The population of the Azores was 246,772 in 2011 and in Madeira it was 267,785. Only two islands in the Madeira group are inhabited, Madeira Grande and Porto Santo. São is the largest and most populated of the nine islands of the Azores. All nine islands are inhabited.
Tourism, farming and agri-business are the main sources of employment in Madeira. Most Azoreans work in service industries, especially tourism. In agriculture, most farms are small and farmers tend to be in older age groups.
Madeira and the Azores were discovered in 1419 and 1427 respectively. Both archipelagos were uninhabited.
Madeira was settled in 1433 by people from the Algarve and Minho. Agriculture was irrigated in Madeira from the sixteenth century. Tropical fruits, wine, sugar, honey, corn and wheat were supplied to mainland Portugal. In the nineteenth century Madeirans emigrated to South Africa and Venezuela, and in the latter half of the twentieth century to other countries of the EU. After two vine diseases seriously affected the Madeiran wine industry, Madeirans also emigrated to British Guiana at the end of the 19th century. British Guiana appealed to Madeiran migrants because of an early settlement by Madeirans, and given the prospects of agricultural development in this country. The Madeiran diaspora outnumbers the island population by around 3:1. The first tourist hotel was opened in Madeira in 1894. Tourism increased after the opening of the airport in 1963.
The Azores were settled from 1439 by people from the Algarve and Alentejo to service Portuguese shipping. The Portuguese were joined later by Flemish, French, Spaniards, Indians, Jews, Moorish prisoners and African slaves. In the nineteenth century many Azoreans emigrated to North America, where they now outnumber the population of the islands by around 4:1. In the twentieth century some returned to live in the Azores.
The 1976 post-revolutionary Constitution created regional governments in the islands and a measure of autonomy over local affairs. Islanders are also represented in the national parliament in Lisbon. Local politicians have continued to press for greater autonomy.
In 1988 Madeira set itself up as a low tax centre for international business with an industrial free trade zone, financial services, international services and an international shipping register. However, as the EU and Organization for Economic Cooperation and Development (OECD) tightened up on tax havens, Madeira introduced new rules of transparency in 2004, which gained the approval of these two bodies. In 2015 the EU Commission decided to extend the Madeira tax benefits system with new rules applied to the Madeira International Business Centre until 2027.
Agriculture and tourism do not provide enough income for the rural population of the Azores or Madeira and islanders continue to emigrate, some on a seasonal basis. Remittances are important, especially in the Azores.
Madeira has a more established tourist industry and a greater range of agricultural products, including the famed Madeira wine. Its low-tax international business centre and its international shipping register have diversified the economy. Local skills are provided by the Scientific and Technical Centre and the University of Madeira. The revamped Madeira International Business Centre has approval of the EU Commission to offer tax concessions to companies setting up there, provided they create new jobs. However, in recent years there have been concerns that the companies licensed by the Centre were not creating enough jobs to improve the economy in Madeira. In 2000, despite the existence of some 4,000 companies, they were providing only around 1,000 jobs. The EU Commission has since implemented a 5 per cent business tax rate whereby companies also have to create a certain number of jobs in line with their profits. The unemployment rate in Madeira was 11 per cent in 2017, higher than the average in mainland Portugal.
Both regions have promoted the use of IT and e-business, Madeira more successfully. The Azores has a university and technical centre, but the region’s remoteness has held back the economy.
Agriculture and other areas of the economy in Madeira and the Azores benefit from EU structural funds for less developed regions.
The Azores government has implemented regional development plans aimed at strengthening infrastructure, local skills, businesses, cooperatives and non-profit associations, modernizing production, and providing social programmes for vulnerable sections of the population, including returning migrants. The Azores has not been as severely affected by the aftermath of the 2008 financial crisis compared to mainland Portugal. There are still some issues of concern in the Azores, however, and EU funding is currently focused on expanding and diversifying the local economy to reduce its dependence on certain sectors and external markets.
Updated February 2024
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