COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(93) 711f i naI 
Brussels, 7 January 1994 
ISs**-PEDIP 
Specific Industrial Development Programme for Portugal 
Final Report 
(presented by the Commission) 
CONTENTS 
I Introduction 
1.1 Background 
1.2 The basic decisions 
II Portuguese industry before PEDIP 
III PEDIP'S structure 
IIL1 Basic and technological infrastructure 
111.2 Vocational training 
111.3 Incentives for productive investment 
111.3.1 PEDIP incentives scheme (SINPEDIP) 
111.3.2 Rational use of energy: incentives scheme (SIURE) 
111.3.3 Aid for industrial restructuring or modernization 
111.3.4 Support for specific industries 
111.4 Financial engineering 
111.5 Productivity drives 
111.6 Quality and industrial design improvement 
111.7 Publicity, implementation and monitoring 
111.8 Initial financial table 
IV Implementation 
rV.l PEDIP - pilot experiment 
IV.2 Centralized management 
IV.3 Subsidiarity 
IV.4 Partnership 
IV.5 The Monitoring Committee 
IV.6 The Advisory Committee 
IV.7 Auditing 
IV.8 The use of the ECU 
IV.9 Application of the deflator 
V Results 
V.l Final financial table 
V.2 The operational programmes - overall view 
V.2.1 Programme 1 
V.2.2 Programme 2 
V.2.3 Programme 3 
V.2.4 Programme 4 
V.2.5 Programme 5 
V.2.6 Programme 6 
V.2.7 Programme 7 
V.3 Implementation (major areas) 
V.4 Budget execution 
V.4.1 Additional heading 
V.4.2 ERDF contributions 
V.4.3 ESF contributions 
V.5 Auditing results 
V.6 Compliance with Community policy 
V.6.1 Public procurement 
V.6.2 The environment 
V.6.3 Competition 
V.6.4 Big projects 
V.6.5 Sensitive sectors and sectors in critical difficulty 
VI Assessment 
V1.1 Pre-PEDIP studies 
VI.2 Assessment studies 
VI.3 Assessment of PEDIP's relevance and effectiveness 
VI.3.1 Penetration of PEDIP into industry 
VL3.2 PEDIP firms and the rest of industry 
VI.3.3 Access to PEDIP 
VL3.4 Anticipated effects and actual achievements 
VI.4 PEDIP studies 
VI.5 Conclusions 
I. INTRODUCTION 
L INTRODUCTION 
1.1 Background 
The specific industrial development programme for Portugal (PEDIP) gave practical 
expression to Protocol 21, concerning economic and industrial development in Portugal, 
appended to the Act of Accession of Portugal to the Community. The Protocol is a European 
Community declaration on the adaptation and modernization of the Portuguese economy 
In the declaration, the Community recognized in particular the need "to modernize the 
(Portuguese) production sector and to adapt it to European and international economic 
realities" and said it was "prepared to support Portuguese firms, by letting them benefit from 
its technical support and its credit instruments...". 
In February 1986 the Portuguese authorities sent the Commission a comprehensive 
programme of measures which would modernize Portuguese industry and which requi-ed 
Community funding. 
In October 1986 the Commission sent the Council a communication * on PEDIP, underlining 
the specific problems of Portuguese industry and the important role PEDIP had to play in the 
smooth integration of Portugal into the Community. The communication outlined the ma n 
areas of Community intervention within PEDIP and the best ways of using Community funds 
and loans to finance this action. 
The Commission departments most directly concerned, the Portuguese authorities and the 
relevant economic and social agents then began discussing the instruments which would 
enable Portuguese industry to become more competitive so that it could meet the challenges 
of 1993. 
Following on from these discussions, the Commission, at its meeting of 14 October 1987,^ 
adopted the general framework for a specific programme for the modernization of Portuguese 
industry (1988-92) with the following priorities: 
1. Faster improvement of basic infrastructure 
2. Expansion of the vocational training system 
3. Improved business financing 
4. Productivity drives 
The Commission also decided that measures eligible for Community support should mobilize 
Community resources totalling ECU 2 billion over a five-year period, of which 1 billion 
would be in the form of EIB/NCI loans. In the 1987 budget ECU 2 million was allocated for 
preparatory studies. 
At its meeting on 12 and 13 February 1988, the European Council approved in principle the 
allocation of ECU 500 million to a specific budget heading over a five-year period. This 
would be in addition to the ECU 400 million from the ERDF and ECU 100 million from the 
Social Fund which the Commission had allocated to Portugal in October 1987 to help the 
country make its industry more competitive. The total PEDIP appropriation was 
supplemented by EIB/NCI loans totalling ECU 1 billion during the programme's five-year 
duration. 
On a proposal from the Commission, in June 1988 the Council adopted a Regulation-* on 
1 COM(86) 552 
2 SEC(87) 1518 
3 Regulation (EEC) No 2053/88 of 24 June 1988 
OJ L 185, 15.7.1988. 
financial assistance for Portugal for a specific industrial development programme (PEDIP). 
This Regulation provided for: 
1. The introduction of a five-year programme to modernize industry and promote industrial 
development in Portugal. 
2. Financial assistance from the Community budget, over and above Structural Fund 
support, for five years (1988-92) totalling ECU 500 million, Le. ECU 100 million per 
year (1988 prices), for implementation of PEDIP. 
3. Four priority development areas: 
faster improvement of basic industrial infrastructure 
stronger foundations for basic and further vocational training facilities for careers 
in industry 
the financing of productive investment 
productivity drives 
4. Consultation between Portugal and the Commission to define measures which could be 
financed by the Community. 
5. A maximum rate of 75% for Community financing of measures selected under PEDIP, 
and up to 100% for preparatory studies, pilot measures and technical assistance 
measures. 
6. That PEDIP measures must comply with Community policies and law, e.g. on 
competition, the award of public contracts and the protection of the environment. 
7. The establishment by the Commission, every year, of general guidelines for the 
implementation of PEDIP measures. 
8. The setting up of an Advisory Committee composed of the representatives of the 
Member States, to assist the Commission. 
9. The presentation to the European Parliament and to the Council of two reports on the 
implementation of the Regulation giving details of all the development measures 
implemented and the expenditure incurred and assessing their effects. 
The first report^ was presented in May 1990. 
This document is the final report which the Commission must present to the Council and 
Parliament, in accordance with the abovementioned Regulation, by the end of 1993. 
1.2 The basic decisions 
Following the publication of the PEDIP Regulation, the Commission departments most 
directly concerned and the Portuguese authorities speeded up the discussions begun at the end 
of 1986, the aim of which was to formalize the implementing instruments for the four priority 
areas. 
COM(90) 205 
On the Portuguese side, by Government decision, a team was set up (the PEDIP Office) to 
draw up the instruments and negotiate them with the Commission. This was a small team 
under the responsibility of a top official directly attached to the Ministry of Industry, 
independent of traditional administrative structures. 
On the Commission's side, by Decision of 19 October 1988, the Member of the Commission 
responsible for industrial affairs was empowered, on behalf of the Commission and under its 
responsibility, in agreement with the Member responsible for the coordination of structural 
instruments and, where necessary - depending on the area concerned - in agreement with the 
Members responsible for social affairs and regional policy, to decide which measures were 
eligible under Article B 544 of the general budget additional heading (PEDIP). 
The Commission also decided that DG III would be responsible for the financial management 
of the new PEDIP heading. DG V and DG XVI, responsible for areas 2 and 1 respectively, 
would work in close collaboration with DG III on the measures financed under the additional 
PEDIP heading. 
Within the inter-departmental coordination group, a special ad-hoc group was set up for 
PEDIP - GIC PEDIP - under the responsibility of DGXXII, to ensure horizontal 
coordination. Within DG III a new sector and then a new unit were set up to administer 
PEDIP. 
PEDIP's structure gradually began to take shape. Successive versions were presented by the 
PEDIP team, discussed at the Commission and negotiated with the Portuguese authorities, 
leading finally to formal notification of the various programmes. 
Table I lists the programmes and the decisions granting Community support. 
TABLE I 
Basic decisions 
PROGRAMMES DECISIONS 
Priority 1 1. 
Priority 2 2. 
Priority 3 
3.1. 
3.2. 
3.3.1. 
3.3.2. Basic and technological 
infrastructure 
Vocational training 
C(90)587of29/3(ESF) 
Incentives for productive 
investment 
SINPEDIP 
SIURE 
Restructuring of the 
wool industry 
Restructuring of the 
metal industry C(89) 1287 of 13/7 
C(89) 765 of 26/4 (AH) 
C(88)2119of 11/11 
C(89)484of20/3 
C(88)2117of 11/11 
C(90)704of26/4 
COM(88) Min 936 
3.4. 
4. Support for specific 
industries 
Financial engineering C(89) 2045 of 27/11 
C(88) 2220 of 28/11 
Priority 4 5. 
6. 
7. Productivity drives 
Quality and 
industrial design 
Publicity, implementation 
and monitoring C(89)390of7/3 
C(89)391of7/3 
C(88)2118ofll/ll 
IL PORTUGUESE INDUSTRY BEFORE PEDIP 
10 
IL PORTUGUESE INDUSTRY BEFORE PEDIP 
Portuguese industry at the beginning of 1988. 
When Portugal joined the European Community Portuguese industry had a number of 
strengths: 
(a) A good spread of sectors and products, indicating a flexible industrial system 
adaptable to market requirements; 
(b) A reasonable number of good-sized, well-organized firms able to guarantee a stable 
supply in most industrial sectors; 
(c) A positive image of Portuguese products in a wide range of external markets; 
(d) Reasonably specialized human resources with remarkable capacity to adapt. 
There were also major weaknesses: 
(e) Insufficient industrial specialization, based on sectors with limited capacity to 
generate wealth, and creating heavy dépendance on external suppliers for raw 
materials, capital goods and energy resources; 
(f) Energy-intensive production and little attempt to rationalize energy consumption; 
(g) Insufficient investment to change the structure of industry, linked to poor 
entrepreneurial development strategies, which focused on "hard" investment rather 
than complex competitiveness factors; 
(h) Uncoordinated corporate structures, with little integration and no real collaboration; 
(i) Weak approach to the foreign market, based on exports to uncontrolled markets; 
(j) Little research activity, concentrated in the universities and on the margins of 
industry; 
(k) Little technological training, technical assistance and research infrastructure; 
(1) Shortage of skilled human resources at all levels; 
(m) Low levels of quality and productivity; 
(n) Insufficient provision for environmental protection, hygiene, health and safety in the 
workplace. 
To solve these problems, Portugal needed: 
an industrial policy clearly defined at national level and well integrated with major 
Community policy objectives; 
a programme (PEDIP) with instruments well-adapted to Portugal's economic situation 
and to the needs of its industrial agents. 
11 
III. PEDIP'S STRUCTURE 
12 
III. PEDIP'S STRUCTURE 
PEDIP was conceived as an integrated programme to support the development and 
modernization of Portuguese industry. It concerned not only firms but also their 
environment. To make industry more competitive the Portuguese authorities and the 
Commission decided that they should intervene both at the level of production and by 
creating and improving basic infrastructure, technological support infrastructure (through 
training), the development of financial engineering schemes and the promotion of 
productivity, marketing, new management techniques, standardization, certification, 
metrology and design. 
III.l Basic and technological infrastructure (programme 1) 
Industrial and technological development in Portugal was for many years characterized by 
dependence on external technology. The inadequacy of basic infrastructure and the weakness 
of R&TD infrastructure were an indication of this. If the country's industrial base was to be 
strengthened and diversified, the reliance on external technology had to be gradually reduced. 
This need was broadly reflected in Portugal's industrial strategy, in particular the two 
components of PEDIP's programme to develop basic and technological infrastructure: 
(i) strengthening basic infrastructure (improvement of road and rail communications and 
the exploitation of natural resources); 
(ii) the development of technological infrastructure. 
