The military coup of April 1974, which ousted the long-lived authoritarian Salazar-Caetano regime, was rapidly transformed into a social revolution that profoundly recast Portugal's political and economic systems (see Spínola and Revolution, ch. 4). The revolutionary leadership undercut the old elite's economic base by nationalizing the banks and most of the country's heavy and medium-sized industries expropriating landed estates in the central and southern regions and giving independence to Angola, Mozambique, and other colonies. The last action dismantled the web of economic relationships, known as the Escudo Area, through which metropolitan Portugal was linked to its "overseas provinces."

In the brief period between the collapse of the old regime in April 1974 and the abortive leftist coup of November 1975, a variety of economic models were proposed for Portugal by the provisional Armed Forces Movement (Movimento das Forças Armadas-- MFA) governments, including the West European, Yugoslav, and Albanian models. In the early months following the military coup, the new Portuguese government's economic orientation could be described as moderate-reformist. The regime's Economic and Social Program published on May 15, 1974, made no provision for largescale nationalization of industry or agriculture. The program simply provided for the "adoption of new measures of government intervention in the basic sectors of the economy and particularly in the sectors of national interest, without prejudice to the legitimate interest of private enterprise" argued for "reform of the tax system so as to rationalize it and ease the tax burden on less well-off groups, with a view of a fairer distribution of income" recommended measures "to stimulate agriculture and gradual reform of the land tenure system" and, within the sphere of social policy, favored introduction of "a minimum wage to be progressively extended to all sectors of activity."

The initial moderate-reformist policies reflected the views of General António de Spínola, who was chosen by the MFA to lead the coup and to serve as the country's president. Spínola, the celebrated war hero, favored the establishment of civil liberties and the creation of democratic institutions. He also advocated rapid improvement of living standards, a modernized financial structure, and eventual Portuguese participation in the EC--objectives laid down in an economic plan he commissioned from Erik Lundberg of the World Bank. Spínola's view on the economy and the pace of decolonization diverged from those of the Coordinating Committee of the MFA, most of whose members were prepared to end completely the Portuguese presence in Africa and to expand substantially the scope of the public sector. By the early autumn of 1974, events both within and outside Portugal favored the course chosen by the MFA coordinating committee. Unable to stop the leftward drift of the country, Spínola resigned in September 1974.

Data as of January 1993