Spain’s Economic Shift: Autarky to Industrialization
The National Institute of Industry (INI) and Autarky (1940s)
Many public enterprises were created through the INI. The main group companies (Iberia, Endesa, Aunos, etc.) were established during these early years. During this period, the free market operation was replaced by the arbitrary fixing of prices by the state.
The state controlled the market, and producers were forced to sell all production at a price set in advance. The valuation of food prices below their actual value caused many producers to hide their production for sale on the black market, where they obtained higher profits.
Thus, there was price regulation by the state and an illegal parallel market, the so-called black market, where black marketeers conducted trading outside the law. In many cases, black market prices reached double or triple those of the official market. The Franco government’s autarky policy was forced by international isolation, which gave rise to all kinds of scarcity.
Insufficient quantities of food, guaranteed by rationing, and high prices for black market goods, coupled with miserable wages, led to hunger for a large majority of the population.
The Shift Away from Autarky (1950s)
At the beginning of the 1950s, the congestion and exhaustion of the autarkic model began to become clear. Francoist economic policy increased inequality in income distribution among the Spanish. This explains the appearance of the first workers’ mobilizations. Thus, between 1945 and 1947, the first outbreak of labor unrest occurred in Catalonia, Asturias, and the Basque Country.
These early demonstrations showed discontent with the regime’s economic situation. Despite the regime’s refusal to devalue the peseta, the official exchange rate fell during the second half of the 1940s from 11.2 pesetas to the dollar to 40 pesetas per dollar.
As part of the Cold War, and after the events in Berlin, the United States altered its position on the Franco regime. International relations entered a more favorable phase. Thanks to Franco, Spain became a staunch U.S. ally. In 1950, Spain was admitted to international organizations such as FAO and UNESCO. It was the end of isolation, and the UN allowed the entry of Spain into its internal organs in 1955.
Due to autarky and the new international situation, Franco decided to reshuffle his government in 1951. The new cabinet was characterized by a combination of Falangists and Catholics, but with a greater weight of the latter. The government introduced a person who would be key to the continuity of the regime: Admiral Luis Carrero Blanco. With these political changes, the regime sought some diplomatic acceptance.
At the end of the 1950s, a new wave of labor protests developed, and there were also the first student opposition movements in Madrid and Barcelona.
Technocrats and Economic Reorientation
There was another restructuring of the government in 1957. Men from Opus Dei, and even so-called technocrats, came in as ministers, with a reorientation of economic policy based on the permanent abandonment of autarky and openness to the outside of Spain.
Industrialization and Economic Growth (Late 1950s – 1974)
From the late 1950s until 1974, the Spanish economy grew at an unprecedented rate. Spain finally joined the small group of industrialized countries.
The need for an economic stabilization plan stemmed from the lack of gold and currency reserves to cope with the imbalance between imports and exports. In exchange for assistance, the Spanish government pledged to reduce its intervention in the economy, and various international organizations granted loans to help them cope with the lack of reserves.
Three four-year plans were enacted. The planning focused its interest on the industrial sector.