European integration and the modernization of industry led to the definition of two overall 
objectives concerning basic infrastructure: 
to improve communications within Portugal and links with the rest of the 
Community, which required good road and rail networks; 
to make the best possible use of local resources, which required assistance to industry 
(technical, technological and logistic), decentralization of vocational training and 
efficient trade associations. 
The "basic infrastructure" sub-programme had the following priorities: 
(a) to strengthen road links to industrial areas and areas where industrial products are 
marketed, sold, etc. 
(b) to encourage the creation of rail infrastructure and related equipment on lines of major 
use to industry; 
(c) to support the development of port infrastructure and related equipment in industrial 
areas of great potential value at national and international level; 
(d) to encourage the creation of infrastructure to support the activities of firms and their 
associations (exhibition centres, multi-purpose buildings which can be used for 
training and general business support); 
(e) to improve other basic infrastructure to support industrial activity in areas where such 
infrastructure is lacking (industrial parks, road transport fleets, sewage networks, 
improvement of the environment, etc.); 
(f) supporting the development of energy infrastructure, including electricity and gas 
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distribution and transport networks. 
To achieve the objectives inherent in industrial modernization, it is essential to have 
technological infrastructure which will make it possible to restructure traditional industries, 
make production more technology-intensive, create new products using new technologies, 
improve productivity and quality and make full use of natural and human resources. 
The expansion and optimization of the technological sub-system geared to industrial 
modernization had the following priority objectives: 
to strengthen the technical and technological capability of firms; 
to further incorporate technology into production; 
to set up joint research, development and demonstration centres; 
to strengthen links between firms and universities; 
to provide SMEs with greater technological assistance. 
To this end, the following measures were defined: 
(a) metrological support (central and regional metrology laboratories); 
(b) technological support for industrial sectors (technology centres); 
(c) development of new technologies (centres of new technology, centres of excellence); 
(d) transfer of new technologies (transfer centres, demonstration units); 
(e) the promotion of technological innovation by setting up "incubators", technology 
parks, etc. 
III.2 Vocational training 
For several decades Portugal had virtually nothing in the way of an active vocational training 
policy. As a result, there were skills shortages. Immediately before and after accession to the 
Community there was a vigorous reaction to this situation, with ESF support: short and 
medium-length intensive training schemes were set up, intended primarily for young people 
who were unemployed or seeking access to university education. Action by the Portuguese 
authorities had started to have a positive impact on the industrial base, but there were still 
serious deficiencies: 
(i) Training demand was not based on the assessment of requirements by activity, region, 
type of firm, potential trainees or subject area; 
(ii) Training supply was characterized by poor knowledge of requirements and the 
predominance of "standard" training courses. Nor was there any official recognition 
of certain new occupations which did not fit any existing career pattern; 
(iii) Training was available mainly for firms and trade associations, and those excluded 
from the labour market. 
The purpose of PEDIP as far as training is concerned has been to enhance the value of human 
resources in industry, focusing on entrepreneurs and managerial staff, mid- to upper-level 
14 
technical staff and specialized technical staff. The measures taken have been designed to 
have an impact on the organization of firms and not just on the enhancement of workers' 
skills as before. 
The following measures have been taken: 
(a) awareness-raising and short training courses in modern management techniques and 
new technologies for entrepreneurs, senior executives and specialists; 
(b) management training for senior and middle-ranking executives; 
(c) training in new technologies and techniques for senior and middle-ranking executives; 
(d) training of senior and middle-ranking executives, specialists and other workers in 
sectors being restructured; 
(e) training of middle-ranking executives and specialization of senior executives; 
(f) training of researchers for work in firms and scientific and technological institutions 
linked with industrial development (researchers for industry project); 
(g) training of young graduates for jobs in industry (young technicians for industry 
project - JTI); 
(h) training of trainers and instructors; 
(i) support for the preparation and publication of teaching material for PEDIP training 
schemes; 
(j) assessment of PEDIP training schemes. 
IIL3 Incentives for productive investment - programme 3 
By virtue of its scope and the size of its budget the programme entitled "Incentives for 
productive investment" is the core of PEDIP. 
The programme comprises various schemes of aid to industry and was expected to have a 
direct impact on the levels, frequency and allocation of investment in Portugal between 1988 
and 1992. 
The aim was to support the implementation by industrial firms of investment projects aimed 
at modernization, rationalization and technological innovation. Initially, activities were 
horizontal in scope and gave priority to: 
industry-oriented research, including the adaptation and local development of 
technologies; 
measures to install and expand productive capacity, to convert or diversify production 
and encourage technological innovation; 
investment in quality management; 
measures to protect the environment and improve health and safety conditions at 
work; 
- energy saving in industrial production. 
15 
These activités were supplemented by the following vertical measures: 
restructuring measures in a limited number of struggling traditional industries; 
measures aimed at the development of certain modern industries with considerable 
growth potential. 
Programme 3 was divided into four sub-programmes: 
financial incentives - SINPEDIP; 
rational use of energy - SIURE; 
support for industrial restructuring or modernization; 
support for specific industries. 
There were three reasons for this structure: (i) clarity - differentiated criteria for granting aid 
could be established, geared to specific objectives; (ii) PEDIP could absorb existing national 
programmes designed on the same lines and pursuing similar objectives, e.g. the energy 
efficiency scheme and plan to restructure the wool industry; (iii) it would facilitate the 
implementation of other new measures required under national strategic programmes such as 
the Integrated Information Technology and Electronics Programme (PITIE) and the 
Development Programme for Capital Goods Industries (PRODIBE). 
III.3.1 PEDIP incentives scheme (SINPEDIP) - programme 3.1 
The aim of SINPEDIP was to assist certain types of investment project, especially those 
relating to new technologies, which would contribute to innovation, the rationalization of 
production and the modernization of firms. 
The programme comprised the following measures: 
1. Investment in the purchase and development of technology. 
This meant financing the development of new products or manufacturing processes, 
especially at the pre-competitive stage of prototype construction or mass production. 
Categories of project eligible: 
(a) research and technological development; 
(b) the development of new products and manufacturing processes, including the 
construction of prototypes and experimental plant; 
(c) the development of technologically advanced products or processes; 
(d) the manufacture of pre-production models and the construction of pilot plants. 
2. Investment in innovation and modernization 
Investment projects of considerable technological potential and projects relating to 
modernization, innovation or rationalization, the introduction of advanced 
16 
technologies or the improvement of productivity. 
Types of project eligible: 
(a) Investment with considerable technological potential; 
(b) Investment in modernization/innovation; 
(c) Investment in modernization/rationalization; 
3. Support for investment in quality management and protection of the 
environment. 
This covered investment projects relating to industrial quality and design, the 
protection of the environment or the reduction of occupational and safety hazards at 
the workplace. 
Types of project eligible: 
(a) the purchase of laboratory quality-control or metrology equipment; 
(b) the introduction and development of quality-management systems; 
(c) production certification and the calibration of measuring instruments abroad; 
(d) the purchase of health and safety equipment for the workplace; 
(e) the purchase of equipment to protect the environment; 
4. Support for specific investment in capital equipment 
This measure financed the replacement and upgrading of equipment not covered by 
other programmes and not requiring detailed preliminary studies. 
Types of project eligible: 
(a) the purchase of equipment to improve productivity; 
(b) the purchase of equipment to improve health and safety standards, product and 
process quality and environmental protection. 
III.3.2 Rational use of energy: incentives scheme (SIURE) 
SIURE is a scheme of incentives to promote the rational use of energy, authorized by the 
Commission as a national aid scheme (Decision of 20 January 1988 under Articles 92 and 93 
of the EEC Treaty) which is still in force. 
PEDIP sub-programme 3.2 provided for SIURE to be co-financed from the PEDIP budget 
without modification of the scheme. 
However, PEDIP assistance could not be combined with assistance granted under the 
Community's VALOREN programme. 
The objective of SIURE was to promote energy saving in industrial firms and diversify the 
sources of supply. 
17 
More particularly: 
(a) to promote the rational use of energy (management, conservation and diversification 
of supply); 
(b) to decentralize energy production by focusing on renewable resources, energy from 
waste and the combined production of heat and power; 
(c) to stimulate R&D on new forms of energy production and use, and associated 
technologies, including the manufacture of energy equipment. 
Three types of project were eligible for this scheme: 
1. Investment projects relating to the conservation and saving of energy and fuel, 
including changes to production processes and equipment, the purpose of which was 
to reduce specific consumption or energy costs; 
2. Investment projects relating to energy and fuel production, renewable resources, 
energy from waste or by-products, or combined heat and power technology; 
3. Investment projects relating to the replacement of oil products by other sources of 
primary energy. 
IIL33 Aid for industrial restructuring or modernization - programme 3.3 
PEDIP was part of a general strategy that reflected the priority given by the Community to 
the establishment of a favourable environment for industrial development. 
However, in its definitive structure PEDIP, since it was an integrated programme, had to take 
account of sectoral measures already in progress. Such measures were incorporated into the 
general programme, as a separate sub-programme. The industries being restructured when 
PEDIP was approved were the wool and metal industries. 
The instruments used to support these industries could be categorized as follows: 
(i) specific instruments, comprising: 
(a) structural measures: 
- financing of productive investment 
- technological assistance and tighter management 
(b) measures relating to infrastructure: 
- technical assistance, training and marketing measures at sectoral level 
- financing of sectoral technical infrastructure 
(c) other measures (no financial contribution under the programme) 
- consolidation of social security debts, tax reliefs and exemptions 
(ii) complementary instruments 
restructuring projects recognized as such would have preferential access to other 
18 
PEDIP programmes (except SINPEDIP and SIURE): combined applications by firms, 
guaranteed receipt of aid, maximum rate of assistance 
(iii) social measures 
in connection with Ministry of Employment job creation measures, grants for firms 
taking on workers made redundant by restructuring 
Restructuring of the wool industry - programme 33.1 
The purpose of the programme was to make the industry more competitive, modernize its 
structures, improve the quality of its production, step up its technological capability and 
upgrade the skills of both workers and management. 
The programme provided subsidies for: 
the restructuring of firms; 
the modernization of equipment; 
technical assistance to help rationalize production, staff training, market research, the 
development of new products and processes, energy saving, etc.; 
co-financing of the salaries of skilled staff with a higher-education qualification or an 
equivalent qualification in textiles, mechanical or chemical engineering, business 
organization, management or economics, within the context of a restructuring project 
Restructuring of the metal industry - programme 33.2 
The objective was to restructure the metal industry in order to increase competitiveness by 
reducing costs, improving quality and strengthening technological and management 
capability. 
The programme's specific objectives were to: 
reduce production costs and losses; 
maximize capacity utilization; 
reduce specific energy consumption; 
improve financial indicators; 
step up training; 
increase productivity, in particular by improving working conditions; 
implement environmental protection measures. 
III.3.4 Support for specific industries - programme 3.4 
Sectors which are considered strategically important for industrial competitiveness were not 
very developed in Portugal. These are: 
information technology 
19 
capital goods 
These two areas accounted for only 10% of gross added value in Portugal's manufacturing 
industry. 
Moreover, they exhibited structural weaknesses as regards technological capability and 
workforce skills. 
They nevertheless had potential for development, and agressive expansion strategies were 
needed. 
The aim of sub-programme 3.4 was to provide the specific additional support necessary for 
implementing two strategic industrial policy programmes drawn up by the Portuguese 
Government: 
the integrated information technology and electronics programme (PITIE) 
the development programme for capital goods industries (PRODIBE) 
These strategic programmes were implemented chiefly through two other types of 
instrument: 
(a) Preferential support for PITIE and PRODIBE under PEDIP operational programmes. 
