As it snaps out of years of austerity, Portugal puts industrial innovation at the center of its future.

A farmer works near wind turbines in the Sierra del Rey mountain range, about 100km (62 miles) from Lisbon. REUTERS/Nacho Doce (PORTUGAL)

Until recently often seen as a failing economy plagued by inefficiencies and incapable of competing in the global market, Portugal is now enjoying an economic recovery that would have been difficult to imagine just three or four years ago.

As anti-austerity measures supported by strong growth in tourism and public sector reform push the country's economy into smoother seas, the country is now in a position to draft improved policy for its economic future.

In January 2017, the Portuguese government put in place new measures, designed in collaboration with the private sector, to focus on what has become known as Industry 4.0, or the fourth industrial revolution.
This new stage in global manufacturing and industry will be driven by the second wave of computerization, the first being that which triggered the third industrial revolution at the end of the 20th century.

Now, beyond computers, we are witnessing the rise of the so-called “internet of things (IoT)," where smart TVs, smart homes, smart grids, smart factories, smart labels—smart everything—will be constantly gathering data that can be used to improve and optimize industrial processes. The era of big data is upon us, and companies cannot afford to miss out on it.

Last year, the program i4.0 was launched by the Portuguese Ministry of Economy.

The program comprises 60 measures that should help over 50,000 companies make the move into the world of big data.

These measures include financing programs, public-private partnerships, extensive training programs, the revision of education curricula to adapt them to the digital age, the creation of learning factories, the promotion of the Portuguese industrial ecosystem internationally, and the integration of universities with the private sector.

The National Innovation Agency COTEC has been in charge of the program's implementation, and one year in the effects are already visible.

During the XII COTEC Europa Meeting, which took place last week in Mafra and was entitled “WORK 4.0: Rethinking the Human-Technology Alliance," Portuguese Minister of Economy Manuel Caldeira Cabral noted that flexible firms focused on produced high quality goods are transforming the Portuguese job market, as young people who left the country during the crisis are now coming back home to work.

Sectors like renewable energy production have benefited from favorable policies and technological developments which have made them more competitive in the international market.

A training program launched at the end of 2016 in collaboration with Google trained 35,000 people in various digital sectors during 2017 in an education drive that aims to tackle the lack of skills in these areas.

The country's oldest university, in Coimbra, launched a platform called i4.0@UC aimed at strengthening ties between the industry and the university's research center. These efforts are preparing the Portuguese work force for the jobs of the future.

Surprisingly enough, after the industrial sector, it is the public sector that has been most effectively driving innovation in the country.

Known for decades for its sluggish, inefficient, and bureaucratic service, public institutions are striking partnerships with private players to integrate new capabilities in their services.

In the northern city of Braga, for instance, the local municipality and IBM have deployed IoT capabilities to the cities urban transport services. Today, buses are equipped with sensors that capture all kinds of data, from geolocation to ticketing, CO2 emissions and vehicle telemetry, to try to improve the service and the user experience.

In a collaboration with Siemens, the Portuguese government has launched three technologic centers for experimentation, which will be supporting projects connected to the adaptation of the industry to the era of the IoT. A fourth center supported by Siemens named 4AC-Industry 4.0 will be dedicated to streamlining development and growth within the country's start-up scene. The incubator will focus on technology-based start-ups that work with software and hardware development, helping them to scale and market their products.

It is meant to become a central hub connecting the industry, technological centers, incubators, universities, entrepreneurs, investors, and stakeholders.

It will build on the flourishing start-up scene that has developed in Portugal around its main urban centers over the last few years, benefiting from reduced bureaucracy and competitive taxation frameworks.

A study released by consulting firm PWC in 2017 indicated that up to 86% of all surveyed companies in Portugal expect to see the integration of digital structures in their vertical and horizontal value chains. Cost reduction and efficiency improvements are only some of the most direct advantages of the use of these processes.

The government sees the industrial sector's representation within the GDP to grow from 15.4% in 2015 to 18% by 2020.

While many challenges remain, particularly when it comes to shifts in established corporate cultures and the implementation of dramatic work flow changes in legacy companies, the Portuguese economy seems to be embracing the bold new world of digitization with open arms, a strategy that is likely to bring great benefits in the not-so-distant future.