Spain’s Economic Transformation: 1950s-1970s
In the 1950s, Spain was running out of isolation, and the first signs of economic recovery appeared. In 1957, after a student crisis, Franco remodeled the government, bringing in ministers closer to the more radical Movement and appointing the so-called technocrats. These technocrats prioritized efficiency and economic measures in line with Western capitalism over political ideology. Several laws were introduced to organize the state, but without abandoning its character as a personal dictatorship. The most important were:
- The Law on Principles of the National Movement (1958), which set out the basic principles of Francoism, moving away from the totalitarianism of the early years but rejecting democracy. The system was defined as a traditional, Catholic, social, and representative monarchy.
- In 1962, the office of Vice President of the Government was created, a position held by Carrero Blanco.
- In 1963, the Public Order Tribunal was launched to try political crimes.
- In 1966, the Press and Printing Act was approved, abolishing prior censorship.
- In 1967, the Organic Law of the State was approved, acting as a pseudo-constitution and preparing for the post-Franco era. It was voted on in a referendum.
- In 1969, Juan Carlos de Borbón was appointed as Franco’s successor with the title of king.
In foreign policy, the visit of US President Eisenhower was a highlight. Spain also presented its request to enter the EEC and insisted on recovering Gibraltar.
Economic Autarky and its Failure
In 1939, Spain was a country demographically and economically ruined. Most people were hungry, and economic recovery was urgently needed. The government opted for a system of autarky and intervention. The assumed economic autarky meant that prices were set, and farmers were forced to hand over their harvest to the state. Any industrial investment was subject to prior licensing, and factories were converted to produce essential goods. In 1941, the National Institute of Industry was established. The state produced goods that private enterprise could not and channeled import and export permits. The goal of autarky was not achieved, as there was an increase in prices, and products began to be rationed through state quotas. All this led to the existence of a black market.
By the beginning of the 1950s, the failure of autarky was evident. In 1951, the government decreed a partial liberalization of prices, trade, and the movement of goods. These measures allowed the rationing to end and started a timid economic expansion. US aid, which began arriving in 1951, contributed to this growth and allowed for increased imports of capital goods for industrial development.
The Economic Stabilization Plan
Franco and his advisors could not find a way to solve the economic problem. The country was on the verge of collapse, and a return to rationing was expected. Franco remodeled the government in 1957 and put the technocrats Ullastres, Navarro, and Rubio at the head of Finance and Commerce. They developed the Economic Stabilization Plan, decreed in 1959. Its key measures were:
- Reduction of state spending
- Wage freezes
- Devaluation of the peseta
- Removal of state control over economic activities
- Opening to foreign markets by facilitating the installation of foreign companies in Spain
This plan liberalized the economy and laid the foundations for the economic take-off of the 1960s, helped by the international economic situation, which even caused the emigration of millions of Spanish citizens.
Economic Development in the 1960s
In the 1960s, the Spanish economy grew significantly but in an unbalanced way. Development was favored by abundant and cheap labor from the rural exodus, which was also very controlled. Other factors included the existence of accumulated capital in Spain, foreign capital inflows, growing revenues from tourism, and remittances sent by migrants. Industrialization was concentrated in Madrid, Catalonia, the Basque Country, Asturias, and Valencia.
In 1962, the Development Plans were launched under the direction of Laureano López Rodó. These four-year plans established mandatory guidelines for public companies. Tax incentives and credit were granted to companies that followed the guidelines of the state. The objectives were:
- GDP growth
- Industrial development and modernization of agriculture
- Development of non-industrialized regions, for which development poles were created
Development was limited, with little industry and dependence on foreign technology. Incentives for migration were used to avoid mass unemployment. Per capita income and social welfare did not reach the average European level. The tax system was regressive, based on indirect taxes, with significant tax fraud and evasion.
Social Changes
Between 1957 and 1970, population growth was high due to high birth rates and declining mortality. The migration of the 1960s was spectacular. The rural exodus went to Madrid, Catalonia, and Valencia, where suburbs and dormitory towns emerged unplanned and without basic services. Andalusia, Castile, Extremadura, and Galicia were depopulated. External migration affected more than 1.5 million people, with destinations including Germany, France, Switzerland, and Belgium.
The structure of the workforce was modernized. In 1970, the primary sector occupied 27% of the workforce, the secondary sector 37%, and the tertiary sector 34%. The number of laborers decreased, while the number of workers and the middle class increased. Lifestyles and attitudes changed, especially among urban youth, through the influence of tourism and the spread of television. One of the most important changes was the incorporation of women into the labor market.
The economic growth profoundly transformed Spanish society. These social and economic changes contrasted with political stagnation and regression.