Under special rules, PITIE and PRODIBE projects were granted preferential treatment 
in the form of higher or maximum rates of assistance, guaranteed support up to certain 
ceilings and permission to submit combined applications. 
(b) Support under other operational programmes of the Regional Development Plan, 
including the regional incentives scheme (SIBR) and Community support 
instruments, especially in the field of science and technology. 
1. Additional support under the integrated information technology and electronics 
programme (PITIE) 
The programme covered the following activities: 
(a) Evaluation of training requirements 
(b) Information technology and electronics promotion office (GATIE) 
GATIE was a standing advisory body. It was responsible for four specific projects: 
strategic survey of markets, technologies and regulatory provisions 
support for the development of the domestic IT and electronics industry 
international cooperation 
support for the use of information technology and stimulation of the IT market; 
integration of IT systems in services, industry and agriculture. 
(c) The software industry (training, development of R&D centres, setting up of software 
design companies, promoting wider use of infomation technology, etc.). 
(d) The information industry (training of staff specialized in IT, development of R&D, 
supporting the establishment in Portugal of one or more database development and 
operation centres, etc.). 
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2. Development programme for capital goods industries (PRODIBE) 
PRODIBE's general aim was to improve Portugal's technological capability by both 
expanding and upgrading its capital goods industries. 
The strategy adopted was to encourage innovative investment in the capital goods industries, 
for producing new capital goods or upgrading existing production, with the back-up of 
sectoral measures to increase technological assistance and information resources (technology, 
vocational training, quality, organization and management). 
The programme covered the following activities: 
(a) Publicizing the opportunities for manufacturing new capital goods 
(b) Campaign to improve the image of the capital goods industries 
(c) Framing a vocational training policy 
(d) Setting up an office for promoting capital goods production (GAPE) 
The office was responsible for steering and stimulating the necessary activities for 
implementing the PRODIBE strategy, including: 
providing information on PRODIBE and assisting firms in preparing 
applications 
carrying out activities planned under PRODIBE and participation in studies 
which do not form part of the programme 
monitoring progress and evaluating results 
(e) Prototype development (by non-industrial firms) 
(f) Preparation and use of manufacturing specifications 
III.4 Financial engineering - programme 4 
This programme was devised in order to open up the PEDIP financial incentives scheme 
(SINPEDIP) to firms which, although viable, would otherwise have been disqualified 
because of temporary cash-flow problems or their inadequate financial structure. 
The objectives were to: 
finance investment projects, alongside firms' capital and reserves and any grants they 
receive, on more advantageous terms; 
put back on a sound footing businesses that are economically viable but suffer from 
serious financial handicaps; 
inject capital into firms so that they can qualify for assistance under SINPEDIP or 
SIBR. 
These measures supplemented and catalysed the incentive schemes already in existence or set 
up under PEDIP. They were targeted chiefly on small and medium-sized businesses and 
21 
coordinated with activities in the banking sector for maximum possible benefit. 
Measure A - Investment financing (Guarantee Fund) 
This measure was considered an essential concomitant to the aid scheme set up under PEDIP 
programme 3. 
The guarantee fund provided the necessary security for the "particpation bonds" issued to 
finance high-risk projects. 
"participation bonds" are a means of financing specific investments whereby the return that 
holders receive depends on the performance of the investment (or exceptionally, the 
performance of the business). 
Thus: 
Investment projects involving normal risk exposure were financed through the 
banking system, in particular loans from the EIB; 
Projects involving greater risk exposure were financed by "fundos consignados" 
issued by venture capital companies (either private or set up under measure B) and 
underwritten by the Instituto de Apoio as Pequenas e Médias Empresas e ao 
Investimento (IAPMEI). 
Measure B - Financial restructuring and industrial development (setting up 
of two venture capital companies) 
Two venture capital companies (NORPEDIP and SULPEDIP, which operate in the north and 
south of the country respectively) were set up with the following aims: 
(a) to acquire a stake in investment and technological innovation projects of special value 
to industry (wherever possible in addition to the holdings taken up by other venture 
capital companies or other market/private sector investors); 
(b) to contribute to the financial recovery of companies carrying a heavy inherited burden 
of debt, but making a clear operating profit and enjoying a genuine chance of survival. 
Measure C - Mutual guarantee system 
Small and medium-sized businesses find it difficult to obtain bank loans. There are many 
reasons for this, but the main one is the problem of bank exposure stemming from the 
undercapitalization and small size of many firms. 
The mutual guarantee system is a financial mechanism through which member firms take 
joint liability for credit defaults by contributing to a fund. 
After a detailed viability study the scheme was shelved. 
III.5 Productivity drives - programme 5 
The aim of this programme was to boost industrial productivity by promoting 
demonstration/publicity schemes aimed at significantly increasing the efficient use of factors 
which affect productivity or by supporting schemes which serve the same purpose but are too 
specialized to be included in the other PEDIP programmes. 
22 
The competitive advantage enjoyed by Portuguese industry could be chiefly ascribed to low 
wages; considering that labour costs would have a decreasing influence on production costs 
and that unit labour costs would rise steadily as new technology was introduced, it was clear 
that Portugal's competitiveness could not last and would not guarantee a gradual long-term 
rise in the return on the factors of production. 
Low productivity was therefore a fundamental obstacle to the restructuring of Portuguese 
industry, which had to be accompanied by a substantial and lasting improvement in 
competitiveness. 
The revised version of the programme comprised the following measures: 
A. - Demonstration schemes: 
- Demonstration schemes in firms 
- Demonstration of advanced technologies in "centres of competence" 
The specific aim of this programme was to promote and spread ideas, concepts and 
techniques which would have a significant impact on industrial productivity. 
The schemes were to be implemented in stages: 
assessment of a particular firm's productivity and identification of steps to be taken to 
improve it. The firm in question was the "demonstration firm"; 
aid to enable the "demonstration firm" to carry out the course of action identified. 
This consisted of technical assistance from an independent outside body ("centre of 
competence"); 
publicizing and promoting these activities in other firms in the same sector and in 
other sectors. 
To ensure that new technologies and techniques were effectively transferred, the publicity 
work was done by the "centre of competence" or advanced technologies demonstration firm 
which had provided the firm with technical assistance. 
B - Promotion, publicity and studies 
Cooperation between firms, in particular SMEs, enables them to achieve the necessary 
"critical mass" in such fields as as production (specialization and complementarity), supplies 
and marketing. 
The purpose of this scheme was to stimulate cooperation by creating favourable conditions 
for its development; it involved two types of activity: 
stimulation of cooperation, subcontracting and "partnership" schemes 
support for participation by industrial firms in Community programmes 
promotion of health and safety at work and environmental protection 
studies 
The purpose of including aid for studies under PEDIP was to help increase productivity by 
23 
providing firms with the information gathered. 
C - Strengthening management capacity and market access 
Increased productivity in industrial firms, even those using updated processes and equipment, 
depends essentially on the ability to put existing factors of production to good use. One of 
these factors is business management and organizational capability. 
The following activities were provided for: 
assessment of firms 
introduction of advanced management techniques 
legal protection of inventions 
export market prospecting 
publicizing national productive capability 
D - Technical assistance and information 
The purpose of this scheme was to guarantee the provision of advanced technical assistance 
to industrial firms which were too small to employ staff of their own at that level. 
The scheme comprised six measures: 
setting up and strengthening of "centres of competence" 
industrial development network 
sectoral information systems 
aid for participation in EEC trade associations 
strengthening the technical capability of industry's associative structures 
aid to assocations for the opening up of delegations abroad; 
III.6 Quality and industrial design improvement - programme 6 
The aims of PEDIP programme 6 were (i) to promote consumer protection and (ii) to 
improve industry's competitiveness by ensuring that national legislation governing industrial 
activity is adapted to Community law. 
The objectives were: 
(a) to strengthen the three target areas of the National Quality Management System 
(SNGQ): standards, metrology and certification 
(b) to create awareness among producers and consumers of the need for quality 
(c) to develop industry's own quality management capability 
(d) to create the conditions for mutual or multiple recognition of certification systems and 
bodies 
24 
(e) to promote industrial design 
To achieve these objectives the following measures were adopted: 
Al - support for investment projects relating to the setting up, expansion or quality 
assessment of testing or metrology laboratories for the provision of services under the 
SNGQ 
A2 - support for investment projects relating to the setting up, restructuring or quality 
assessment of sectoral standardization and certification bodies and technical 
inspection or audit bodies 
Bl - quality awareness campaign 
B2 - industrial design promotion campaign 
CI- support for standardization 
C2 - promoting the calibration of measuring instruments 
C3 - promoting the use of certification systems 
Dl - support for integrated programmes to improve relations between suppliers and 
purchasers 
D2 - analytical and forward studies on industrial quality and design 
D3 - support for initiatives to promote industrial design 
III.7 Publicity, implementation and monitoring - programme 7 
The above programmes alone could have helped to modernize Portuguese industry and 
played a vital role in integrating Portugal into the single market. 
However, the measures planned and instruments and funding available would not have been 
sufficient to achieve the desired goals unless industry became fully involved and made a 
genuine contribution to the implementation and, where necessary, adjustment of the PEDIP 
programmes. 
Economic agents could only become involved if they were clearly informed of PEDIP's 
objectives, the measures it included, the advantages it offered and the instruments at its 
disposal. 
For its own implementation, then, PEDIP had to provide for a set of publicity meaures which 
would provide potential beneficiaries with all the information necessary to enable them to 
take part. 
Since PEDIP was an evolving programme, critical reviews had to be carried out periodically 
to see how the different schemes were progressing and how successfully they were achieving 
the programme's objectives. Such reviews could lead to changes in the measures and 
instruments being used or prompt more searching studies. An information network therefore 
had to be set up, linking all the bodies involved in implementing PEDIP and providing up-to-
date information at any given moment on the various programmes and their state of progress. 
The programme was divided into two parts: 
25 
A - Implementation, follow-up and monitoring 
B - Publicity, awareness and information 
III.8 Initial financial table 
The basic decisions approving the various PEDIP programmes also adopted the financial 
tables presenting public and private Community and national contributions. 
The following table collates the information contained in the financial tables set out in the 
decisions listed in Table I (p. 10) and shows all the sources of financing for the PEDIP 
programmes. 
26 
TABLE II 
PEDIP - FINANCIAL TABLE RESULTING FROM THE BASIC DECISIONS 
Ecu 
Million 
PROGRAMMES Total 
Cost PUBLIC EXPENDITURE 
Total 
Public 
Expenditure Community Funds 
TOTAL ERDF ESF PEDIP 
AH National Public Financing 
TOTAL Central. 
Govern. Reg. 
Local. 
Author. Public. 
Enterpr. Private 
Sector 
PROG. 1* 668.17 564.82 349.60 323.12 26.48 215.22 114.27 32.26 68.69 103.35 
PROG. 2 202.39 178.54 115.78 100.00 15.78 62.76 62.76 23.85 
PROG. 3.1 609.40 326.00 244.50 244.50 81.50 81.50 283.40 
PROG. 3.2 64.02 12.90 9.66 9.66 3.24 3.24 51.12 
PROG. 3.3.1 54.97 23.45 17.65 17.65 5.90 5.90 31.52 
PROG. 3.3.2 68.98 34.00 25.50 25.50 8.50 8.50 34.98 
PROG. 3.4 30.46 21.46 16.12 16.12 5.34 5.34 9.00 
PROG. 4 76.00 44.00 33.00 33.00 11.00 11.00 32.00 
PROG. 5 103.20 68.40 51.30 51.30 17.10 17.10 34.80 
PROG. 6 41.47 32.00 24.00 24.00 8.00 8.00 9.47 
PROG. 7 11.00 11.00 11.00 11.00 
NOT YET 25.01 
ALLOCATED 
TOTAL 1955.17 1341.68 932.12 323.12 100.00 500.00 418.56 317.61 32.26 68.69 613.49 
* The figures for programme 1 do not include the projects which received ERDF funding (ECU 76.88 million)0 in 1988 
27 
IV. IMPLEMENTATION 
28 
IV. IMPLEMENTATION 
IV.l PEDIP - pilot experiment 
When PEDIP was launched it was regarded as a pilot experiment since this was the first time 
the new mechanisms for intervention and principles introduced by the reform of the 
Structural Funds - partnership, subsidiarity, additionality and follow-up - had been applied. 
