12% in 2010 to below 9% over the period 2011-14.

Credit to non-financial corporations continues to contract, although at a decreasing rate, mirroring the situation in most of the euro area (OECD, 2017b). Credit is also expensive. In a recent survey by the European Central Bank on SME financing, access to finance and high interest rate are cited as the principal limiting factors to get external financing in Portugal (ECB, 2016). The World Bank Global Innovation Index (GII) 2017 identifies access to credit as a weakness in Portugal’s market conditions for innovation: for this composite index, Portugal ranks 84 out of 127 economies, much lower than its overall GII ranking of 31 (World Bank, 2018).

Against this backdrop, the current government has made the SME access to finance a major priority. Several programmes were recently launched to improve this situation, notably the Capitalizar programme, which in 2016 included over 60 new measures to improve businesses’ access to financing and equity instruments. Several credit lines targeting SMEs and offering guarantees and preferential conditions have also been launched (OECD, 2018f). In addition, the Start-up Portugal programme aims to broaden market-based finance for SMEs (OECD, 2015d). The Portugal Venture Capital Initiative (PVCi) set up by the European Investment Fund (EIF) and other public and private actors in 2007 has also been a catalyst for the development of the venture capital and private equity market in Portugal during its investment period (EIF, n.d.).

As a result of national and EU investments, Portugal enjoys a high broadband coverage, with 33.6 subscriptions per 100 inhabitants. Portuguese firms are well connected to the Internet (96.3% of all firms have a broadband subscription), above the OECD average of 95.6%. Small firms (49 employees or less) fare worse than medium and large firms for which the coverage is virtually complete), a common pattern across the OECD. In terms of mobile broadband, Portugal’s penetration is among the lowest in the OECD (65 subscriptions per 100 inhabitants).

2.2. Overview of the higher education, research and innovation system (HERI) in Portugal

2.2.1. Overall structure of the HERI system

Portugal has a centralised state. It has no independent tier of government at regional level, and local authorities have limited responsibilities compared to counterparts elsewhere in the OECD (OECD, 2017e). This pattern is reflected in the governance and funding of the higher education, research and innovation system, in which the central government has exclusive responsibility for higher education. Most European funding for research and innovation is administered at the regional level through regional Operational Programmes, Portugal’s regional managing authorities. However, these are unelected bodies that act within strict national and EU frameworks.

The national HERI system in Portugal (Figure 2.8) functions at four broad levels.

Figure 2.8. Structure of the Portuguese HERI system
picture

At the highest level, the Portuguese government (Council of Ministers) has collective responsibility for higher education, research and innovation policy and for setting strategic direction. It is also responsible for implementing EU Structural and Investment Funds in Portugal within guidelines set by and agreed at EU level. Advice to government on research issues is provided by the National Council for Science and Technology (Conselho Nacional de Ciência e Tecnologia, CNCT), and on innovation and entrepreneurship by the National Council on Entrepreneurship and Innovation (Conselho Nacional de Empreendedorismo e Inovação, CNEI).

The second tier of governance is composed of individual line ministries, headed by ministers with a specific portfolio. A ministry in charge of research was established in 1995, and higher education and research have been under the responsibility of a single, dedicated ministry since 2002, apart from 2011-2015 when these responsibilities were merged into a single Ministry of Education and Science. The Ministry of Science, Technology and Higher Education (Ministério da Ciência e Tecnologia e Ensino Superior, MCTES) has responsibility for higher education, public research and science-based innovation activities involving HEIs and public research units supported by MCTES. The Directorate-General of Higher Education (Direção-Geral do Ensino Superior, DGES) is responsible for ensuring the design, implementation and co-ordination of higher education policies developed by the MCTES. The ministry regulates the higher education sector, including through establishing admissions policies setting the total number of student places for all study programmes in both the public and private sectors. The Co-ordinating Council for Higher Education (Conselho Co-ordenador do Ensino Superior, CCES) advises MCTES on higher education policy. Primary responsibility for business innovation policy lies with the Ministry of the Economy. Important prerogatives are also in the hands of the Ministry of Planning and Infrastructure, which is in charge of the management of the EU structural funds in various areas, including regional development, sea and fisheries, and agriculture, among others.

