Portugal offers a compelling case study for what is often referred to among OECD countries as the paradigm shift in regional policy (in brief, a shift from subsidies targeting the reduction of regional disparities to investment supporting regional opportunities in order to enhance territorial competitiveness; from different sectoral approaches to multi-sectoral place-based approaches; from a dominant role of certain levels of government to a multi-level governance approach involving co-ordination of national, regional and local governments plus other stakeholders). The example of Portugal draws attention to why and how this new type of regional policy could contribute to national development in a relatively small yet diverse country, with weak growth and limited public spending capacity, and marked by a long tradition of centralised governance and no elected regional level (except in two island regions).