Regulation (EEC) No 2053/88, which provided for the PEDIP additional heading, was 
adopted by the Council in June 1988 at the same time as the framework regulation on the 
reform of the Structural Funds, for immediate application. However, the regulations relating 
to ERDF and ESF intervention were not adopted until the end of December, and the dates on 
which the new principles were to apply to the Structural Funds were fixed as 1.1.1989 and 
1.1.1990 respectively. 
IV.2 Centralized management 
PEDIP's operational machinery, the main feature of which was two centralized management 
teams (one in Lisbon and the other in Brussels) was set up by the Commission and the 
Portuguese authorities as soon as the additional heading had been approved. 
A "PEDIP manager", reporting directly to the Minister for Industry, independent of the 
Ministry's traditional administrative structure, was appointed by the Portuguese Government. 
At the same time, within the Commission, DG III (Unit III-A-4) took on the role of "chef de 
file" under the delegation assigned to the Member of the Commission responsible for the 
internal market and industrial affairs, given that PEDIP specifically concerned industry and 
the completion of the internal market. 
Centralized management avoided the need for parallel negotiations between various 
Portuguese ministries and Commission DGs and reduced to a minimum the time needed to 
launch the operational programmes - of which SINPEDIP, the restructuring of the wool 
industry, financial engineering and the publicity, implementation and monitoring programme 
had been approved in 1988 - so that the appropriations entered in the Community budget 
could be committed and paid; it also meant that the negotiation of the other programmes 
could be speeded up, as shown in Table I which gives the dates of the decisions approving the 
programmes. 
IV.3 Subsidiarity 
The principle of subsidiarity was applied with an equal degree of rigour and flexibility. 
The PEDIP manager was entirely responsible for all the activities relating to implementation 
(publicity, administrative organization), selection of projects, incentives and auditing. The 
Commission was responsible for follow-up, higher-level monitoring (compliance with 
Community policies and individual approval of major projects) and participated in the 
assessment of the programme. 
Flexibility was apparent in the partnerships established before decisions were taken and each 
time a decision had to be amended. 
IV.4 Partnership 
The partnership between the two management teams was an important factor in the launching 
29 
of PEDIP and its subsequent implementation. 
Meetings were held frequently (at least 6 per year during the stabilization phase), a great deal 
of communicating was done by fax and essential aspects of PEDIP were discussed at the 
partners' meetings, the decisions being reserved for the Monitoring Committee. 
IV.5 The Monitoring Committee 
In accordance with the principles laid down in the "Structural Funds" regulations, the 
Commission and the Portuguese authorities set up a PEDIP Monitoring Committee. 
The Committee was composed of the PEDIP manager (in the chair), representatives from the 
Directorate-General for Regional Development, the Department of ESF Affairs, the SME 
Support Institute and the office of the Portuguese Permanent Representative and, on the 
Commission's side, representatives from DG III, DG V, DG XVI and DG XXII. The EIB 
could attend the meetings when the items on the agenda concerned it specifically. The 
Committee met eleven times while PEDIP was running, first on 7.11.89. 
These formal meetings were held for the purpose of discussing and, above all. taking 
decisions on all aspects of PEDIP's implementation. The Committee gave its opinion on the 
three-monthly and annual reports presented by the manager, analysed the overall execution of 
the programme and each particular measure, decided when to launch studies, monitored the 
assessment work and made any adaptations which proved necessary along the way, in respect 
of budgetary programming (increases, reductions and rescheduling of funds allocated for 
measures or programmes) and the general direction of the programme (some measures were 
scrapped, others strengthened). 
The Committee also played an important role in ensuring compliance with Community 
policies and law, in particular as regards competition, the awarding of public contracts, 
environmental protection and the notification of projects relating to sensitive sectors or 
sectors in critical difficulty. 
30 
IV.6 The Advisory Committee 
The Advisory Committee provided for in Article 8 of Regulation (EEC) No 2053/88 was 
formally set up on 20 July 1988, the date of its first meeting, five days after the Regulation 
was published in the Official Journal. 
It was composed of representatives of the Member States and chaired by a representative 
from the Commission. An EIB representative also participated in the Committee's work. Its 
task was to assist the Commission in the application of the Regulation and to deliver opinions 
on the Commission's general guidelines for the implementation of PEDIP. 
The Committee was regularly briefed, both orally and in writing, on PEDIP's progress, 
including decisions approving or amending programmes, and on the Annual Report which the 
Portuguese authorities had to present within six months after the end of the year concerned. 
No formal comments on the management of the funds available under the additional heading 
or the execution of the programmes were made at any of the meetings. 
IV.7 Auditing 
The auditing system was developed in Portugal in collaboration with the various departments 
of the Ministry of Industry and the Inspectorate-General of Finances (IGF), with advice from 
the Community Financial Control departments, where two Portuguese officials worked for 
several weeks. Auditing was done on three levels, each with specific objectives and covering 
specific fields of activity. 
The Ministry of Industry and Energy was responsible for the first level of auditing, which 
was carried out in accordance with a manual for each institution concerned. This covered all 
the projects which formed part of the programmes for which the body in question was 
responsible and the aim was to check the work done, the financing, whether the objectives 
had been achieved and whether the projects complied with the relevant legal and regulatory 
provisions. 
The PEDIP Office was responsible for the second level of auditing, done by independent 
consultants selected by open invitation to tender, in accordance with very detailed 
instructions. These audits, concerning all PEDIP projects, were done on significant samples 
(covering 10 to 20% of all the incentives per programme) to check (i) the fulfillment of legal 
and contractual requirements relating to the execution of the projects and (ii) the 
administrative procedures of the bodies responsible for appraising, examining and auditing 
the projects. After auditing, the bodies concerned had to take corrective action where 
necessary. 
Auditing on the third level was done by the Inspectorate-General of Finance which, working 
within its jurisdiction, carried out inspections at the appropriate level, including inspections 
of the PEDIP Office. 
Coordination between the first and second level was achieved by means of periodic reports 
submitted by the MIE departments to the PEDIP Office, which in turn submitted three-
monthly summary reports to the Minister and the Inspecçâo Gérai de Finanças (IGF). 
The auditing and monitoring of PEDIP was regularly monitored by the IGF and the 
Commission; this involved several specific missions. 
31 
IV.8 The use of the ECU 
It was the first time that the ECU had been used as the only accounting unit in Structural 
Funds management. 
The ECU was used not only in the financial plans, but also in the statements of expenditure, 
which meant that the funds could be transferred more quickly. In order to avoid any 
accounting disparities, at the beginning of the month the Commission informed the PEDIP 
manager of the ECU conversion rate it was using. 
IV.9 Application of the deflator 
Sincere resources allocated under the additional heading had been fixed at constant 1988 
prices, they were increased each year on the basis of the annual deflator. Table III shows the 
appropriations entered in the Community budget. 
TABLE III 
APPLICATION OF THE DEFLATOR 
Additional Heading 
ECU 
Million 
Year 
1988 
1989 
1990 
1991 
1992 
TOTAL Aggregate deflator 
--
3.5% 
8.78% 
14.11% 
21.61% Annual 
— 
3.5% 
5.1% 
4.9% 
6.6% Commitments 
entered in budget 
90.0 
103.5 
108.8 
119.8 
127.7 
549.8 
32 
V. THE RESULTS OF IMPLEMENTATION 
33 
V. THE RESULTS OF IMPLEMENTATION 
V.l Final financial table 
When analysing the final overall results of implementation the following must be taken into 
account: the total amount of funding added to the programme by application of the deflator 
(see point IV.9) and all financial changes affecting the programmes. These changes were the 
result of corrections made along the way by the Monitoring Committee, either because 
certain measures were difficult to apply in an industrial context or because others were 
unexpectedly successful, as was the case with almost all the measures relating to productivity 
and quality, which had to be substantially reinforced by funds from other programmes. 
34 
TABLE IV 
PEDIP - FINAL FINANCIAL TABLE 
* For projects financed by the ERDF in 1988 the exchange rate was : 1 ECU =171.14 PTE 
This table takes account of budgetary changes between programmes in 1993 ECU 
Million 
PROGRAMMES Total 
Cost DEPENSES PUBLIQUES 
Total 
Public 
Expenditure Subventions Communautaires 
TOTAL ERDF ESF PEDIP 
AH Financement Publique National 
TOTAL Central. 
Govern. Reg. 
Local+ 
Author. Public 
Entrepr Private 
Sector 
Programme 1 793.98 772.13 412.98 383.00 29.98 359.15 142.92 35.92 180.31 21.85 
ERDF* 736.86 732.15 383.00 383.00 349.15 132.92 35.92 180.31 4.71 
AH 57.12 39.98 29.98 29.98 10.00 10.00 17.14 
Programme 2 180.68 163.19 -112.65 100.47 12.18 50.54 50.54 17.49 
ESF 162.86 146.94 100.47 100.47 46.47 46.47 15.92 
AH 17.82 16.25 12.18 12.18 4.07 4.07 1.57 
Progr.3.1 2270.77 499.03 374.28 81.50 292.78 124.75 124.75 1771.74 
ERDF 494.46 108.66 81.50 81.50 27.16 27.16 385.80 
AH 1776.31 390.37 292.78 292.78 97.59 97.59 1385.94 
Progr. 3.2 64.02 12.90 9.66 9.66 3.24 3.24 51.12 
Progr. 3.3.1 54.97 23.55 17.65 17.65 5.90 5.90 31.42 
Progr. 3.3.2 57.52 28.35 21.26 21.26 7.09 7.09 29.17 
Progr. 3.4 23.17 16.05 12.02 12.02 4.03 4.03 7.12 
Progr. 4 76.00 44.00 33.00 33.00 11.00 11.00 32.00 
Progr. 5 185.60 94.45 70.83 70.83 23.62 23.62 91.15 
Progr. 6 68.38 50.27 37.70 37.70 12.57 12.57 18.11 
Progr. 7 12.74 12.74 12.74 12.74 
TOTAL AH 2393.65 728.91 549.8 549.80 179.11 179.11 1664.74 
ITOTALPEDIP 3787.83 1716.66 1114.77 464.50 100.47 549.80 601.89 385.66 35.92 180.31 2071.17 
35 
TABLE V 
DECISIONS 
DATE 
PROGRAMMES 
1. Basic and Technological 
infrastructure 
2. Vocational Training 
3. Incentives productive 
Investment 
3.1 SINPEDIP 
3.2 SIURE 
3.3.1 Restructuring wool 
3.3.2 Restructuring Metal 
3.4 Support for specific 
industries 
4. Financial Engineering 
5. Productivity Drives 
6. Industrial Quality and 
Design 
7. Publicity implementation 
and monitoring 1988 
C(88)2119 
of 11.11 
C(88)2117 
of 11.11 
C(88)2220 
of 28.11 
C(88)2118 
of 11.11 
Fi 1989 
C(89)1287 
of 13.7 
C(89)765 
of26.4 
(AH) 
C(89)1965 
of 20.11 
C(89)484 
of 20.3 
C(89)2045 
of 27.11 
C(89)390 
of7.3 
C(89) 391 
of 7.3 
C(89) 1400 
of25.7 
nancial Provis 1990 
C(90) 136 
of 29.1 
(AH) 
C(90)587 
of29.3 
(ESF) 
C(90) 1922 
of 28.9 
C(90)1221 
of28.6 
C(90)2986 
of 11.12 
C(90)704 
of 26.4 
C(90) 1921 
of28.9 
C(90)1920 
of 28.9 
C(90)281 
of 23.2 
Ions Decision 1991 
C(91)753 
of 25.4 
C(91)74*of 
16.1 (AH) 
C(91) 1057 
of31.5 
(ESF) 
C(91)1696* 
of 26.7 
C(91)1990 
of20.9 
C(91)51 
of 15.1 
C(91)1622 
of 24.7* 
C(91) 1971 
of 20.9 
C(91)50 
of 15.1 
C(91)211of 
7.2 1992 
C(92)749 
of 1.4 
C(92)2220 
of23.9 
C(92)2220 
of23.9 
(AH) 
C(92)2153 
of7.10 
(ESF) 
C(92) 1201 
of 17.6 
C(92)2220 
of23.9** 
C(92)56 
of 22.1 
C(92)2220 
of23.9 
C(92)435 
of 4.3 
C(92)2220 
of 23.9 
C(92)433 
of 4.3 
C(92)2220 
of23.9 
C(92)2220 
of23.9 1993 
C(93)712 
of23.4 
(ESF) 
C(93) not 
yet taken 
* the financial plan was amended by the Monitoring Committee on 8.10.91 to bring it into line with the new 
financial provisions adopted by the Commission on 11.6.91 
** the financial plan was amended by the Monitoring Committee on 28.10.92 to bring it into line with the new 
financial provisions adopted by the Commission on 11.6.91 
36 
V.2 The operational programmes - overall view 
Table VI gives an overall view of all the PEDIP operational programmes. 
