Spain’s Industrial Transformation: 1959 and Beyond

Posted on Mar 23, 2025 in Business Administration and Management (BAM)

The Second Industrial Boom in Spain

The political confrontation between the two superpowers, known as the Cold War, had significant implications for Spain due to its strategic location.

A Key Date: 1959

The United States’ support of Franco’s dictatorship had a significant economic counterpart in Spain. In exchange for allowing the US to establish military bases, Spain experienced a new wave of economic growth. In 1959, the Stabilization Plan represented the liberalization of the Spanish economy, which had previously been monopolized by the state.

Spain: An Industrial Nation

Since 1959, Spain has experienced impressive economic growth, coinciding with a period of global economic expansion. The effects of the Stabilization Plan led to Spain becoming an industrialized nation. In ten years, Spain transitioned to a situation where industry surpassed other sectors by almost two and a half times.

The key industries were:

  • Electromagnetic
  • Chemical

These industries were concentrated mainly in existing industrial centers with established infrastructure.

Spain’s Integration into the Global Economy

Spanish industry became more competitive and integrated into the global economy. The elimination of many tariff barriers and the influx of foreign capital allowed Spain to join the world economic system. This liberalization also facilitated the acquisition of property and increased industrial productivity. Key export sectors included:

  1. Consumer goods industries
  2. Basic industries

The Crisis of the Fordist Industrial Model

The industrial model, known as the Fordist model (named after the Ford automobile factory), was practiced in most industrialized countries.

The Fordist Model of Industrial Development

Characteristics of the Fordist model:

  • Production of large quantities of homogeneous products on assembly lines.
  • Factories concentrated around the industrial production process.
  • Electro-mechanical technology that was labor-intensive.
  • High energy consumption.

Consequently, there was no structural unemployment in the industrial sector.

The Causes of the Crisis

The Fordist system suffered a major crisis due to declining profits, high inflation, and industrial stagnation. The causes of this situation were complex:

  1. Industrialists needed increasingly more labor to increase production. Limited wage growth impacted industrial profits.
  2. OPEC (Organization of Petroleum Exporting Countries) reduced production, leading to a substantial rise in petroleum prices.
  3. The crisis in Spain had unique characteristics. It had a major social impact because unemployment levels in Spain were the highest in Europe.

Patterns of Industrial Development and Capital

Capital tends to concentrate to eliminate competition. This began a new phase called post-industrialism, or the Third Industrial Revolution.

Key features of this new phase:

  1. Industrial capital is concentrated and becoming more international through purchases and mergers.
  2. Competition is measured not by the domestic market but by the international or foreign market, now encompassing the entire planet.
  3. The production process is fragmented, carried out by different companies in different locations.
  4. Products are diversified and adapted to the characteristics and demands of each market.
  5. The technological base shifts from electro-mechanics to information technology.
  6. “Just-in-time” production or flexible production is implemented. This means that the number of permanent workers can be minimal, but the overall workforce is very large and variable.
  7. The state enters a crisis as the main distributor of wealth through taxation.

The Three Classic Forms of Capital Accumulation:

  • Cartel: A group of companies that manage and control a specific market sector, creating a monopoly. Example: computer equipment, software.
  • Holding: A group of individuals owns and manages diverse types of businesses, often forming a conglomerate. Example: department stores, gourmet shops, banks, dairy businesses.
  • Trust: A single entity controls the entire production process of a product. Example: A company that owns truck fleets, parts factories, steel mills, and retail stores for washing machines.

Multinational or transnational companies establish branches in different countries based on strategic considerations.