Economic Evolution in Spain: Franco Era to 1973

Economic Policy During the Franco Regime

After the war, there was a large decrease in population due to fighting (killed and maimed) and repression (prisoners and exiles). Moreover, agrarian and industrial production was much lower than in 1935, gold reserves and foreign exchange disappeared, and the transport network was deteriorating.

The post-war period saw the beginning of autarky, an economic system under which a nation must be able to supply itself and survive, meeting all its needs with minimal trade with the outside world and rejecting foreign capital to achieve economic self-sufficiency (Doc.1). To achieve this, a series of measures were taken by which the administration intervened in both internal trade (fixing prices arbitrarily) and external trade, exercising control of imports and exports. Abolish import (“… not essential. (…) intensify our exports …”), as well as in industry, encouraging military industries and creating the INI. The consequences were negative, as it produced a shortage of products, which led to rationing and a rise in the black market.

In the late forties, we can say that the result (Doc.2) of intervention by the administration was blocking economic growth (“… end of moderate growth …”), the reduction of competitiveness, and a disconnect from the heyday of the European economy (“gap that separatesfrom other European countries“). As the author points out in that document, this negative result of the economic policy of the forties would be linked directly with the actions of a totalitarian and repressive regime, with economic failure (“… then ran parallel to political and social regression. “)

The 1950s began poorly, economically speaking, and in February 1951, as a result of a boycott due to rising transport prices, Franco formed a new government with the aim of improving the economy. Thus began a new stage, which is termed “Development”.

The new government pursued a beginning of economic liberalization, which increased imports and exports, improved agricultural production, suppressed ration cards, and reduced public expenditure. However, in 1956, growth shut down, and in 1957, economic experts, the technocrats of Opus Dei, persuaded Franco to change from autarky and interventionism to a liberal economy. In 1959, Spain joined the IMF and the World Bank, which required Spain to take a series of measures, which it accepted and collected in the Stabilization Plan (Doc.3). This plan gave a justification for the bad economic situation, citing the consequences of the Civil War (“… insufficient resources … as a result of strife”) and the World War (“… largely closed markets and normal supplies …”), and marked the beginning of a new stage of “greater economic flexibility …” Thanks to this plan, the economy was stabilized, and the foundation of economic growth was laid.

Economic Development in the 1960s

In 60 years, there was further development of the Spanish economy:

  • Industry was modernized due to imports of foreign technology and diversified. It is worth highlighting the rapid growth of the automotive industry, especially in large cities. In fact, one of the emblems of this step was the SEAT 600 (Doc.4).
  • Agriculture experienced an increase in income and an improved standard of living for farmers. Nevertheless, there was a significant rural exodus in the 1960s, with large migrations to the cities to occupy jobs in industry and tourism. At the same time, there was also an increase in emigration abroad in this decade (Doc.5), with news that emigration to America was decreasing and emigration to Europe, with France and Germany as the main destinations, was beginning. Labor emigration was also a source of income for Spain, as emigrants repatriated a significant portion of their salaries.
  • Parallel to the industrial expansion, there was a spectacular development of tourism, thanks to a mass influx of European tourists, mainly from the second half of the decade (Doc. 6). The main tourist areas were the Balearic Islands, Catalonia, Andalusia, and the Canary Islands. Tourism had a great influence on the Spanish scene. First, it drove construction work and was a source of foreign exchange, but it also had a negative impact on the coastal landscape. It also influenced the customs and way of thinking of the Spanish, which meant a way to undercut the traditionalist ideas of the regime.

Beginning in 1973, there was an economic crisis caused by the oil crisis, which added to the instability of the final years of the Franco regime.