Early on the morning of Good Friday this year, at the height of Portugal’s sovereign debt crisis, the delegation of senior EU and International Monetary Fund officials that had travelled to Lisbon to negotiate the country’s €78bn ($112bn) bail-out agreement disappeared from public view.

The television and radio journalists who had tracked their every move across the city for days, broadcasting live from the backs of motorcycles as they followed their black limousines, confessed that they had lost the trail and speculated over the possibility of secret, unscheduled meetings.

Portugal, which was also in the middle of a heated general election campaign, was avid for news of the team from the so-called troika – the EU, IMF and European Central Bank – that was about to usher in years of deep austerity and radical reform in return for a financial rescue.

In fact, the two Germans and a Dane had left their hotels early for a discreet breakfast with senior members of the economics faculty of Lisbon’s Universidade Nova, one of the country’s top two schools of business and economics. “They were eager to hear our views,” says José Ferreira Machado, dean of the faculty.

The meeting reflects the degree of influence that Portugal’s top business and economics schools have always had on government policy and national debate. “In a small country like ours, the leading economics faculties are in a sense co-leaders of the nation in a way that would not be possible in bigger countries,” says Prof Ferreira Machado.

“Governments care about what we think,” says Fátima Barros, dean of the economics faculty at Lisbon’s Universidade Católica, Portugal’s other top business school and the only one in the private sector. “We see ourselves as an independent voice that can make an important difference in the country.”

Sometimes this influence is highly tangible. The Easter breakfast with the troika delegation, held in a former palace on the Nova campus, has only just come to light. But the memorandum of understanding that sets out the terms of Portugal’s three-year rescue package bears what Prof Ferreira Machado calls “the intellectual mark of our school” in at least two critical areas.

Pedro Portugal, an economics professor at Nova and senior researcher with the Bank of Portugal, is seen as the “intellectual father” of the labour market reforms included in the rescue package. These focus on ending a dichotomy between permanent and fixed-term work contracts that has created a two-tier system where older, less skilled workers have become “unsackable”, but many younger, often highly qualified people are forced to accept short-term contracts with little job security.

Francesco Franco, an assistant professor at Nova, is seen as the inspiration for another key measure in the bail-out package – a plan to cut employers’ social security contributions as a means of lowering labour costs and increasing the competitiveness of exports.

Prof Franco, an Italian who has worked at Nova for the past seven years, has calculated that abolishing such contributions altogether and replacing the revenue by a single 25 per cent rate of value added tax would be the equivalent of a 40 per cent currency devaluation.

The government will not make such a radical cut, but it has firmly adopted the concept as one of the chief components of its plans to lift the country out of recession. In a similar way, several economics professors at Católica, including Prof Barros, made direct contributions to the government programme of the centre-right Social Democratic party (PSD), the senior partner in the governing coalition elected in June.

In an initiative known as “Mais Sociedade (More Society)”, Pedro Passos Coelho, leader of the PSD and now prime minister, asked leading independent figures to put forward proposals for dealing with the country’s problems.

“Portugal’s difficulties had already been well diagnosed,” says Prof Barros. “What were needed were solutions.”

Católica and Nova are also agenda setters, says Prof Ferreira Machado. “We are a meeting point for the elites of today and tomorrow, and our obligation is to point out possible directions for the future leaders of the country.”

A course in maritime business to be launched at Nova this year is the latest example of how the school seeks to focus attention on potential areas of national development.

Católica also has an noticeable effect on the climate of opinion through respected newspaper columns written by its professors as well as quarterly reports on the economy and regular surveys of public-private partnerships and savings trends.

As well as these broader influences on policy, Portugal’s two leading business schools habitually enjoy strong personal ties with the government. For example, Vítor Gaspar, the finance minister charged with implementing the bail-out agreement, obtained his PhD at Nova and taught there for many years. He also taught three courses at Católica before taking up his government post in June.

As is almost invariably the case, several junior ministers in the government as well as senior advisers to the prime minister and president are also former alumni or faculty members of Católica and Nova. “There is a great deal of common ground between people who share the same vision of the world,” says Prof Ferreira Machado.

The two deans are not convinced that academics make good decision-makers. “It’s very rare to find someone [on the faculty] of a business school who can actually run a business, and the same is true of government,” says Prof Ferreira Machado. “They are usually very adept at in-depth analysis of small problems, but not so good at value judgments and evaluating trade-offs.”

Although academics may have self-selected themselves out of decision-making, Prof Barros says politicians need a strong academic background to “understand the play of economic forces” and enlarge their vision of the world. Poor academic choices are a negative signal, she says.

“The motto of our school is ‘shaping powerful minds’, and that gives us a tremendous responsibility,” says Prof Ferreira Machado. “Bigger faculties in bigger countries may have the money to recruit Nobel Prize-winning economists, but they don’t have the same kind of impact on society as the leading schools in a small country.”

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