Spain’s Economic Transformation: 1957-1970s
**1. The Turn of the Spanish Economy**
1.1. Governments of Development
Franco’s governments since 1957 saw a transition from the dominance of Falangist principles to the dominance of technocrats. Linked to Opus Dei, economic growth was seen as the main guarantee of social stability. The main purpose was to incorporate criteria of rationality and effectiveness into state management that would ensure the continuity of the regime. This involved technical reform, without challenging the dictatorship, finding a solution to the severe economic and social situation arising from autarky.
Change of course -> A poor economic situation at the end of 1950, including exhaustion of the reserves of the Bank of Spain, inflation, a budget imbalance, pressure from international agencies, increased social protest, and a stage of economic recovery in Europe after World War II.
1.2. The Stabilization Plan
The Stabilization Plan (1959) aimed to end state intervention of previous years, remove barriers to trade, and achieve financial liberalization.
The Stabilization Plan (1959) had the following areas of activity:
- Stabilization of the economy: reduce current inflation and the government deficit by:
- Raising interest rates.
- Limiting bank credit.
- Implementing a wage freeze.
- Implementing a fiscal reform that increased revenue and limited government spending.
- Internal liberalization of the economy: elimination of regulatory agencies and auditors fixed price.
- External liberalization of the economy: removing barriers to the entry of goods overseas and facilitating foreign capital investment. This included the convertibility of the peseta to facilitate trade and devaluation against the dollar.
In exchange for these commitments, several international organizations provided loans to Spain. Those provisions were intended to incorporate Spain into international markets for further economic growth.
1.3. Development Plans
Economic and Social Development Plans were created with three to four-year terms. The Development Plan Commission, with Commissioner Laureano Lopez Rodo, implemented indicative economic planning. The state promoted the growth of the Spanish economy by programming public sector activity and providing information and predictability for private investors.
Lines of Development
- Structural: solve some shortcomings of the industry.
- Development centers: reduce regional economic imbalances by promoting new industries in areas of low industrialization.
Failures
- The implementation of the plans was conditioned by the economic performances of the groups close to the generals.
- Inefficient investment plans.
Achievement
Provide the private sector with infrastructure and basic materials, contributing to industrial growth in the context of the favorable economic climate.
**2. Economic Development**
Introduction: Factors that led to economic growth included a good international economic situation when the European economy was thriving, foreign capital investment with the installation of foreign companies (Siemens, Nestle, Ford, etc.), tourism receipts with a significant inflow of tourists, remittances sent by migrants who went abroad to find work, reduced labor costs, and public spending on infrastructure.
This growth slowed in 1973 with the oil crisis. Clashes occurred between Palestinians (supported by Arab countries) and Israel (supported by the U.S.). Then the countries agreed to raise the price of oil. The crisis mainly affected Europe, which has no oil. This implied a stop to Spanish emigration.
2.1. Rapid Industrialization
Industry was the central engine of the expansion of the Spanish economy. Improved productivity due to low pay, technology imports, foreign capital investment, increased weight of capital goods sectors, decreased prices, encouraged exports, wage increases, dissemination of hire purchase, and increased demand for consumer durables.
Industrial sectors that led the process included the chemical industry, energy, steel, shipbuilding, and automotive industries. Also, other low-tech industries like clothing, footwear, and furniture. Established industrial zones (the Basque Country, Catalonia, and Asturias) continued their growth. There was expansion in new areas (Madrid) and new industrial areas (Valencia, Seville, Vigo, Burgos, etc.).
2.2. The Conversion of Traditional Agriculture
In 1960, a crisis occurred in traditional agriculture, which was based on an abundance of labor for low wages, the adequacy of supply to market needs, and large *minifundismo* (small landholdings) that persisted alongside large estates worked poorly.
New job opportunities in the industry led to a rural exodus. This caused decreased farm labor and increased wages. The business began a process of mechanization and chemical fertilizers for crop intensification. This led to decreased field occupation and migration. There was also a diversification of food demand: decreased grain for livestock and horticultural products.
The government encouraged the consolidation and construction of irrigation. This changed the appearance of the Spanish countryside, decreased the agricultural workforce, led to the disappearance of small farms, and improved business production systems.
2.3. The Progress of the Tertiary Sector
There was the outsourcing of the economy, intense urbanization, increased distribution and trade networks, improved transportation and communication, and a tourist boom. The massive influx of tourists was a high source of income and hotel operations and services. This was due to European welfare and the generalization of paid vacation. Spain was the preferred destination for its climate, beaches, and low prices.