The third tier of governance is composed of agencies with implementation or regulatory responsibilities. The Foundation for Science and Technology (Fundação para a Ciência e a Tecnologia, FCT) manages project-based funding of public research and carries out associated ex ante evaluations of research projects and centres. The national innovation Agency (Agência Nacional de Inovação, ANI), created in 1997 and reestablished in 2014, manages incentive programmes targeting businesses and technological interface centres. It aims to foster technology transfer and knowledge promotion and focuses on collaboration. ANI also manages the tax incentive scheme “System of Fiscal Incentive for Business R&I” (Sistema de Incentivos Fiscais à I&D Empresarial, SIFIDE). The Competitiveness and Innovation Agency (for the support of SMEs) (Agência para a Competitividade e Inovação, IAPMEI) aims to foster innovation activities and boost competitiveness of Portuguese firms through financial support as well as business support services and training. Portugal Global – Trade & Investment Agency (Agência para o Investimento e Comércio Externo de Portugal, AICEP) was created in 2007 to encourage investments in Portugal by foreign companies as well as support internationalisation of Portuguese companies. The Agency for Assessment and Accreditation of Higher Education (Agência de Avaliação e Acreditação do Ensino Superior, A3ES) is an independent foundation tasked with the evaluation and accreditation of higher education institutions and their study programmes, with the objective of ensuring the quality of the higher education system.

The fourth level of the HERI system is composed of the organisations that carry out the work of teaching, research and knowledge-based innovation, including higher educational institutions and public research organisations affiliated to them. In 2018, Portugal had 118 higher education institutions, 39 of which were public – 14 universities and 20 polytechnics. It had 79 private higher institutions – 24 universities and 55 polytechnics. Additionally, its higher education system included five public military institutions, which were outside the scope of this review (Table 2.2).

The 2007 Legal regime for higher education institutions (Regime Jurídico das Instituições de Ensino Superior, RJIES) defines the missions and the scope of autonomy enjoyed by higher education institutions in Portugal. Portugal has a binary structure in which polytechnics are legally responsible for providing professionally-oriented study programmes, while universities are responsible for providing theoretically-led academic programmes. Polytechnics are distinguished in the legal framework by their focus on professionally oriented studies and ‘targeted research’ (investigação orientada) and the fact they are only entitled to award bachelor and Master’s degrees, but not doctorates, which can only be awarded by universities.

Table 2.2. Higher education institutions, by sector (2016-17)

 

Public

Private

Total

University

14

24

38

Polytechnic

20

55

75

Other

5

n/a

5

Total

39

79

118

Note: The category “Other” includes military and police higher education, which are not the subject of this review.

Source: MCTES, 2017.

The majority of HEIs, and in particular those in the private sector, are located in coastal regions with greater population density and more dynamic labour markets, such as the metropolitan areas of Lisbon and Porto. Public polytechnics are more dispersed throughout the country and are present in 47 municipalities, whereas public universities are located in 16 municipalities, private universities in 13 municipalities and private polytechnics in 28 (MCTES, 2017).

Higher education institutions in Portugal are key actors in the research and innovation system, accounting for a large share of research expenditure and the research workforce. In contrast to higher education systems in which academic departments play a leading role in organising research activities, the R&D activities of Portugal’s higher education institutions are principally organised by R&D units. These units may contain researchers from a single higher education institution; a set of higher education institutions; or contain researchers who are employed outside a higher education institution, such as a private (non-profit) foundation or a state laboratory.

After the democratic revolution of 1974, Portugal had few universities with weakly developed research capacities and cultures. To stimulate the development of high-performing research groups within its higher education system, central government authorities chose to provide research funding directly to designated R&D units that were chosen through a competitive process organised by the FCT, rather than provide untargeted research support to universities and the existing faculties and departments.

