Spain’s Economic Transformation: 1959-1975
1. The Changing Economic Landscape
1.1 Government’s “Desarrollismo”
The governments formed by Franco in 1957 and the 1960s marked a significant shift. This era transitioned from an initial Falangist phase to one dominated by technocrats linked to Opus Dei and economic elites. Their primary goal was to incorporate economic rationality into state management, ensuring the regime’s continuity. They opted for technical reform without challenging the dictatorship, addressing the economic and social consequences of autarky.
Europe’s post-WWII economic recovery presented opportunities for the Spanish economy to leverage favorable international market conditions.
1.2 The Stabilization Plan (1959)
This plan comprised three main areas:
- Economic Stabilization: To combat inflation, bank interest rates were raised, credit was restricted, and salaries were frozen. A tax reform aimed to increase revenue and limit public spending.
- Internal Liberalization: State intervention was reduced, and fixed prices were deregulated.
- External Liberalization: Barriers to foreign goods were removed, and foreign investment was encouraged. The peseta’s convertibility was announced and devalued by almost 50% against the dollar.
In return, international agencies provided loans to Spain, averting potential bankruptcy. These measures aimed to integrate the Spanish economy into international markets, laying the foundation for future growth.
1.3 Development Plans (1964-1975)
Three four-year development plans were implemented, overseen by Laureà López Rodó. These plans promoted indicative economic planning, encouraging growth through public sector programming, providing information and incentives to private investors.
The plans focused on:
- Structural Measures: Addressing industrial shortcomings.
- Development Poles: Reducing regional imbalances by promoting industries in less industrialized areas.
While their overall impact was limited, the plans successfully provided infrastructure and resources that fostered industrial growth.
2. Years of Economic Growth
2.1 Accelerated Industrialization
Between 1960 and 1974, the Catalan and Spanish economies experienced significant growth. This was driven by agricultural renewal and expansion in secondary and tertiary sectors. Industrial growth resulted from improved productivity (due to low wages, imported technology, and foreign capital), lower prices, and increased exports. Rising employment and consumerism fueled demand for durable goods.
In Catalonia and Spain, the metallurgical industry, linked to automobile and appliance production, led industrial progress. Other sectors like chemicals, energy, steel, shipbuilding, and construction also saw high growth rates. New industrial centers emerged across Spain.
Catalonia’s industrial structure continued to be dominated by small and medium enterprises. Economic concentration persisted in Barcelona’s industrial outskirts.
2.2 Transformation of Traditional Agriculture
The contrast between small farms (minifundismo) and large estates persisted. Industrial opportunities spurred rural exodus, leading to higher rural wages. Mechanization and fertilizers intensified crop production, further reducing rural employment and increasing emigration. Dietary diversification saw a shift towards livestock products and fruits/vegetables.
In Catalonia, the number of farmers drastically decreased. Grain production declined, while viticulture, fruit, citrus, vegetable, and tuber production increased.
2.3 Growth of the Tertiary Sector
Urbanization, improved distribution networks, better transport and communication, and tourism significantly impacted the tertiary sector. In Catalonia, the tertiary sector remained less important than the secondary sector, with a lower weight of public administration employees.
The 1960s tourism boom boosted hospitality services. The banking sector grew to meet financing needs, fueled by industrial profits and investments. International trade expanded, with finished goods replacing agricultural products as major exports. Imports of capital equipment, energy products, and raw materials resulted in a negative trade balance.
2.4 External Financing of Growth
Foreign resources financed imports, crucial for industrial growth. These resources came from foreign capital investment (attracted by low wages and favorable conditions), tourism revenue, and remittances from Spanish emigrants in Europe.
2.5 Limitations of the Spanish Economy
Economic growth was concentrated in industry and services, neglecting agriculture. Low research spending and a weak financial sector created dependence on foreign technology and investment. Despite increased per capita income, the standard of living lagged behind other European economies. The state failed to effectively redistribute wealth through taxation or create infrastructure to sustain growth. These weaknesses became apparent during the 1973 global economic crisis.