The banking sector experienced growth. Significant investment of capital in industrial enterprises obtained a wealth of benefits. This was buoyed by the ban on foreign banks operating in Spain but restricted competition and slowed the modernization of Spanish banks.
International trade saw an increased volume of imports and exports and a change in its composition. Main exports were finished goods abroad. Therefore, the resulting negative balance was that the value of imports exceeded exports, so the trade deficit was offset by income from abroad (tourism, remittances, etc.), generating a surplus in the balance.
2.4. External Dependence
An open, favorable international situation allowed large markets, obtained energy supplies at reduced prices, and better technology. Spain received funding for the shortfall of imports of machinery. A number of countries absorbed the surplus labor in agriculture. Unemployment may have constrained growth, and remittances equilibrated the balance of payments.
2.5. The Limitations of the Spanish Economy
Good data: Increased GDP above the average for other European countries, increased income per capita, and an improved standard of living.
Limitations:
- Uneven growth sectors: industrial (chemical, steel, cement, automotive, etc.) and services (tourism) increased their development while agriculture and consumer goods were still in arrears. The industrial sector could not absorb all the farming population, which mostly had to emigrate to Germany.
- Persistence of inter-regional imbalance: the traditionally rich continued to grow while others did not. Emigration from poor regions within developed ones.
- Maintenance of an inadequate system of social services.
- Expansion disorderly major cities: lack of an urban norm.
- Maintaining a tax benefit of a privileged social minority.
- Ecological disaster.
- Unit of technology and foreign investment.
- Congenital weakness in financial resources.
- Failure of the state for the redistribution of benefits and infrastructure development.
**3. Population Growth and Social Change**
3.1. The Increase in Population
The decade of 1960 saw the largest annual population growth rate of the whole century. This was a consequence of decreased mortality (especially in children) and high birth rates (better life).
Better economic prospects led to maintaining a high number of births. Family planning methods existed, and there was a natalist policy of the Franco regime. The fertility rate remained high throughout the decade.
The population boom led to an age distribution with increased youth aged 0-14 years (due to increased births) and over 65 (due to increased life expectancy).
3.2. Migratory Movements
Mechanization and modernization of agriculture left many farmers without work. This led to a rural exodus, conditions of miserable lives, a lack of employment, and a lack of prospects.
Agricultural areas of Andalusia, Extremadura, Castile, Galicia, and Murcia were major providers of foreign immigrants to France, Germany, Switzerland, and Belgium.
Domestic migration increased in the most dynamic economic areas, such as Madrid, Catalonia, and Valencia. This led to demographic and economic imbalances. The big industrial cities and towns on its periphery grew to the brink of saturation without the necessary infrastructure to accommodate migrants, which led to *Chabolismo* (shantytowns).
3.3. Changes in Social Structure
Industrial economic development and the expansion of the service sector led to a transformation in the socio-professional structure, strengthening the industrialized capitalist society. The sector of employees was wide and varied, while the middle class increased their weight.
Sectoral distribution of the population: active agricultural workers went from 50% to 21%, while industrial workers increased from 24% to 38%, and services from 25% to 41%. This led to growth in the number of industrial workers, an increase in the middle class, and the consolidation of the urban bourgeoisie. There was also growth in self-employed individuals, employees, and qualified professionals for industrial or financial management.
3.4. The New Social and Cultural Patterns
Transformation in society:
- Consumer Society: Increased purchasing power. Spanish households began to be equipped with new utensils, refrigerators, TVs, and kitchen appliances. The national production car (Seat 600) was popularized.
- Demand for education: necessary to achieve higher pay and status. In 1970, the General Law of Education was enacted. This increased the school population and state investments in education. Illiteracy decreased to attain the most advanced countries, and there was a democratization of the education system with the addition of students from lower-class families.
- Family structure: the extended family of rural tradition was replaced by the typical nuclear family of the urban world. Young people began to travel abroad and introduce new ideas in Spain.
- Status of Women: abandoned the traditional role of mother and wife to enter the world of education and paid work. Many women reached a level comparable to men’s studies and defended their freedom and personal fulfillment. This led to the emergence of a new feminist movement. However, the female employment rate remained well below the average in Western Europe.
- Renewal of the Church: Vatican II. A section of the Spanish Church began to distance themselves from the regime and align itself with the social sectors who demanded democratization. There was a growing secularization and influence in all areas.
Social progress and cultural patterns change weakened the social support system. A new type of opposition emerged, pushing for the democratization of the regime, political freedoms, and a more open society with the movements of Europe.