The table shows that 14 175 applications were received, representing applications to invest 
over 1 275 billion escudos. 
All in all, 9 568 projects and courses were approved (54.9% of the projects examined), 
corresponding to approved incentives totalling 308 billion escudos and applications to invest 
over 924 billion escudos. 
As at 31.12.92 the promotors had received nearly 155 billion escudos, corresponding to over 
60% of the value of the incentives approved for projects under contract. 
37 
TABLE VI 
PEDIP OPERATIONAL PROGRAMMES 31.12.92 
(106PTE) 
PROG. 
1 
2 
3 
5 
6 SUB-
PROGRAMMES 
1.1-IBasic infr. 
AH 
ERDF 
1.2 Techn Infr.. 
TOTAL PROG.l 
ESF 
AH 
TOTAL PROG.2* 
3.1-SINPEDIP 
3.2-SIURE 
3J-Restr/Modern.. 
33.1-Wool 
3J.2-Metal 
3.4-Specif.indust 
3.4.1-PITIE 
3.4.2-PRODIBE 
TOTAL PROG J 
PROGR. 5 
PROG. 6 
TOTAL PEDIP PROJECTS 
PRESENTED 
N° 
505 
295 
210 
132 
637 
1.948 
2.292 
4.240 
5.699 
30 
135 
83 
52 
210 
180 
30 
6.074 
2.229 
995 
14.175 INV. 
147.762 
32.533 
115.229 
90.577 
238.339 
59.742 
12.143 
71.885 
756.233 
21.241 
51.400 
26.033 
25.367 
19.480 
17.718 
1.762 
848.354 
92.415 
24.351 
1.275.344 PROJECTS 
N° 
341 
158 
183 
93 
434 
1.679 
2.184 
3.863 
5.699 
30 
134 
82 
52 
189 
160 
29 
6.052 
2.180 
807 
13.336 INV. 
106.559 
19.234 
87.325 
70.990 
177.549 
52.787 
9.413 
62.200 
756.233 
21.241 
50.749 
25.382 
25.367 
17.589 
15.945 
1.644 
845.812 
88.581 
16.291 
1.190.433 PROJECTS 
APPROVED 
N° 
317 
144 
173 
73 
390 
1.416 
1.614 
3.030 
3.532 
30 
95 
58 
37 
112 
91 
21 
3.769 
1.627 
752 
9.568 INV. 
83.812 
11.546 
72.266 
49.944 
133.756 
45.777 
7.772 
53.549 
583.528 
21.241 
43.583 
22.471 
21.112 
10.376 
9.196 
1.180 
658.728 
62.832 
15.527 
924.392 INC. 
48.659 
7.554 
41.105 
44.071 
92.730 
32.774 
4.810 
37.584 
120.583 
3.328 
13.368 
6.218 
7.150 
4.872 
3.933 
939 
142.151 
24.514 
11.354 
308.333 PROJECTS WITH 
CONTRACT 
N° 
298 
125 
173 
66 
364 
1.030 
1.248 
2.278 
2.811 
19 
71 
44 
27 
54 
47 
7 
2.955 
1.347 
590 
7.534 INV. 
83.464 
11.198 
72.266 
49.156 
132.620 
30.149 
6.053 
36.202 
448.707 
14.187 
35.192 
17.460 
17.732 
5.378 
4.621 
757 
503.464 
46.152 
13.383 
731.821 INC. 
48.305 
7.200 
41.105 
43.034 
91.339 
21.035 
4.184 
25.489 
92.894 
2.224 
10.689 
4.695 
5.994 
2.929 
2.258 
671 
108.736 
19.117 
9.837 
254.518 PROJECTS WITH 
PAYMENTT 
N° 
293 
125 
168 
66 
359 
836 
1.246 
2.082 
2.510 
16 
66 
44 
22 
40 
34 
6 
2.632 
1.009 
461 
6.543 INV. 
81.750 
11.198 
70.552 
49.156 
130.906 
24.409 
6.027 
30.436 
398.688 
10.296 
32.536 
17.460 
15.076 
4.102 
3.464 
638 
445.622 
37.124 
12.354 
656.442 INC. 
ATTRIB 
47.390 
7.200 
40.190 
43.034 
90.424 
18.407 
2.920 
21.328 
82.396 
1.738 
9.691 
4.695 
4.996 
2.280 
1.727 
553 
96.105 
15.674 
9.069 
232.600 INC. 
PAYÉ 
29.073 
5.090 
20.083 
25.147 
54.220 
9.822 
2.303 
12.126 
62.531 
1.495 
6.656 
4.143 
2.513 
1.112 
813 
299 
71.794 
10.587 
6.112 
154.839 
* The figure entered in the N° column is the number of courses, not projects 
38 
V.2.1 Programme 1 - Basic and technological infrastructure 
Sub-programme 1.1- Basic infrastructure 
This sub-programme was financed by the ERDF and topped up from the additional heading. 
The ERDF supported 173 projects, with incentives totalling 41 105 million escudos (total 
public expenditure) relating to road, rail, port and energy irifrastructure which would directly 
support industry. 
The additional heading supported trade association infrastructure and vocational training for 
members of the active population. 144 projects were financed and public incentives totalled 
7 554 million escudos. 
Sub-programme 1.2 - Technological infrastructure 
A total of 73 technological infrastructure projects were approved (metrology laboratories, 
technology centres, centres of excellence, transfer/demonstration centres, technology parks). 
Co-financing from the ERDF totalled 44 071 million escudos (public expenditure). 
Nearly 90% of the promotors supported were private non-profit-making organizations. 
V.2.2 Programme 2 - Vocational training 
This programme was financed by the social Fund and topped up from the additional heading. 
The ESF contribution went mainly on the vocational training itself, while the additional 
heading funded publicity and awareness-raising measures, support for the production and 
publication of teaching material and assessment of the training activities of the programme. 
A total of 792 projects were approved, representing 3 030 courses with incentives totalling 
37 583 million escudos. 
60% of the courses were promoted by educational establishments and scientific institutions. 
Industrial firms ran 35% of the courses. The sectors most involved were the metal and 
capital goods industries. 
V.2.3 Programme 3 - Incentives for productive investment 
Sub-programme 3.1 - SINPEDIP 
Table VI gives the following information: 
The PEDIP Office received 5 699 applications to invest, of which 3 532 were 
approved. The approval rate was 62%, which shows that the Committee was very 
selective. 
A total of 583 billion escudos was invested in approved projects, with incentives 
totalling 120 billion escudos, representing an average aid rate of 21%. 
The sectoral distribution of the approved projects was fairly good, closely mirroring the 
structure of Portuguese industry. Nevertheless, the textiles/clothing sector was slightly 
under-represented and the metal, machinery and transport equipment sectors were slightly 
over-represented. The sectors which received the most incentives were: 
39 
Textiles, clothing, leather 19% 
Non-metallic mineral products 13% 
Metal products, machinery and 
transport equipment 34% 
Chemicals industry 12% 
Sub-programme 3.2 - SIURE 
This programme funded 30 projects, with investment amounting to 21 billion escudos and aid 
totalling 3 billion escudos (average aid rate 16%). 
The projects approved were in sectors with high energy consumption. Paper and pulp had the 
high^t number of projects - 11 - and 40% of incentives. 
Sub-programme 3.3.1 - Restructuring of the wool industry 
There were 83 applications to participate in this sub-programme, of which 70% were 
approved. 
44 projects were carried out, with investment amounting to 17 billion escudos and aid 
totalling 4 billion escudos. The co-financing rate was 24%. 
Sub-programme 3.3.2 - Restructuring of the metal industry 
The Selection Committee examined all the applications. 37 projects (71% of the total) were 
approved. Incentives totalling 7 billion escudos were granted for investment of 21 billion 
escudos. The average aid rate was 34%. 
Most of the applications were from the basic metal industries; 75% of the projects approved 
were also in this sector. 
Sub-programme 3.4 - Support for specific industries 
This programme focused on information technology and electronics and the capital goods 
sector. 
Firms in these sectors were given preferential access to other PEDIP and SIBR programmes 
(207 integrated projects). In addition, 112 projects were approved with incentives totalling 
4 977 million escudos (91 projects and 3 938 million escudos in PITIE and 21 projects and 
939 million escudos in PRODIBE). 
The setting-up of the GATIE (Information technology and electronics support office) and the 
GAPE (Capital goods production support office) was vital to the success of this programme. 
These two offices were the driving force behind most of the action taken, including studies, 
conferences and participation in trade fairs and exhibitions, image promotion, etc. 
V.2.4 Programme 4 - Financial engineering 
Two venture capital companies were set up under this programme. 
These two companies carried out 73 operations at a total cost of over 7 700 million escudos, 
in the following areas: 
40 
Advanced technology 7 
Innovation/modernization 31 
Modernization/reorganization 26 
Other areas 9 
Sectoral analysis of the operations shows that the textiles sector is over-represented. The 
Commission has told the Portuguese authorities that this imbalance should be corrected when 
the new operations are organized. 
There were long delays in implementing the rest of the programme, owing to unexpected 
changes in the relevant Portuguese legislation and the existence of rules that the participants 
had not taken into account. 
Investment was financed from an EIB credit line used by Portuguese banks. The first 
instalment (7 000 million escudos) was completely used up, financing 75 projects with 
investment totalling 21 000 million escudos. 
A guarantee fund was set up for a specific EIB loan to IAPMEI, to finance high-risk projects 
with "participation bonds". The first instalment of the loan, totalling 2 000 million escudos, 
has been practically exhausted. 16 operations have been funded. 
V.2.5 Programme 5 - Productivity drives 
The Selection Committee approved 1 627 projects representing investment of 62 831 million 
escudos, with a contribution totalling 24 513 million escudos. 
Nearly 50% of the incentives allocated were spent on demonstration activities. 
There was a reasonable sectoral distribution of approved projects, with a slight imbalance in 
favour the traditional industries. 
The programme was slow in getting off the ground because of its innovatory nature; it 
gradually attracted new applicants and the budget initially provided for had to be 
supplemented several times. 