R&D units are currently selected though a process of peer review organised by the FCT, and funded for a period of three years. In 2017, there were 307 R&D units in which 40 000 researchers participated, of which 22 000 had a PhD. More than two-thirds of R&D centres were hosted by higher education institutions, while the remainder were located in Associated Laboratories (Laboratórios Associados) or, less often, private foundations.

Associated Laboratories form a key feature of the nation’s research and innovation landscape. At the instigation of MCTES, high-performing R&D units were encouraged to join together to create research units of critical mass and excellence. In 2000, the first cohort of four associated laboratories was chosen by FCT following evaluation by an international scientific panel and awarded dedicated multi-year institutional funding to support their further development. By 2018, a total of 26 Associated Laboratories had been recognised by FCT, each holding this designation for a ten-year period. The Institute for Systems and Computer Engineering, Technology and Science (Instituto de Engenharia de Sistemas e Computadores, Tecnologia e Ciência, INESC TEC), for instance, hosted 13 R&D Centres, over 700 researchers, and had a 2016 annual turnover of EUR 14 million.

Portugal’s nine State Laboratories also perform R&D, each operating under the direct supervision of a line ministry. Successive governments have chosen to focus on funding research performed in higher education institutions and associated laboratories, rather than State Laboratories. Thus, their role in performing research has diminished compared to past decades. State Laboratories accounted for only 3% of GERD in 2015, as compared to 11% in OECD countries, on average. State Laboratories have been the object of several reforms over the past decades. In 2016, their legal statuses were changed to corporate entities or “autonomous funds and services of a business nature” (Resolution of the Council of Ministers No. 124/2006, of 3 October). In the context of the “Plan to Reduce and Improve Central Administration” (Plano de Redução e Melhoria da Administração Central) (PREMAC), the network of State laboratories was reorganised to optimise resource allocation, through mergers and creation of new laboratories (FCT, 2013).

2.2.2. The higher education system: inputs, participation, and outcomes

Funding higher education

Total public and private expenditure on higher education in Portugal is equivalent to 1.4% of GDP, 0.9% of which is from public funds, and another 0.5% from private sources. While this total is slightly lower than the OECD average (1.6%), the share of national income allocated to higher education is slightly higher than that of higher education systems in the region, such as Spain (1.3%) or Italy (0.9%) (Figure 2.9) (OECD, 2017e).

While Portugal commits a share of national income only modestly below the OECD average, its GDP per capita is significantly lower than the OECD average (71%), thus annual expenditure per student by educational institutions is below the OECD average for all levels of education, especially at the higher education level. In Portugal, educational institutions spend USD 6 700 per student in higher education programmes, which is about USD 4 000 per student less than the OECD average (OECD, 2017f).

Expenditure on higher education decreased by 9% between 2010 and 2014. As the number of higher education students also fell during that time, the resulting decrease in expenditure per student was only 3%, but this was against an average increase of 6% across OECD countries in the same period (OECD, 2017). This lower expenditure was mostly driven by lower spending on educational core services (OECD, 2017f). Portugal allocated 10% of its annual expenditure by educational institutions per student to ancillary services (transport, meals, housing) and 90% to educational core services – compared to the OECD average of 6.5% and 93.5% (Figure 2.10) (OECD, 2017f).

Figure 2.9. Public and private expenditure on educational institutions
% of GDP in higher education, 2016
picture

Note: The year of reference is 2015 for Chile, Colombia. Public does not include international sources for Australia, Chile, Japan. Expenditure on public institutions for bachelor’s, master’s and doctoral degrees for Korea, Indonesia and Slovak Republic.

Source: OECD (2017f), Education at a Glance 2017: OECD Indicators, OECD Publishing, Paris, https://doi.org/10.1787/eag-2017-en.

