When meeting people from different countries, they would sometimes ask me what the biggest industries in Portugal and what are Portugal’s most known products. Then, a straightforward answer for the most recent years is “Tourism” since it has been broadly increasing in the last decade. However, I could still remember the prominence of the textile industry in the north, more specifically, the shoemaking industry in Guimarães. On top of that, there are the stories of Olive Oil and Cork industry – since Portugal is the biggest producer/exporter of cork in the world.

These questions always puzzled me leading to the ultimate questions: are those industries truly being major contributors to my country’s economy?

Gross Value Added

To answer the previous question, we will look at a specific metric called Gross Value Added.

Gross Value Added (GVA) is an economic productivity metric that measures the contribution of a corporate subsidiary, company or municipality to an economy, producer, sector or region. It provides a dollar value for the amount of goods and services that have been produced in a country, minus the cost of all inputs and raw materials that are directly attributable to that production. Investopedia

All in all, Valued Added reflects the value generated by producing goods and services, and is measured as the value of output minus the value of intermediate consumption.

In that sense, we can use the Gross Value Added to see how much each economic sector has contributed to a country’s economic production (GDP), in a specific year. As a final note, it is important to realize that GVA adjusts the GDP by the impact of Subsidies and Taxes (tariffs) on products.

Finally, as a reminder to the reader, a high-level look at economic production usually comprises 3 sectors: Agriculture, Manufacturing and Services. The economies of less developed countries will, typically, depend more on the Agricultural sector’s activities while the more developed ones will have an economic focus towards Services.

Value added by Activity, by Country

In the graph below, I present a Treemap including for each country the Value Added by Activity. The data used is referent to 2017 and the value amounts were adjusted to be presented in dollars (Millions of USD), as by using the same currency it becomes possible to make a comparison between different countries. Also, please note that 2017 was chosen since it was the latest available data I could find with a deeper granularity for the activities inside each of the 3 sectors mentioned on the previous section.

The Treemap was generated using Python language code and data from OECD Stats. Similarly to all my articles, I present the links to both Python’s Code Source and Data Source at the bottom of the page. Furthermore, I would like to give credit to the developer of the Python library I am using to generate this Treemap who made the code available here.

Lastly, when navigating the Treemamp please notice that by clicking in each country’s name it’s possible to see its Valued Added by Activity, as well as, making use of the “Back” button to come back to the initial view.

Treemap Value Added by Activity, by Country

Now it’s the moment of truth to see the contribution values of the shoemaking (Manufacturing of Textiles, Wearing Apparel and Other) and Cork industries (Manufacturing of Wood and Products of Wood and Cork). In the end, it turns out that their share on the total GVA for Portugal is 2.5% and 0.59%, respectively. These are relatively small contributions but comparatively to other countries they can be deemed as large, to be honest.

One needs indeed to take one step back to understand why these values are so small when compared to the initial expectations. Let’s remember that here actually we are not talking about the number of shoes/cork being made but the value added (in USD) of those activities. Therefore, if we look at the second biggest sector “Real Estate Activities” then we can easily realize that the value (money amount) of one house/building is much higher than the one of a pair of shoes. Furthermore, taking this perspective to the overall view of a country’s economy and thinking about the number of people employed in each industry, then, the values showed in our Treemap start to make more sense.

Did you also find interesting stats about your country or another one? Don’t be shy and share your findings below on the comments area.

Sources

Data Source: OECD Stats

Code Source: GitHub Page

Cover Image Credits: from the presentation in https://pt.slideshare.net/joseklo/economic-sectors-96285235

• Economy