V.2.6 Programme 6 - Quality improvement 
Incentives totalling 11 354 million escudos were allocated for 752 projects, for investments 
of 15 527 million escudos. 
54% of the incentives were allocated to projects relating to standardization, the calibration of 
measuring instruments and the certification of products or quality control systems in firms. 
The development of quality control systems in Portugal received 28% of the incentives, 
totalling 3 000 million escudos. 
Industrial firms presented 63% of the projects and obtained 33% of the incentives, while 
other institutions providing support for industry (testing laboratories, technological 
infrastructure) presented 29% of the projects and received 59% of the incentives. This figure 
reflects the higher cost of building laboratories. 
The largest number of projects were in the metal products and capital goods sectors. 
The spread of projects over the various measures shows that Portuguese firms are beginning 
to understand that quality is an important aspect of competitiveness. 
41 
V.2.7 Programme 7 - Publicity, implementation and monitoring 
This programme of technical assistance was one of the keys to PEDIP's success. 
The opportunities offered by PEDIP were widely publicized. Studies, including assessment 
studies, were carried out which meant that certain measures could be modified as the 
programme developed; an information system was developed for the management of PEDIP 
allowing the funds allocated to be used at 100%; the monitoring and auditing system set up 
minimized insularities and ensured recovery of undue payment. 
42 
V.3 Implementation (major areas) 
Table VII gives the breakdown of approved projects for each of the major areas provided for: 
TABLE VII 
Investment and Incentives (major areas) 
AREA/PROGRAMME INVESTMENT INCENTIVE 
(ECU MILLION) (ECU MILLION) 
Innovation and Prog. 1 260,6 233,6 
Technological Prog. 3 1912,4 369,3 
Development Prog. 6 197,8 94,2 
PITITE 137,9 51,8 
PRODIBE 142,6 38,0 
TOTAL 2651,4 786,8 
Industrial quality Prog. 1 24,8 18,3 
and design Prog. 3 139,7 49,5 
Prog. 6 88,7 64,9 
TOTAL 253,2 132,7 
Human Prog. 1 19,4 14,9 
resources P2 305,7 214,5 
TOTAL 325,2 229,5 
Protection of the Prog. 1 109,4 68,9 
environment Prog. 3 107,6 31,4 
TOTAL 217,0 100^3 
The table shows that innovation and technological development received the greatest amount 
of PEDIP support: almost 50% of the total value of the projects approved and 45% of the 
incentives. 
The importance of the measures relating to quality and design improvement and PEDIP's 
contribution to the implementation in Portugal of Community Directives concerning the 
environment must be emphasized. 
V.4 Budget execution 
Since PEDIP was financed from several sources (ERDF, ESF and AH) which are 
administered separately, we will look at each source in turn: 
V.4.1 The additional heading 
43 
The execution of the budget can be looked at from two angles. 
Firstly, the execution of the programme vis-à-vis the Community budget, which shows the 
extent to which the appropriations entered in the Community budget have been used, as 
commitments or payments. 
Secondly, analysis of the internal execution of the programme, i.e. commitments and 
payments made by the Portuguese authorities to the final beneficiaries. 
V.4.1.1 
The table below shows that 100% of the appropriations entered in the Community budget, 
whether as commitments or payments, were used for five consecutive years during the 
programme's implementation. 
Table VIII 
PEDIP - Commitment and payment appropriates up to 31.12.92 
Additional Heading 
Ecu Million 
Year 
1988 
1989 
1990 
1991 
1992 
Sous-total 
1993-1994 
TOTAL Commitments 
entered in 
budget 
90.0 
103.5 
108.8 
119.8 
127.7 
549.8 
549.8 Made 
90.0 
103.5 
108.8 
119.8 
127.7 
549.8 
549.8 Payments 
entered in 
budget 
45.0 
80.0 
101.0 
114.4 
121.6 
462.0 
87.8 
549.8 Made 
45.0 
80.0 
101.0 
114.4 
121.6 
462.0 
• 
* 
* not yet made 
Further details are given in Table IX below. 
The amounts requested by the Portuguese authorities were sometimes higher than the 
amounts entered in the budget, therefore some projects had to be postponed until the 
following years when new funds could be transferred. 
44 
TABLE IX 
USE OF PAYMENT APPROPRIATIONS BY PROGRAMME 
(situation on 30/09/93) (Mecu's) 
PROGRAMMES COMMITMENTS PAYMENTS 
1st Advance 2nd Advance Balance 
BASIC AND 
TECHNOLOGICAL 
INFRASTRUCTURE 
VOCATIONAL 
TRAINING 
3.1. SINPEDIP 
3.2. SIURE 
3.3.1. WOOL 
3.3.2. METAL 
3.4. PITIE/PRODIBE 
4. FINANC. ENGIN. 
5. PRODUCT DRIVES . 6,05(89/90) 
9,050 (91) 
14,880 (92) 
6,71(89/90) 
4,20 (91) 
1,270 (92) 
7. PUBLICITY, 
IMPLEMENTATION 
MONITORING 37,10 
66,65 
71,92 
62,76 
54,35 
6. QUALITY IMPROVEMENT (88) 
(89) 
(90) 
(91) 
(92) 
2,02 (89) 
2,17 (90) 
3,300 (91) 
2,170 (92) 
8,37 (90) 
4,295 (91) 
8,595 (92) 
1,26(89/90) 
8,47 (91) 
2,29 (92) 
33,0 
10,9 (89) 
16,29 (90) 
20,195 (91) 
23,445 (92) 
7,5 (89) 
7,44 (90) 
5,520 (91) 
17,240 (92) 
2,25 
2,41 
2,61 
2,010 
3,46 (88) 
(89) 
(90) 
(91) 
(92) 3,025 
4,525 
7,44 
3,355 
2,100 
0,635 
18,55 
31,257 
35,960 
31,380 
31,275 
1,01 
1,085 
1,650 
1,085 
17,65 (88) 8,825 
4,185 
0,230 
4,2975 
0,63 
4,235 
1,145 
(88) 16,5 
5,45 
8,145 
10,0975 
11,7225 
3,75 
3,72 
2,760 
7,32 
1,125 
1,205 
1,305 
1,005 
1,73 89) 
91) 
92) 
89) 
91) 
93) 
88) 
89) 
90) 
91) 
92) 
89) 
90) 
91) 
93) 
88) 
90) 
91) 
93) 
89) 
91) 
93) 
88) 
89) 
90) 
92) 
93) 
89) 
90) 
91) 
92) 
88) 
89) 
90) 
91) 
92) 1,815 
2,715 
4,464 
2,013 
1,260 
0,381* 
11,13 
22,063 
21,576 
18,828 
1,571 
10,634 
0,606 
0,651 
0,99 
0,651 
5,295 
2,511 
1,2885 
1,9175 
2,5785 
0,378 
2,541 
0,687* 
16,5 
3,27 
4,887 
6,0585 
7,0335 
2,25 
2,232 
1,656 
5,172 
1,3 
0,675 
0,723 
0,783 
0,603 
1,038 91) 
91) 
92) 
89) 
92) 
89) 
90) 
91) 
92) 
92) 
93) 
90) 
91) 
92) 
93) 
90) 
91) 
92) 
92) 
93) 
91) 
92) 
89) 
90) 
91) 
92) 
93) 
90) 
91) 
92) 
93) 
93) 
89) 
90) 
91) 
92) 
92) 1,210 (91) 
1,81 (93) 
2,976* 
1,342 (92) 
0,84 (93) 
0,254* 
7,42 (89) 
4,523 (90) 
8,807 (91) 
14,384 (91) 
12,552 (92) 
10,870* 
0,404 (91) 
0,434 (92) 
0,66 (93) 
0,434* 
3,53 
0,45 
0,482 
0,522 
0,402 
0,692* (93) 
1,674 (92) 
0,859 (93) 
1,719* 
0,252 (92) 
1,694* 
0,458* 
2,18 (91) 
3,258 (92) 
4,039 (93) 
4,689* 
1,5 (91) 
1,488 (92) 
1,104 (93) 
3,448* 
(90) 
(91) 
(92) 
(93) 
TOTAL 549,8 
TOTAL PAYMENTS 
* : Not yet paid 273.714S n-L.wi 76,126 
521,498 
28,302 
45 
V.4.1.2 
On an internal level, we must look at: 
the administration's commitments to the promotors of approved projects, 
corresponding to the value of the incentives approved; 
the payments made to promotors of projects, completed or under way, either as 
advances or as reimbursement of expenses incurred. 
Table X shows that commitments exceeded 34% of the additional heading because they 
included projects to be financed by ERDF in 1993 .The payments, totalling ECU 593 
million, accounted for 83% of the appropriations entered in the budget. 
46 
TABLE X 
Implementation of the Budget 
(situation on 30.12.1992) 
(Mecu's) 
PROGRAMMES 
1. Basic and 
technological 
infrastructure 
2. Vocational training 
3.1 SINPEDIP 
3.2 SIURE 
3.3.1 Restructuring of 
the metal industry 
3.3.2 Restructuring of 
the metal industry 
3.4 Support for 
specific industries 
4. Financial 
engineering 
5. Productivity drives 
6. Quality and design 
improvement 
7. Publicity, 
implementation 
and monitoring 
TOTAL BUDGET 
(1988-92) 
39.980 
16.250 
390.360 
12.900 
23.550 
28.350 
16.050 
44.000 
94.450 
50.270 
12.740 
728.900 COMMITMENTS 
APPROVED 
(*)(**) 
41.396 
27.485 
572.709 
14.789 
23.674 
33.966 
21.059 
44.000 
127.821 
62.046 
11.526 
980.471 PAYMENTS 
28.756 
13.064 
351.380 
8.405 
24.101 
14.233 
6.354 
44.000 
59.397 
34.061 
10.017 
593.768 
(*) Average exchange rate used : 1988, 1989, 1990, 1991, 1992: 1ECU = 175$00. 
Programme 4 the exchange rate applicable on teh date of the transfer was used. For 
(**) The commitments include projects with conditions and projects to be financed by ERDF 
in 1993. 
47 
V.4.2 ERDF contributions 
Programme 1 
In October 1987 the Commission decided to allocate 400 MECU from the ERDF to Improve 
the Competitiveness of Portuguese Industry in the framework of PEDIP. In 1988 
13.157.433.000 Escudos (76.880.000 ECU) were committed for individual projects under the 
then existing ERDF Regulations. Until 31st October 1993 11.710.618.017 Escudos (89%) 
had been paid out by the Commission on the basis of expenditure declarations made by the 
Portugueses authorities. 
On 13th July 1989 the balance of the 400 MECUs, an amount of 323,120,000 ECU, was 
fixed as the ERDF contribution to tprogramme n° 1. In June 1993 it was decided by the 
Monitoring Committee of PEDIP to transfer 17 million ECU from Programme 1 to 
Programme 3.1 (Sinpedip) thus reducing the total amount committed to this programme by 
the ERDF to 306.120.000 ECU. 
The situation of Commitments and Payments as of 31st December 1993 wsill be: 
Commitments Payments in ECU 
1989/1990 49.791.375 49.791.375 
1991 96.250.000 96.250.000 
1992 66.608.625 66.608.625 
1993 93.470.000 88.376.000 
1994* - 5.094.000 
TOTAL 306.120.000 306.120.000 
Programme 3.1 
Following a proposal of the Monitoring Committee of the Community Support Framework 
for Portugal the Commission decided on 17th June 1992 to transfer 45 million ECU to 
Programme 3.1 (Sinpedip) from the ERDF. This was reinforced by a further 19.5 million 
ECU fro the ERDF in 1993 in addition to the amount transferred from Programme 1 (cf. 
subrs). The total ERDF support for Sinpedip thus became 81.5 million ECU. 