Figure 2.10. Annual expenditure per student by educational institutions for core educational services, ancillary services and R&D, 2014
In equivalent USD converted using PPPs
picture

Note: Public institutions only for Canada, Luxembourg and the Slovak Republic. Ancillary services correspond to transport, meals, housing provided by institutions.

Source: OECD (2017f), Education at a Glance 2017: OECD Indicators, OECD Publishing, Paris, https://doi.org/10.1787/eag-2017-en.

Participation in higher education and equity in access

Overall, in the academic year 2016-17, 361 943 students were enrolled at all levels of higher education. The majority of students (65.8%) were enrolled in universities and 35% in polytechnics. Another 1 794 students were enrolled in short-cycle non-higher education programmes.

Portugal has succeeded in greatly expanding participation in education in the last two decades. The nation’s higher education system, which grew from 24 000 students in the 1960s to 400 000 in 2010, spurred by a growth in demand for higher education among expanding age cohorts, and the added supply of study places (MCTES, 2017). Declining numbers of young adults have led to declining enrolments (Figure 2.11) (Fonseca et al., 2014), with total numbers in 2015/2016 decreasing to 360 000 (MCTES, 2017). The private higher education sector has been particularly affected, with enrolments declining from 114 641 (1995/96) to 58 515 two decades later. While it accounted for 37% of students enrolled in higher education in 1995/1996, its share declined to 16% in 2015/2016 (MCTES, 2017).

Figure 2.11. Number of students enrolled in higher education institutions
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Note: Number of students enrolled including students enrolled in CTeSP.

Source: MCTES (2017), Country Background Report, MCTES.

The expansion of higher education has led to an increasing diversification of the profile of higher education students in Portugal, a phenomenon that has also been observed across OECD and partner countries. An increasing number of higher education students do not follow the traditional path into full-time study immediately following graduation from upper secondary education.

Despite increasing diversification of the higher education student population, young people from families with low levels of education still have a lower probability of participating in higher education than their peers from more advantaged backgrounds, and the gap in participation probabilities is wider in Portugal than in many OECD countries (Figure 2.12).

Figure 2.12. Relationship between students’ participation in higher education and socio-economic status
Odds ratio of being a student in higher education by parents' educational level, 20091
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Note: This figure shows the odds of someone from a low (or high) educational background attending higher education. The odds ratio is calculated by comparing the proportion of parents with low (or high) levels of education in the total parent population to the proportion of students in higher education whose parents have low (or high) levels of education. If young people from a low (or high) educational background were as likely to attend higher education as those from more (or less) educated families it would result an odds ratio equal to 1. Countries are ranked in increasing order of difference between the odds ratios of being a student in higher education with low and high educational backgrounds.

Source: OECD (2012), Education at a Glance 2012: OECD Indicators, OECD Publishing, Paris, https://doi.org/10.1787/eag-2012-en.

2.2.3. Research and innovation: inputs and performance

Overall investment in research and innovation in Portugal – as measured by gross domestic expenditure on research and development (GERD) – is lower than in most OECD countries, and has been severely affected by the crisis. Research and Development expenditure in higher education (HERD) is comparatively higher, standing around the OECD median (OECD, 2018g). Indeed, HEIs carry out a large proportion of research and development expenditure and employ the lion’s share of the research and development workforce, especially at higher qualification levels. They also perform well in terms of research and innovation outputs when compared to other OECD countries, including in terms of patenting. In contrast, the private sector lags behind in terms of investment in research and development, with a GERD intensity at the lower end of the OECD spectrum. This situation is reflected in innovation outputs, where the performance of the private sector is mixed.

Expenditure and funding

Investment in research and innovation in Portugal is lower than in most OECD countries, both in terms of GERD as a share of GDP and in terms of expenditure per capita. R&D expenditure is mostly concentrated in applied research and experimental development with almost equal shares of of GDP (0.5%), while basic research accounts for 0.3% of GDP, a distribution that is similar to countries with comparable R&D intensities.

