That is so low for an upper-middle/lower-upper income country. (Most economists would not describe Portugal as high income in 1996.) I expected EU integration would have made their economy boom. You are right: I have not seen this pattern before. Normally, good democracies can "right the ship".
- Our main business sectors are bad (tourism, agriculture, textiles)
And a few law/cultural reasons:
- Lots of buroucracy and inefficiency + high taxes means making a business here is impossible (I've sold a company that I incorporated here so I'd know ahah)
- Bad education and lack of incentives for companies to be here means younger talent leaves for greener pastures across EU and the US. We call it "brain drain".
- Because all the young talented people keep leaving, the only remaining people are low-income workers or old people (we're a very old country). Old people keep voting the same corrupt parties into power so nothing ever changes.
- There's a big "crab mentality" about people who are wealthy being evil.
Extra:
The party that played the biggest role in getting rid of our dictatorship was the communist party (that's literally their name, Partido Comunista Português), so in Portugal communism is good, and capitalism is bad.
There's lots of talk about taxing the rich here, but the truth is that there are no rich. We only have ONE billionare. If were to tax 100% of our rich we wouldn't be able to run the government for more than a couple of weeks.
They then announce pensions for majority groups like the elderly and get voted into power by the same groups they are financing.