Portugal has developed into an internationally sought-after hub for technology, innovation and investment. Highly qualified professionals are joined by a growing start-up scene, high-performance digital infrastructure and close links between businesses, universities and research institutions.

International companies have long since ceased to use Portugal merely as a nearshore location – that is, a country to which IT services, software development or customer service are outsourced. Instead, software, digital products and new technologies are being developed there for international markets. In the digital sector alone, around 120 foreign companies have established innovation centres in the country, including Bosch, Siemens, Cloudflare and BMW. As a result, Portugal is increasingly becoming a hub for research, development and international expansion.

“Economy of the Year 2025”

Economically, too, Portugal has attracted attention beyond its borders in recent years. The Economist named the country “Economy of the Year” for 2025, placing Portugal at the top of a ranking of 36 predominantly developed economies. The assessment took into account factors such as economic growth, inflation, the labour market and stock market performance.

The European Commission also sees robust development in Portugal: the economy has recently grown faster than the EU average and is expected to continue on this growth trajectory. For businesses, this development creates an environment in which economic stability, digitalisation and innovation work in tandem.

Talent as the key to success

Skilled workers are a crucial location factor. Of the approximately 96,000 graduates in Portugal each year, around 30 per cent hold a degree in STEM subjects. According to the Portuguese Investment and Foreign Trade Agency (AICEP), Portugal also has the third-highest proportion of engineering graduates in the EU.

This diversity of talent particularly strengthens future-oriented fields such as artificial intelligence, software development, cloud computing, cyber security, mobility and data science.

At the same time, international companies benefit from an open and increasingly globally oriented labour market. For research, development and technology centres in particular, access to qualified teams is becoming a decisive factor in choosing Portugal as an investment location.

When business and academia develop together

Another of Portugal’s strengths is the close network linking universities, research centres, start-ups and established companies.

Bosch, for example, is setting up a new research and development team for e-bike systems in Braga this year. There, in collaboration with other Bosch sites, solutions for safety, connectivity and digital mobility services are being developed.

Such collaborations shorten the path from research to practical application. Innovation does not take place in isolation in laboratories, but is developed, tested and scaled up in collaboration with companies.

This also makes Portugal attractive to international technology companies that are not only looking for a location, but also for access to a functioning innovation ecosystem.

More than 5,000 start-ups are bringing new ideas to market

This dynamism is particularly evident in the Portuguese start-up landscape. In 2025, the country surpassed the 5,000 mark for active start-ups for the first time. Together, they generated around 2.85 billion euros in turnover and employed some 28,000 people.

Lisbon, Porto and Braga are among the ecosystem’s most important hubs. Universities, research centres, incubators, investors and international companies ensure that young businesses can find partners and staff more easily.

Global connectivity as a locational advantage

Portugal is also strategically well-positioned geographically. As an EU member state, the country offers direct access to the European single market. At the same time, there are historically and economically close ties to Portuguese-speaking markets in Africa and South America.

International airports, Atlantic ports and digital connections via undersea cables also make Portugal a key hub between Europe and the rest of the world.

For technology companies, this location is becoming increasingly important: data traffic, international teams and digital services rely on high-performance and resilient networks. Portugal thus combines its geographical position on the Atlantic with the infrastructure of a digital economy.

Green energy is becoming a competitive advantage

Portugal is also well placed to support the digital economy in terms of energy supply: 68 per cent of the electricity consumed in the country in 2025 came from renewable sources – a new record on the path to 100 per cent renewable electricity production.

Wind, hydro and solar energy play a central role in this. For energy-intensive digital business models such as data centres, cloud infrastructures or AI applications, access to renewable energy is increasingly becoming a decisive location factor.

Portugal is already attracting major investment in this sector. For example, more than 3.5 billion euros is being invested in the Sines 4.0 data centre project, which is set to be powered entirely by renewable energy. Digital transformation and the energy transition are thus becoming two sides of the same location strategy.

Quality of life helps in the competition for skilled workers

Companies compete internationally not only for investment, but also for people. Quality of life plays an increasingly important role in this regard.

Portugal ranks 7th worldwide in the Global Peace Index 2026. An international environment, cities with growing technology communities and the comparatively short distances between universities, companies and start-ups further enhance the country’s appeal to national and international skilled workers.

For companies, this can be decisive: technology hubs can only grow in the long term where they are able to attract and retain international talent.

Portugal at a glance

• “Economy of the Year 2025” in The Economist’s ranking

• more than 5,000 active start-ups

• around 30 per cent of graduates in STEM subjects

• third-highest proportion of engineering graduates in the EU

• around 120 international innovation centres in the digital sector

• 68 per cent of electricity generation from renewable sources relative to electricity consumption in 2025

• 7th place in the 2026 Global Peace Index

Innovation meets the public sector

What makes Portugal particularly relevant to the Smart Country Convention is that technological development is not confined to the private sector.

The country is linking its innovation ecosystem to the modernisation of public administration, cities and public infrastructure. Digital identities, smart cities, artificial intelligence, urban data platforms and smart mobility demonstrate how technologies are being translated into concrete public applications.

AICEP, for example, highlights more than 40 Portuguese cities investing in smart city projects. These focus, amongst other things, on mobility, energy, the environment and governance.

Portugal thus offers something that is particularly valuable for digital transformation: a place where new technologies are developed and, at the same time, put to practical use in the economy, cities and the public sector.