Following the 2008 economic crisis, GERD in Portugal declined from EUR 2.8 billion in 2009 to EUR 2.2 billion in 2015 (-19%), following a phase of steady expansion from 2005 to 2009 (Figure 2.13). R&D intensity also declined over the same period reaching 1.3% in 2016, slightly below the OECD median (1.6%). The public sector carried out 50% of R&D expenditure in 2016, mostly within the higher education sector, while the private sector was responsible for 50%. The decline in GERD was most pronounced in government expenditures on research and development (GOVERD), which contracted by 28% over 2009-2015, mainly driven by the declining role of state laboratories. This decrease was not compensated by higher education institutions’ expenditures (HERD), which decreased by 2% over the same time period. However, a large share of R&D expenditures still occurs in universities representing 45% of the GERD and 0.58% of GDP in 2016. In terms of HERD per capita, Portugal is around the OECD median, ahead of France, Spain and Italy (Figure 2.14). The decrease of business expenditures for research and development (BERD) between 2009 and 2016 was particularly pronounced (Figure 2.15).

This slump was mainly caused by the financial crisis, which reduced firms’ capacity to invest in R&D. However, business spending on research and development has been historically low in Portugal. At 46% of GERD in 2015, it was far below the OECD average of 69% (OECD, 2017g). One of the key reasons for the low level of BERD in Portugal is that the country has few large R&D-performing firms. The main ones in 2015 were Portugal Telecom (PT) (telecom), SONAE (distribution), Grupo Banco Comercial Português (finance) and BIAL (pharmaceuticals). The limited role of large domestic companies in R&D is not compensated by multinational enterprises (MNEs), in part due to difficulties in attracting foreign capital for R&D in the post-crisis economic context (Godinho et. al., 2016).

55% of business R&D expenditure was carried out in service sectors in 2016 in Portugal, one of the highest shares in the OECD. The financial sector plays a relatively important role in R&D expenditures (mainly dedicated to IT system development to respond to improve their operations), with at least two banking corporations in the top 10 R&D performers. In the manufacturing sector, only 53% of R&D expenditure were carried out in medium-high or high R&D intensity sectors in 2016: a particularly low rate in international comparison (OECD, 2017g).

Firms largely self-finance R&D expenditures. Public support to BERD in Portugal remains low, covering 4% of business expenditure on R&D in 2016, below the OECD median (Figure 2.16). In 2016, 6.9% of BERD was financed by funds from abroad in 2016. The majority of this funding came from international organisations (OECD, 2017g) with the EU R&D Framework Programmes playing an important role (MCTES, 2017). EU Framework programme funding to beneficiaries based in Portugal almost trebled in 15 years, growing from EUR 224 million in 2000 to EUR 663 million in 2015. This increase has offset, in part, decreased national funding for R&D over the same period.

Figure 2.13. Portugal's total R&D expenditures by sector of performance, 2015
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Note: Values for 2016 are provisional. Values for 2006 are national estimates or projection. Break in series occurs in 2008.

Source: OECD (2018), OECD R&D Statistics (RDS) Database, www.oecd.org/sti/rds (accessed on 2 August 2018).

Figure 2.14. International comparison R&D expenditure in Portugal and selected OECD countries
2016 or latest year available
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Note: All indicators are presented in indices and reported on a common scale from 0 to 200 to make them comparable (0 being the lowest OECD values and 200 the highest). The median OECD value is represented by the bar at 100.

Source: OECD (2018), OECD R&D Statistics (RDS) Database, www.oecd.org/sti/rds (accessed in August 2018).

Figure 2.15. Portugal's BERD by source of funding
2010 USD constant PPP, million
picture

Source: OECD (2018), OECD R&D Statistics (RDS) Database, www.oecd.org/sti/rds (accessed on 2 August 2018).

