How distant are the Portuguese regions? A multidimensional scaling application

Despite being a small country, Portugal is characterised by significant regional disparities which are evident from the analysis of numerous indicators such as the level of income or the unemployment rate. These regional disparities acquire characteristics that, in a sense, do not respect the traditional pattern as the one expected when assuming that standards of living decrease with the distance of each region to the region where economic prosperity is higher. Plainly, this means that, besides the geographical map, it is possible to construct an alternative map of the regions of Portugal which, by its characteristics, is certainly much more interesting from the regional economics point of view. This can be done through the use of multidimensional scaling as it allows representing graphically the regions in a way to reproduce as close as possible the economic distances of the regions as measured by traditional indicators. The analysis of the multidimensional scaling output makes it then possible, on the one hand, to verify how geographical distances are related with economic ones and, on the other hand, to verify if the Portuguese regional economic policies have, indeed, contributed to a diminishment of those regional disparities. KEY-WORDS: Distance, Multidimensional Scaling, Portugal, Regional Disparities JEL CLASSIFICATION: C14, R12, R15