The situation of commitments and payments as of 31st December 1993 will be as follows: 
1993 
1994 
TOTAL Commitments 
81.500.000 
81.500.000 Payments 
36.500.000 
45.000.000 
81.500.000 in ECU 
V.4.3 ESF contributions 
The ESF contribution to programme 2 (vocational training): 
1989 During this transitional period applications for funding were submitted in 
1994 is a forecast 
48 
accordance with Council Regulation (EEC) No 2950/83 of 17.10.1983 and 
approved by Commission Decision No C(89) 0570 of 22.03.89. Details are given in 
the table below: 
Dossier Requested Approved Committed Spent 
890011P1 1.145.381 1.145.381 1.145.381 947.124 
890011P3 15.883.180 15.883.180 15.883.180 4.496.348 
1989 TOTAL 17.028.561 17.028.561 17.028.561 5.443.472 ECU 
1990/93 By Decision C(90) 587 of 29.03.90 the Commission adopted PEDIP's programme 2 
for the period 1990-92, with an ESF contribution of ECU 83 million. 
Since the Portuguese CSF covers the period 1989-93 the Portuguese authorities 
asked for PEDIP's programme 2 to be extended until 31.12.93 so that it could fit in 
with the CSF (Decision C(91) 1057 of 31.12.91). 
In view of the problems which arose in 90/91 in connection with the programme's 
execution, the Commission decided, on a proposal from the CSF Monitoring 
Committee, to increase the ESF contribution from 65% to 75% of total public 
expenditure (Decision C(93) 2153 of 7.10.92) and to reduce the amount of the ESF 
contribution by ECU 11 million (Commission Decision C(93) 712 of 23.04.93). 
After these changes had been made and the deflator applied to the various 
instalments the financial execution of PEDIP could be summarized as follows: 
Mecu's 
1989 
1990 
1991 
1992 
1993 
INSGEZA 
MT Initial Plan 
89 Prices 
17,029 
23,576 
26,558 
32,865 
100,028 Initial Plan 
Indexed 
17,029 
24,519 
28,780 
38,008 
108^36 Current Plan 
93 Prices 
17,029 
7,525 
16,305 
24,029 
35,586 
100,474 Amount 
Committed 
17,029 
24,519 
6,819 
27,765 
24,342 
100,474 Amount 
Spent 
5,443 
7,525 
16,305 
24,029 
35,586* 
88,888 
* Estimated Expenditure 
V.5 Auditing results 
Table XI below shows the audits referred to in point IV.7. 
On 31.12.92, 5 736 first and second level audits had been carried out on 4 344 projects (59% 
of the projects approved), corresponding to 79% of the funds invested and 74% of the 
incentives. In 1993 auditing will continue, to cover all the projects. 
49 
TABLE XI 
Auditing 
Programme 
/Body 
1-GEP Year 
1990 
1991 
1992 
Sub-total 
2-INETI 1990 
1991 
1992 
Sub-total 
3-IAPMEI 1990 
1991 
1992 
Sub-total 
5-DGI 1990 
1991 
1992 
Sub-total 
6-IPQ 1990 
1991 
1992 
Sub-total 
TOTAL PROJECTS AUDITED 
Number 
Level 1 
11 
49 
60 
158 
60 
153 
371 
519 
531 
812 
1862 
260 
369 
306 
935 
49 
98 
147 
294 
3522 Level 2 
1 
4 
5 
41 
5 
20 
66 
204 
255 
164 
623 
16 
29 
45 
90 
10 
17 
11 
38 
822 TOTAL 
12 
53 
65 
199 
65 
173 
437 
723 
786 
976 
2485 
276 
398 
351 
1025 
59 
115 
158 
332 
4344 % of projects 
approved 
17% 
55% 
69% 
63% 
44% 
61% 
N.B. The table does not inculde the auditing of the two venture capital companies or 
auditing done this year. 
During auditing, various types of irregularity were detected. 
The PEDIP Office divided them into two major categories: 
infringements of PEDIP legislation 
fraud 
The first group covers a wide range of infringements, e.g.: 
accounting system which does not allow the project's effects to be singled out 
failure to publish the incentive 
incentive incorrectly recorded 
accounting delay 
failure to comment on the project's effects in the report 
delay in finishing the project 
50 
In such cases, the firm was notified so that it could take the appropriate corrective action, aid 
was suspended and, where necessary payments already made were recovered. 
The auditors found 16 cases of suspected fraud. Investigations were carried out by the 
Portuguese authorities and the results were as follows: 
four cases unconfirmed, three other cases were regarded as mere anomalies without fraud and 
corrected, the other cases led to cancellation of contracts and the recovery of funds, or are still 
being investigated. The total amount of incentives in question is 327 million escudos 
(approx. ECU 1.8 million) i.e. 1% of total incentives approved. The system of contract 
guarantees set up by the PEDIP Office will enable all the funds granted to firms found guilty 
of fraud to be recovered. 
We can conclude that the auditing and monitoring system set up, covering the fields of 
activity of all the establishments/bodies involved and providing for coordination between 
them, enabled the main aims to be achieved: guaranteeing strict monitoring of the application 
of the rules, checking that the projects were actually being carried out, in accordance with the 
financial plan, assessment of the projects' achievements. 
51 
V.6 Compliance with Community policy 
V.6.1 Public procurement 
Specific clauses on compliance with public procurement rules were included, where 
appropriate, in the contracts with project promotors who received PEDIP funding. 
This was also looked at by the auditors. 
V.6.2 The environment 
Two strategies were adopted for ensuring compliance with Community Directives: 
Firstly, projects which might conflict with national and Community environmental policy 
were not included in PEDIP. For a certain number of projects, the promotors were asked to 
carry out environmental impact studies. 
Secondly, direct support was provided for projects which would help preserve the 
environment or minimize the impact of industrial activity on the environment. 
V.6.3 Competition 
Competition rules were complied with in two ways: firstly, all the programmes and any 
changes to programmes were notified to the Commission; secondly, the same project 
selection criteria were used for all firms. 
V.6.4 Big projects 
All big projects, i.e. industrial projects involving investment over ECU 10 million, and 
infrastructure projects with investment over ECU 15 million, were the subject of prior ad-hoc 
notification to the Commission, which examined them and delivered a binding opinion. 
V.6.5 Sensitive sectors and sectors in critical difficulty 
All projects in sectors in critical difficulty (steel - NACE 221 and 222, shipbuilding - NACE 
361 1/2 and synthetic fibres - NACE 260) were notified to the Commission, which delivered 
a binding opinion. 
For investments projects in sensitive sectors, an information system was set up and an annual 
report was sent to the Commission. 
Annual reports were prepared on the following sectors: textiles/clothing, footwear, vehicle 
parts and mass-market electronics. The information included the name and location of the 
firm, the amount of the investment and of the aid and analysis of the overall effects of the 
investment on production capability at national and Community level. 
52 
VI ASSESSMENT 
53 
VI ASSESSMENT 
VI.1 Pre-PEDIP studies 
Following the decision of 14 October 1987, the Commission, with a view to preparing all the 
measures to support Portuguese industry, launched a series of study contracts to assess the 
situation and determine where aid was required: 
The following studies were done by consultants: 
"Method of confinancing SME investments" 
"Analysis of mutual guarantee schemes" 
"Forward study on the modernization of Portuguese industry" 
"The preparation of young people for work and adult life" 
"Vocational training and rural development" 
"Technological training and industrial development" 
"Development of vocational training guidance and advisory structures" 
"Urgent infrastructure needs of Portuguese industry in the fields of science, research and 
technological development" 
"Preparatory study for the manufacturing actions" 
"Identification of basic infrastructure needs of Portuguese industry, within the 
framework of a future regional development plan" 
"Pilot scheme for cooperation between Portuguese and Spanish SMEs, to promote 
modernization" 
The Commission also cofinanced a study launched by the Portuguese authorities on "The 
restructuring of the system for standardizing and certifying industrial products in Portugal". 
VI.2 Assessment studies 
When the various programmes were being negotiated, the Commission and the Portuguese 
authorities agreed that thorough assessment was necessary to measure the effectiveness of 
public aid. 
Consequently, on 7 November 1989 the Monitoring Committee formally decided to 
participate in the assessment activities being prepared by the PEDIP manager. A Task Force 
was set up to monitor assessment, composed of a representative from the Ministry of 
Industry's Studies and Planning Office, a representative from the PEDIP manager's office and 
a representative from DG III. 
It was decided that the assessment of PEDIP should be divided into three sections: analysis of 
the macroeconomic impact of the programme, done by the Studies and Planning Office, 
which is behind schedule at the moment; an ex-ante assessment of PEDIP's relevance and 
effectiveness followed by an ex-post assessment, carried out by a firm of consultants - CESO 
- in collaboration with a university research centre - CISEP - selected by open invitation to 
54 
tender. 
The following information is based on the study of PEDIP's relevance and effectiveness, the 
only one completed to date. 
VI.3 Assessment of PEDIP's relevance and effectiveness 
The consultants took their information from the application forms submitted by economic 
operators whose projects had been approved. The study is therefore based on the promotors' 
intentions and not what they actually did. A follow-up study is now being done to complete 
the analysis and confirm, on the basis of surveys of firms which have finished their projects, 
whether or not the conclusions of the relevance study are correct. 
The reason for doing an assessment study is to determine how and to what extent PEDIP has 
penetrated industry and the extent to which the programme's objectives have been achieved. 
VI.3.1 Penetration of PEDIP into industry 
The team looked at 7 023 projects supported by PEDIP, representing investment of 
approximately 1 056 billion escudos, with subsidies totalling 322 billion escudos. 
Of the total amount invested 62.7% was spent on productive investment projects, 13.7% on 
basic and technological infrastructure, 4.6% on human resources, 11.6% on risk capital 
operations and 6.3% on investment relating to complex competitiveness factors (productivity 
and quality). 
Since the programme began, there have been an increasing number of applications to 
participate in the quality improvement and productivity programmes and for support for 
productive investment in strategic areas (technological development, environmental 
protection and quality management) and sectors, which meant that the budgets for these 
programmes had to be increased, at the expense of the hard incentives programmes. 
As regards the distribution of funds by type of economic operator, firms received 68%, 
educational and research establishments 20.6% and trade associations 8.2%. 
Firms supported by PEDIP accounted for 42% of Portugal's industrial employment. The 
study found that the distribution of PEDIP firms by volume of employment does not reflect 
the structure of Portuguese industry: firms with over 100 workers are over-represented and 
firms with less than 50 workers are under-represented. This may mean one of two things: 
either that not many very small firms applied for PEDIP support, or that they did apply but 
the elegibility criteria were too strict, which would justify the setting-up of a specific 
incentives scheme for this type of firm. 
As regards industrial sectors, traditional industries are under-represented (textiles and 
forestry-related sectors) and "modern" industries are over-represented (metal, electrical 
goods) This suggests that PEDIP has encouraged Portuguese industry to move forward into 
new sectors. 
VI.3.2 PEDIP firms and the rest of industry 
The study showed that PEDIP firms were more dynamic and "healthier" than other 
Portuguese firms. This dynamism, especially where investment was concerned, made their 
financial structure more vulnerable, because they had higher costs than other firms. 
As regards international trade, PEDIP firms exported more, although the figures fell as new 
55 
projects were approved. 
As regards human resources, less upward pressure on wages and higher average wage costs 
were recorded. This was the result of higher productivity, which offset the burden of 
increased wage costs. Under PEDIP the distribution of added value is thus favourable to 
firms. 
VI.3.3. Access to PEDIP 
A fairly wide range of sectors are represented within PEDIP. This diversity indicates that 
PEDIP, while supporting traditional industries, also encouraged the development of new 
industries in Portugal. 