The labour force involved in research activities grew dramatically over the first decade of the 2000s, peaking at 8.1 full time equivalent (FTE) researchers per 1 000 workers in 2011. At 8 FTE equivalent researchers per thousand workers in 2016, Portugal still outperforms the EU average and ranks below France but above Italy and Spain. This newly trained research workforce is mainly employed by universities and research institutions (R&D units and associated laboratories). Despite its relatively strong researcher workforce, Portugal’s research and innovation system is faced with a shortage of other types of R&D personnel.9 The share of ‘other R&D personnel’ in the country is among the lowest measured in the OECD.

Research and innovation performance

Portugal’s scientific production has increased substantially over the past decade. Portugal had one of the highest average annual growth rates in publication output in the OECD over the period 2004-2012, second only to Luxembourg. The volume of publications remains modest, but around the OECD median when adjusted by population and ahead of France, Italy and Spain (Figure 2.16). However, the quality of Portuguese scientific production remained fairly stable, as measured by the share of publications in the 10% most cited publications worldwide, almost unchanged from 9.5 to 9.2% between 2005 and 2015 (OECD, 2017e). This places the country below the OECD median, but around the level of France and Spain. When considering all citations, Portuguese publications also appear slightly under the OECD average (cited 18% more often than the world average compared to 26% more often). The two sectors in which Portugal has the highest citation impact are multidisciplinary journals (a common occurrence worldwide) and engineering (OECD and SCImago Research Group, 2016).

Figure 2.16. Share of researchers labour force, selected countries
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Source: OECD (2018) Main Science and Technology Indicators database, http://www.oecd.org/sti/msti.htm, (Accessed on 2 August 2018).

Over the period 2003-12, the higher education sector contributed 82% of scientific publications in Portugal, one of the highest shares in the OECD (Figure 2.18). The health sector was the second largest contributor (7.6%), followed by the government laboratories (9%).

Worldwide, and particularly in small economies who may benefit more from accessing global networks international, international co-operation positively affects the quality of research and innovation outputs. Portugal is above the OECD median in terms of international co-authorship with 47% of publications involving foreign co-authors over the period 2003-2012 (OECD and SCImago Research Group, 2016) and the rate of international collaboration has increased by 5% over this period. Looking at patterns of collaboration across sectors, co-publications with private sector entities represent 7% of cross-sectoral collaboration with the higher education sector, slightly below the OECD average of 8% and about half the share of the leaders (Belgium and Japan stand at around 14%).

Figure 2.17. Quantity and quality of scientific production, 2005 and 2015
Number of documents and percentage among the world's 10% most-cited publications, fractional counts
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Note: "Top-cited publications" are the 10% most-cited papers normalised by scientific field and type of document (articles, reviews and conference proceedings). The Scimago Journal Rank indicator is used to rank documents with identical numbers of citations within each class. This measure is a proxy indicator of research excellence. Estimates are based on fractional counts of documents by authors affiliated to institutions in each economy. Source: OECD (2017k) calculations based on Scopus Custom Data, Elsevier, Version 4.2017 and 2015 Scimago Journal Rank from the Scopus journal title list accessed June 2017.

Figure 2.18. Distribution of scientific output by sector, by country, 2003-12
picture

Source: OECD and SCImago Research Group, Compendium of Bibliometric Science Indicators 2014, based on Scopus Custom Data, Elsevier, December 2014.

The innovation performance of Portugal remains modest, as measured by international patenting. Although the number of patents per million inhabitants has been increasing over the past few decades, growing by 336% between 1990 and 2013, as compared to a 42% increase in the OECD, 90% in Spain and 28% in France over the same period, it remains one of the lowest in the OECD (OECD, 2017h). Portugal underperforms most OECD countries in terms of number of triadic patents,10 below France, Italy and Spain (Figure 2.19).

However, Portugal’s innovation system is well-embedded in international knowledge networks despite the low share of R&D financed from abroad. A high proportion of Portuguese innovations are international co-inventions. The country ranks close to the first quartile in that measure, significantly ahead of Italy, Spain and France. The most common technology fields for patent applications in Portugal are pharmaceuticals (10% of applications), civil engineering (8%) and organic fine chemistry (7%) (WIPO, 2017).

