MADEIRA - Economy
The free zone in the development of the region's economy
Industry in the region is not very diversified and consists basically of traditional craft activities (embroidery, tapestries and wickerwork) oriented to the external market. In spite of this, the productivity if the region is higher than at the national average. The largest industries are associated with the activities of food, beverages (and especially Madeira wine), tobacco and construction.
The setting-up of the Free Industrial Zone has led to the installation, under more favourable conditions, of infrastructures, production shops and essential services for small and medium-sized industrial enterprises. The Free Zone of Madeira, also called the Madeira International Business Centre, being a tax-privileged economic area, provides an incentive for companies, offering them financial and tax advantages via a whole range of activities exercised in the Industrial Free Zone, the Off-Shore Financial Centre, the International Shipping Register organisation, and the International Service Centre.
Over the last few years, the regional economy has managed to open up and establish more internal and external competitiveness, so that its companies have become internationalised.
The region's business fabric
The region's business fabric consists mainly of firms working in the tertiary and secondary sectors. The tertiary sector is dominated by firms associated with the hotel, wholesale trade and banking branches. In the secondary sector, the largest firms are in the food, beverages and tobacco industries, construction and public works, and energy (production and distribution of electricity). The large firms are mostly located in the municipality of Funchal and neighbouring municipalities. Most firms are limited companies. In 1995 some 95% of the firms set up were of this type, and they were again mainly active in building, wholesale and retail trade and hotels.
Tourism, one of the region's main activities
The services sector makes the largest contribution to the formation of the regional gross value added as opposed to the agricultural sector, for which the share has continuously declined in the regional economy.
Tourism is an important sector in the region's economy since it contributes 20% to the region's GDP, providing support throughout the year for commercial, transport and other activities and constituting a significant market for local products. The share in Gross Value Added of hotels and restaurants (9%) also highlights this phenomena. The island of Porto Santo, with its 9 km long beach and its climate, is totally devoted to tourism. Over the past decade it has recorded a substantial increase in its hotel accommodation capacity. The Madeira Autonomous Region has considerable potential since the necessary infrastructure has been established and adequate investment incentives introduced for expanding its hotel and catering structure in a controlled manner, without disturbing the socio-economic and environmental balance, and without neglecting the conservation of its nature, which is one of tourists' main reasons for visiting Madeira.
Although tourism on Madeira has its roots in the last century, there was a sudden upsurge in hotel construction and modernisation of existing facilities in the 1960s and early 1970s. Most visitors are from the European Union, with Germany and the United Kingdom providing the main contingents alongside Portuguese tourists. The average stay of tourists in the region was currently 6.5 days in 2001. The time of year in which they visit depends on the country of origin: whilst Scandinavian tourists mainly come in winter, domestic and Spanish tourists prefer to visit Madeira in the summer months. Visits by the Germans and British, on the other hand, are spread evenly over the whole year. The average annual occupancy rate was 57.4% in 2001, reaching its maximum in March and April, when it exceeds 70%.
Importance of agriculture
Agriculture in Madeira is fundamentally based on three platforms. Cattle raising is one of them, which of course provides abundant fertilizer for the land. The second area is terrace planting, which produces the amazing staggered terraces visible on so many steep mountain sides. Lastly, the excellent irrigation systems provided by the extensive Levada systems allow for more productive crops. Even the driest areas of the island are provided with adequate water through theses 'channels' to ensure abundant crops.
The climatic conditions on Madeira coupled with the mountain relief, allow for an enormous assortment of crops to be cultivated. The varieties are staggered in direct relationship to the altitude. At the lowest level we find the Mediterranean crops (figs, loquats and grapes), plus cereals such as maize, wheat, rye and barley.
The European fruit trees flourish in the depths of the valleys producing cherries, apples and plums. A little further up from sea level the tropical species are cultivated (bananas, sugar cane, custard fruit, mango and passion fruit).
Madeira and the sea
Since its colonial origins, Madeira, by virtue of its strategic position and the unique characteristics of the Bay of Funchal, has had a privileged role with regard to shipping, and helped to make the port of Funchal one of the most important ports in the world up to the First World War.
This port constitutes the region's main harbour infrastructure and offers a wealth of activities, ranging from the handling of general cargo and palletised goods to passenger transport, tourism and fishing. As far as tourism is concerned, the port of Funchal is an important port of call for cruise ships. Meanwhile, cargo transport has seen an increase to some 1 184 859 tonnes in 1995, 88% of which were imports and 12% exports, and involving the handling of about 46 000 containers.
Fishing, though of minor importance in the regional economic structure, whether in terms of production (less than 1% of the GVA) or employment (less than 1% of the total employment), is still important for the region's economy, since the most characteristic fish species, such as tuna, black scabbard fish, horse mackerel and chub mackerel, are important items of consumption for the population.
Madeira's fishing fleet is still largely made up of small, non-industrial boats. However, considerable efforts have been made to renovate some parts of it, for example the tuna fleet, by building vessels with a gross tonnage of over 100 tonnes.
The fish landed are mainly those of the mackerel family and black scabbard fish, which accounted for 64% and 25% respectively of the total volume.
Transport
Madeira has many newly asphalted roads and a new dual carriage motorway.
There were about 1.7 million tonnes and 496 000 passengers carried at the region?s ports in 2001. In terms of passenger transport by sea, the region accounted for about 80% of the total transport of the country during the 1990?s. Transport by air was responsible of the carriage more freight and passengers, with respectively 9.5 million tonnes and 2.4 million passengers.
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