Franco’s Economic Policies and Their Impact on Spain
Spain’s Economic Transformation Under Franco 1939-1975
Autarky and Initial Economic Policies (1939-1957)
From the outset, the economic policy regime was subjected to Francoist ideology, which opposed both liberalism and communism. The primary objective was to establish a policy of autarky, aiming for self-sufficiency without external dependence. However, this was not viable in Spain due to a lack of energy resources. The government heavily intervened in the economy, regulating production and creating the National Institute of Industry (INI) to promote and nationalize industry. The state controlled all economic activities, especially trade. Prices were fixed, and the value of the peseta was set above its real value, leading to significant inflation. Food shortages necessitated the distribution of ration cards from 1939 onward.
This policy proved to be a failure. Agriculture received little support, and there was no land reform project. Technical backwardness, lack of resources, and autarkic measures resulted in decreased production. Fixed pricing also fostered the emergence of a black market and corruption. In industry, despite the creation of the INI, a competitive sector failed to develop.
The Shift Towards Liberalization (1957-1959)
In 1957, Franco appointed a new government that included technocrats from Opus Dei. These individuals were economically liberal, although they adhered to Francoist ideology in political and social matters. Spain had not received Marshall Plan aid, but agreements with the U.S. provided some assistance. Additionally, the concordat with the Holy See legitimized the regime and recognized the role of the Church hierarchy in Spanish society.
The Stabilization Plan and Development Plans (1959-1975)
In 1959, the Stabilization Plan was adopted to liberalize the Spanish economy and integrate it into the European market. The objectives were to improve the balance of payments, stabilize prices, reduce inflation, eliminate state intervention, and liberalize external trade. Measures included the devaluation of the peseta, the abolition of economic controls, and the elimination of subsidies to enterprises. Public spending was cut, and bank lending was limited. Initially, conditions worsened: wages declined, businesses closed, and unemployment and taxes increased. However, positive effects emerged, including curbed inflation, increased exports, and an improved balance of payments.
Between 1964 and 1975, several Development Plans were implemented.
- They focused on industry, which experienced rapid growth, particularly in the automotive, steel, and chemical sectors.
- The aim was to encourage less industrialized areas by creating development poles.
- However, resources were primarily invested in already industrialized areas like Madrid, the Basque Country, Catalonia, and Valencia.
- Distribution and marketing channels were inadequate.
- Sufficient jobs were not created.
In short, these plans largely failed to reduce regional inequalities.
Economic Development and Social Change (1960-1975)
Between 1960 and 1975, Spain experienced significant economic development, with national income tripling. This led to a series of social and economic changes:
- A sharp increase in population.
- A process of migration from rural areas to cities, promoted by the government to support the growth of industry and service sectors.
- Substantial emigration to other countries, which facilitated development as Spain could not generate enough jobs, and emigrants sent back remittances.
- An increase in living standards and the growth of consumerism.
- Women entered the workforce due to a change in mentality, partly influenced by the arrival of tourists.
- Tourism, however, also led to massive and often poorly planned urban development.
The Religious Freedom Act and the Education Act, which extended compulsory education to the age of fourteen, were also significant developments during this period.
Growing Opposition to the Franco Regime
Despite the economic upturn, opposition to Franco steadily increased. The new labor movement organized and grew, particularly through the Comisiones Obreras (CCOO). Many activists were persecuted and jailed. Student protests, along with those from Catholic and far-left groups, added to the unrest. The Church began to distance itself from the regime, leading the government to establish a special prison in Zamora for dissident clergy. The political opposition was led by the Communist Party of Spain (PCE) and the Spanish Socialist Workers’ Party (PSOE), both operating in exile and through clandestine organizations. They participated in the Fourth Congress of the European Movement, which invited the opposition. Nationalist movements, notably the Republican Left of Catalonia (ERC) and the Basque Nationalist Party (PNV), also challenged the Franco regime. Finally, terrorist groups like ETA and GRAPO emerged, engaging in armed struggle against the dictatorship.