Trademarking activity in Portugal does better than patenting activity by international standards: in 2016, Portugal was close to the OECD median in terms of trademarks filed abroad, which generally signals higher value innovation with global relevance. The country does even better in terms of resident trademark applications. The World Bank Group’s Global Innovation Index identifies non-patent intellectual property assets as one of Portugal’s strength. The country ranks 15th and 14th, respectively, of 127 countries in the number of resident trademarks and industrial designs (per billion GDP) (World Bank, 2018). Filings for industrial designs have increased dramatically over the past decade, from 16 787 applications in 2007 to 32 163 applications in 2016.

Figure 2.19. Benchmarking Portugal on a selection of scientific output indicators
2017 or latest year available
picture

Note: Data on international co-inventions is for the period 2005-2016.

Source: WIPO (2018), WIPO statistics database, accessed on March 2018, https://www3.wipo.int/ipstats/index.htm; OECD (2017h) STI Micro-data Lab: Intellectual Property Database, http://oe.cd/ipstats, June 2017. http://statlinks.oecdcode.org/922017081p1g005.xlsx; OECD (2017j), OECD Science, Technology and Industry Scoreboard 2017: The digital transformation, OECD Publishing, Paris. https://doi.org/10.1787/9789264268821-en.

Portuguese entities are quite active in Horizon 2020 (H2020) calls, accounting for 2.4% of submitted proposals between 2014 and 2016. The number of application per thousand R&D personnel and researchers is above the EU28 average. However, their success rate (12.8%) remains below the EU average (13.6%). Portuguese participants in signed Horizon 2020 grants represent 1.6% of the total grant budget, which translates to EUR 397 million, under the EU28 average in terms of budget per research personnel. Nonetheless, these results in H2020 are higher than those obtained in the EU 7th Framework Programme (FP) (1.15% of funding or EUR 564 million) and FP6 (1.03% for EUR 172 million) despite a slightly higher than average decrease in the success rate.

Geographically, participants in Horizon 2020 are quite concentrated. About half the grant recipients are located in the Lisbon Metropolitan area, a quarter in the North region, and slightly less than 20% in the Centre region (FFG, 2017). Academic research institutions11 received the largest share of Horizon 2020 funding over the period 2014-2016 in Portugal (63%), ahead of SMEs (17%) and large enterprises (11%). SMEs are more represented in Portugal than at the H2020 level where small and large firms receive equivalent participations (both around 15% of the budget). Portuguese small firms have a higher than average success rate in the Horizon 2020 SME instruments (EC, 2018a).

In 2016, Portugal accounted for 1.3% of projects granted by the prestigious European Research Council (ERC) grants – focused on supporting excellence and funding frontier research, far below Spain even when taking into account differences in levels of GDP or GERD (ERC, 2018). Portugal’s success rate was 8.8% over the period 2014-2017,12 below the overall average of 12.7% (FFG, 2017). Unsurprisingly given the strong competition for ERC grants, Portugal’s participation is concentrated among a few entities: the EUR 18.6 million contribution was distributed across 14 institutions, the first five receiving 58% of this amount.

Mobility of scientists contributes to the diffusion and circulation of scientific knowledge across borders. One means to track mobility of publishing scientists is to trace changes in institutional affiliation over their full list of publications in scholarly journals (OECD, 2017k). Migration flows of scientific authors from and to Portugal are similar to those observed in most other OECD countries, with a rate of stayers close to the OECD average. In 2016, the large majority (87%) of Portugal’s scientific authors remained affiliated to a research institution in the country, equivalent to the OECD average and more than in 2013 (83%). The same year, 6.8% of scientific authors left the country and changed their affiliation, 2% returned to Portugal and 3.5% were new scientific authors that had not worked in Portugal previously (Figure 2.20). Portugal experienced a negative net flow of researchers (-1.17%), placing it at the bottom of the OECD ranking but close to the balance of France and Italy.