The best-equipped firms invested in a wider range of initiatives (marketing, training, quality 
improvement, etc.) and the most productive firms were those which concentrated most on 
productivity drives. However, the firms most linked to foreign markets did not sufficiently 
coordinate productive investment measures with measures taken in strategic areas linked to 
productivity. 
The study divided projects into four major groups: 
(a) "offensive projects" which could make Portuguese industry much more competitive; 
(b) modernization projects geared to improving management techniques, but not designed 
to improve competitiveness; 
(c) "defensive projects", involving investments which would give little return, to 
restructure sectors in critical difficulty or with little scope for innovation and 
modernization; 
(d) infrastructure projects and projects concerning the industrial environment, not promoted 
by firms and which would have an indirect impact on competitiveness. 
The major investment in infrastructure and projects concerning the industrial environment 
(18% of investments and 34% of incentives) will have a positive impact not only on PEDIP 
firms but on manufacturing industry as a whole. 
More money was spent on "offensive" projects (over 40% of investments) than on 
"defensive" projects (35%). As regards the number of projects, the reverse was true. 
The investment in both modernization and "offensive" projects should contribute to the 
structural transformation of Portuguese industry. 
VI.3.4 Anticipated effects and actual achievements 
(a) Rationalization of investment 
PEDIP, through a wide range of support measures, encouraged entrepreneurs to shift to new 
investment aims. Instead of focusing almost exclusively on productive investment 
(modernization and increasing productive capacity) they tried to focus on other important 
elements, i.e. complex competitiveness factors. 2 600 projects costing 111 000 million 
escudos were supported by investments which were not directly productive. 
(b) Increasing innovation potential 
56 
Most PEDIP firms benefited from the opportunities to innovate offered by the various 
measures. An improvement in the technological level of equipment and human resource 
skills is therefore expected. 
Under PEDIP, large sums of money were allocated for the improvement of know-how in 
firms, in particular sectors where production is more technology-intensive, and for the 
diversification and strengthening of Portugal's technological infrastructure. It also supported 
a significant number of R&D projects in advanced fields of technology. It is therefore 
expected that projects carried out by the most dynamic firms with the best qualified staff will 
serve as a model for the rest of Portuguese industry. 
(c) Stimulation of industry-based research and development 
PEDIP supported industrial research in two ways: 
indirectly, by creating or strengthening the technological infrastructure which is the 
basis for development and the use of new technologies and is the interface between 
universities and firms; 
directly, by helping firms to acquire and develop new technologies. 
Institutes of new technology, technology centres and transfer centres received 70% of the 60 
billion escudos spent by PEDIP on technological infrastructure. Investment in the acquisition 
and development of industrial technology was greatest in the field of advanced technologies 
(information technology, communications and electronics), in particular new products and 
processes. 
The effects of this investment will be felt only in the medium-term and will mainly concern 
quality improvement, technological support for firms, quicker technology transfer and the 
development of new technologies. 
As far as supply is concerned, PEDIP has done what it set out to do. Action must now be 
taken to encourage firms to take advantage of these opportunities. 
(d) Increasing productivity 
The consultants calculated that the average growth rate of PEDIP firms was now 5%, with a 
2.4% increase in employment. These two figures point to rapid economic growth. 
More particularly, the productivity growth figures of firms which benefited from 
demonstration activities ("soft" aid to improve complex competitiveness factors) should be 
even more significant. The study gives them an annual growth rate of 11%. 
Firms with over 500 employees have better productivity levels, higher average wages and a 
more unequal distribution of added value. 
(e) Quality improvement 
Three types of action were taken: strengthening of the national quality management system, 
general support for firms in the field of industrial quality and design and support for 
investment in quality management. 
Despite the high cost of infrastructure, it should be pointed out that 70% of the investments in 
57 
quality improvement were promoted by industrial firms. 
Portuguese quality management has been given a considerable boost. 3 200 million escudos 
were spent on setting up a basic metrology network. 108 other testing and metrology 
laboratories were supported with 7 700 million escudos. Sectoral standardization, 
certification and auditing bodies also received PEDIP support. 
(f) Diversification of production 
According to the assessment study, industry tended to disregard this objective. Not much 
attention was focused on the introduction of new products or the improvement of the 
technological content of existing ones. However, PEDIP did support a significant number of 
investments in the development of new "specialization poles", especially in the metal 
industry. 
(g) Human resources 
Considerable attention was focused on bridging the gap between the qualifications provided 
by the formal education system and the requirements of industry: 70% of training project 
incentives focused on this problem. 
20% of the incentives went on retraining and further training in new management methods 
and new technologies. 
(h) Rational use of energy 
Programme 3.2 (SIURE) mainly benefited firms which consume large amounts of energy 
(paper and chemicals industries, etc.) 
Annual energy savings of 30% of the investment are expected in energy efficiency projects 
(concerning the production of energy from renewable resources or combined heat and 
electricity production techniques). 
Innovation and modernization projects supported by SINPEDIP also helped reduce energy 
consumption, since energy efficiency was one of the eligibility criteria for these projects. 
(i) Development of industrial cooperation 
Under programmes 5 (Productivity) and 6 (Quality) industrial cooperation projects received 
7% of incentives for investment covering 10% of the total number of projects carried out 
under these two programmes. 
Over 50% of projects concerned trade association activities. The highest number of projects 
was in the metals industry (12.5%): these were partnership and subcontracting projects. 
(j) Modernization of management 
Three types of action were taken to modernize management. Firstly, it was an aspect of the 
major innovation/modernization projects supported by SINPEDIP. Secondly, two-thirds of 
the support provided under the training programme, where Portugal's largest industrial 
sectors (textiles and the metal industry) were well represented, focused on this objective. 
Finally, under the "Productivity drives" programme, 16% of projects and 7% of incentives 
also concerned the modernization of management. The demonstration activities which were 
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part of this programme also contributed indirectly to achieving this objective. 
(k) Strengthening of technical assistance 
Two programmes made a major contribution to the reinforcement of technical assistance: 
Programme 1.2 - Technological infrastructure - helped create the basic infrastructure needed 
by suppliers of services to industry. 
Programme 5 - Productivity - directly supported technical assistance to firms. Thus, 489 
activities representing 57% of programme 5 incentives were cofinanced. The programme 
also helped set up 75 "centres of competence", directly providing 3 000 jobs, mostly for 
technical staff. 
(1) Market access 
More attention was focused on the participation in or organization of fairs in Portugal or 
abroad than opening offices outside the country, indicating that trade is considered more 
important than internationalization in the wider sense. Trade associations were extremely 
interested in this aspect of the programme and submitted a large number of projects 
concerning their respective sectors which received 50% of the funds. 
The metal industry submitted the largest number of projects concerning access to external 
markets. Sectors traditionally geared to export (textiles/clothing, footwear and furniture) also 
made substantial investments in this field. 
VI.4 PEDIP studies 
In addition to the studies already mentioned, many other studies were also carried out while 
PEDIP was being implemented: 
Overall assessment study of PEDIP publicity - GLOBAL 
Feasibility study on the setting-up of cooperation networks - DANSK TEKNOLOGIK 
INSTITUTE 
Study to devise a training programme for the wool industry - NORMA/EGF 
Study on the relevance of the PEDIP training programme to industry NORMA 
Study of a microelectronics and electronics project - CONSULTRONIQUE 
Study of the effectiveness of the support given to SMEs by associative structures -
TECINVEST 
Assessment study of the change in entrepreneurial strategies as Portuguese industry is 
modernized - COOPERS AND LYBRAND 
Study of the strategic development of technological infrastructure COOPERS AND 
LYBRAND 
Vocational training requirements in the wood and furniture industries CFPIMM 
Response to programme 2 from sub-sectors of the wood industry G. TOURNIER 
59 
Response to programme 2 from sub-sectors of the food industry G. TOURNIER 
Identification of vocational training needs in the sub-sectors of the food industry -
CIDEC 
Human resources assessment study (information technology and electronics) - TDC, 
FUNDETEC, DINAMIA 
Assessment study of the training provided in schools and vocational training 
establishments (information technology and electronics) - COOPERS & LYBRAND 
Study to assess training needs for the introduction of IT in firms (flexible automation) -
TDC, FUNDETEC, DINAMIA and COMPTA RH 
Microelectronics and components - CONSULTRONIQUE 
Computer-assisted manufacturing (CIM) - CONSULTRONIQUE 
The software and information industry - BIS MACKINTOSH 
The electronic telecommunications industry - BIS DECISIONS STRATEGY 
Electronic equipment/automobile electronics - SRI INTERNATIONAL 
Qualified human resources and training for the capital goods industry NORMA, 
TECINVEST/EGS 
Study of the timber processing equipment sector - F. ROLIN 
Survey of metal working equipment production - GAPE 
Survey of agricultural equipment production - GAPE 
Survey of quarrying and building equipment production - GAPE 
Survey of timber processing equipment production - GAPE 
Survey of the production of equipment for the ceramics and glass industries 
Survey of the production of lifting, handling and packaging equipment production 
Survey of the production of equipment for the food industry - GAPE 
Survey of the production of equipment for the textiles/clothing and tanning/footwear 
industries - GAPE 
VI.5 CONCLUSIONS 
1. Although PEDIP is still running (ERDF and ESF Programmes) and the full effects of the 
programme will not be felt immediately, we may nevertheless conclude that it has been 
a success at several levels. 
All the PEDIP instruments and measures have set in motion or speeded up fundamental 
change in three areas: 
the business environment 
60 
the efficiency of production 
entrepreneurs' approach to complex competitiveness factors 
As regards the business environment, PEDIP has helped create the basic conditions for 
the harmonious development of firms, especially SMEs, by filling the gaps in other 
sectoral policies (science, training, environment, etc.) and developing support services 
for industry (technological and other infrastructure). PEDIP has also paved the way for 
quicker transfer of scientific and technological know-how to firms. 
As regards training, PEDIP has enhanced the skills of senior and middle-ranking 
executives and corrected deficiencies that would have been difficult to correct through 
the normal education system . 
The programme has strengthened the capability and effectiveness of trade associations in 
all regions of the country. 
It has helped improve business financing in general, and for SMEs in particular. 
As regards production, PEDIP has speeded up modernization in traditional sectors of 
Portuguese industry and boosted investment in sectors with significant technological 
potential. 
It has encouraged Portuguese industry to move, albeit slowly, into new areas of 
specialization. 
The programme has encouraged firms to take steps to improve their competitiveness and 
reduce wastage of raw materials and energy resources. 
It has reduced firms' dependence on cheap labour, until now the most important factor in 
competitiveness. 
It has encouraged firms to innovate more rapidly. 
It has also led to a significant increase in investment by firms in quality, design, 
innovation, protection of the environment and safety in the workplace. 
Finally, PEDIP has enabled a large number of firms to become financially stable. 
PEDIP has also made entrepreneurs aware of the importance of investing in training, 
productivity, quality, design, innovation and marketing. 
2. As regards PEDIP's macro-economic effects, subject to the conclusions of the study now 
being carried out on the programme's real impact on the Portuguese economy, it may 
already be said that PEDIP has made a significant contribution to changing a number of 
indicators. 
Since accession Portugal's unemployment rate has fallen from 10.9% to 4.8% in 1992. 
The trend in the annual rate of growth in investment has been reversed, moving from -
3% to 3.2% in 1992. 
The capacity to attract direct investment from abroad has significantly increased: from 
1% of GDP to 5.1% in 1992. 
Over the same period GDP at current prices rose from ECU 27.1 billion to ECU 65.2 
billion per inhabitant and from 27.0 to 43.5 (EC=100). 
ISSN 0254-1475 
COM(93)711 final 
DOCUMENTS 
EN 10 
Catalogue number : CB-CO-93-762-EN-C 
ISBN 92-77-63753-6 
Office for Official Publications of the European Communities 
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