The Estado Novo Period: The 1930s and World War II

Abstract

Political chronology is again relevant to understand the Portuguese economy from the 1930s onward. Not because the economy changed drastically its behavior, but because the political regime that was installed in the country after 1933, the Estado Novo, conceived the relationship between the Government and economic agents in a much different manner than the previous ones. The Estado Novo was the Portuguese version of the kind of authoritarian or fascist regimes that spread throughout Europe during the 1920s and 1930s, and understood its role in what concerns the economy as based on high interventionism. During the period of its existence, the regime was able to put the economy under a vast set of administrative and bureaucratic mechanisms that limited significantly the freedom of economic agents. Although a lot has been said about this kind of interventionism, the truth is that much of it did not differ much from what regimes contemporary to the Estado Novo that retained a democratic form did as well. The main reason for this similarity was the difficulties of the world economy in the interwar period: all Western countries resorted to protectionism , economic nationalism, and Government intervention once they failed to return to the economic liberal order of the nineteenth century and once the 1930s crisis started. The Portuguese Estado Novo was one more of them.