One Nation's Isolation: A Study of Spanish Economic Growth (1939-1991)
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Authors
Saxton, Robert L.D.
Issue Date
1990
Type
Thesis
Language
en_US
Keywords
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Abstract
Contemporary Spanish economic history has been preoccupied with
the theme of struggle. For decades after Franco's ascent to power, this
struggle belonged to the government. Priorities on the official economic
agenda were set and reset, showing the government's uncertainty
concerning economic matters. Economic ministers introduced reforms,
created and repealed laws, formed and dissolved interventionist
organizations, colonized farmers and subsidized production, all,
supposedly, to promote economic growth and prosperity. Some schemes
were successful, some had mildly positive results, and some failed
miserably. More than once, the sincerity of the economic planners came
under question. It would be difficult to prove that Franco's first priority
rested with economic matters. Dictatorships characteristically worry most
about staying in place, and this regime proved to be no exception. The
economic structures created under Franco contained an extremely
complicated set of legal regulations rendered lethargic by a very complex
bureaucracy - all of which have left their mark on present-day Spain. One
of the prevailing themes in contemporary Spanish economic history is
the constant struggle to modernize the economy. Purely domestic efforts
to achieve this goal have met with repeated failure. Successful results
were achieved only when help was accepted from beyond Spain's borders,
and the nation opened up its economy to world markets. This has been
done in increments. Ultimately, Spain's inclusion in international
markets means more than just a boost in her export goods; it is absolutely
essential to the whole of her economic growth.
The main problem during the 1940's was Spain's international
isolation. During World War II, the conflict between Allied and Axis
powers rendered successful trade with Spain extremely difficult. Mter the
conclusion of the war, the low international popularity of the Franco
regime prompted the United Nations to impose an international
economic boycott against Spain, which lasted until the early 1950's.
Franco's response was to declare autarky to be in the interest of the
nation. This isolation subjected Spain to even harsher conditions than
would have been experienced from the aftereffects of civil war. Industrial
and agricultural production in the 1940's was at a miserable level.
By t;he time the 1950's came around, the regime had realized many of
its mistakes in economic policy. Franco showed some desire to change,
but was uncertain how to go about making these changes. The main
problems were a high cost of living, the relative backwardness of Spanish
industry, and the low productivity of the agricultural sector. An
American-Spanish alliance, a product of the Cold War, allowed Spain to
benefit from massive American aid, which took the form of food credits
and various monetary gifts. The currency was stabilized, industry
experienced impressive growth, and agricultural production finally
reached pre-Civil War levels of production.
Just as Spain's economy was beginning to get back on its feet, a report
published by the OEEe (Organization for European Economic
Cooperation) highlighted suggestions for economic improvements.
Incorporation of these suggestions into a plan for economic recovery
became known as The Stabilization Plan. The introduction of this plan
combined with a tourist boom, high foreign investment, and emigrant
remittances, to produce the "Spanish Economic Miracle." Agriculture
was by and large modernized, industry experienced fantastic growth,
unemployment dropped below 2%, and real average income grew by
156% in thirteen years. Life in Spain in the 1960's and early 1970's was
generally good.
The 1970's will be forever remembered in Spain as the decade of
democratization. