Retained Value from Qimonda in Portugal
April 15's newspaper Público calls our attention to the fact that Qimonda's only retained value in Portugal was practically limited to the salaries it paid.
Retained value is a concept often used to measure the intensity of the links between Foreign Direct Investment, i.e. the multinational companies affiliates in a certain host country, and the local economy, and to a certain extent its overall impact on the economy of the host country. (You may check this at Dunning, John H. "Multinational Enterprises and the Global Economy", Addison-Wesley, Wokingham, 1993, p.454)
Retained value comprises the salaries paid to the local workforce, plus the value of local inputs, minus the value of imported inputs, plus the reinvested profits and profits retained by local shareholders and interest paid to local creditors, plus taxes paid to the local authorities.
As taxes paid locally were virtually none, probably due to extended investment incentives, local shareholders and local creditors nonexistent, and all inputs came directly from its German headquarters and other factories, only the locally paid out salaries remained indeed.
The analysis conducted by this newspaper reporters to Qimonda, Vila do Conde, 2007 accounts lets them infer that it all came down to the difference between the value of imported inputs (1248 million euros, practically all supplied by its German headquarters) and the value of sales (also exclusively to the Qimonda headquarters in Germany of 1460 million euros), i.e. 212 million. The reporters don't miss the irony: as bad as the Qimonda Vila do Conde factory closure is for its laidoff workers, its contribution to the local economy was quite small and small will remain the damage inflicted by it to the local host economy.
The question remains though: where have all those incentives/subsidies millions gone? Was it worth it for the Portuguese state and EU in general, and ultimately for us taxpayers? How much more of taxpayers' money has been spent in order first to attract this investment and later to retain it, and that is nowhere accounted for? How much will be recovered by the Portuguese government and/or by the EU commission? The reporters Luisa Pinto and Rosa Soares write of around 100 million euros in incentives given along the last few years. However, I'm afraid that the total value of subsidies handed out and inherent expenses far exceeds this value. It would be up to the Portuguese government to lay it out openly for us to be convinced otherwise. I'm almost sure we will never know exactly how much of our and other EU citizens' money was wasted in this senseless endeavour.
posted by Carlos A. Páscoa Machado @ 4:18 PM
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