Scientific researchers who left the country tend to be associated with higher-rated publications, compared to staying or returning scientists (OECD, 2017k). This pattern can be found in Portugal with outbound researchers displaying a higher expected citation impact (1.49) than stayers and returnees (1.08 and 1.06). New inflows score a little higher than stayers and returnees (1.36), while the three categories scored much closer together in 2013, possibly reflecting a positive trend in attractiveness. Overall, Portugal’s academic impact according to scientific output ranks under the OECD’s average across all four categories of scientific mobility. And the position of returnees’ impact relative to other researchers in the country is low compared to almost all countries. This might indicate that Portugal is not benefiting from a learning effect from researchers who have been abroad at some point in their careers.

International mobility of research and innovation workers can also highlight a so-called “brain drain” phenomenon, whereby highly skilled professionals seek out opportunities in other countries. A possible measure of the brain drain of innovators is the measure of mobility of inventors listed in patent applications. The share of Portuguese inventors living abroad, calculated as the ratio between Portuguese nationals with foreign residence listed as inventors in patents divided by all Portuguese nationals listed as inventors (with residence inside or outside Portugal) was equal to 0.39% in 1991-2000 and 0.32% in 2001-2010, the second highest in Europe, after Greece (WIPO, 2013; Miguelez and Fink, 2013).

Figure 2.20. International mobility of scientific authors, 2016, as a percentage of authors, by last main recorded affiliation in 2016
Percentage of authors, by last main recorded affiliation in 2016
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Note: Estimates are based on the comparison between the main affiliation of a given author with a Scopus Author ID publishing in 2016 and the closest available publication in a previous year. Only authors with two or more publications are considered. A mobility episode is identified in 2016 when an author who is affiliated to an institution in a given economy in his/her last publication in 2016 was previously affiliated to an institution in a different economy. Authors are assigned a given status from the perspective of the last destination in 2016. The "stayers" status is assigned if the main affiliation for both 2016 and pre-2016 correspond to the reference economy. The "returnee" status is assigned to those who move affiliation into the reference economy, but were affiliated to it in their first recorded publication. From the perspective of the previous economy of author affiliation, individuals can be computed as outflows, and the count is incorporated in the data presentation. Data are presented sorted by the share of outflows in the extended sum of possible mobility profiles from the perspective of a reference economy (stayers, returnees, inflows and outflows). The indicator is represented as the ratio between the number of authors in the relevant category, divided by the (absolute) sum of authors in the reference economy in 2016 plus the outflows from that economy recorded in 2016.

Source: OECD (2017k), OECD Science, Technology and Industry Scoreboard 2017: The digital transformation, OECD Publishing, Paris. https://doi.org/10.1787/9789264268821-en.

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Notes

← 1. Poverty rate is defined as the share of the population whose income falls below the poverty line; taken as half the median household income of the total population.

← 2. Electricity and gas, petroleum, telecommunications, paper and air transport. Data for Luxembourg are missing.

← 3. Wholesale and retail trade, repair of motor vehicles; transportation; accommodation and food service activities.

← 4. NACE 2-digit sectors.

← 5. Calculations by FCT based on Eurostat data.

← 6. Data for Luxembourg are missing.

← 7. Textile yarn, fabrics, made-up articles, etc.

← 8. Measured as earnings before interest, taxes, depreciation, and amortisation (EBITDA) relative to turnover.

← 9. These other types of R&D personnel include the technical, administrative, secretarial and clerical staff participating in R&D projects or directly associated with such projects.

← 10. Triadic patents are patents filed at three major patent offices: the European Patent Office (EPO), the Japan Patent Office (JPO) and the United States Patent and Trademark Office (USPTO).

← 11. The statistical distinction between HEIs and PRIs is not relevant in Portugal due to the specific configuration of the Portuguese research system.

← 12. As of 30 September 2017 (FFG, 2017).

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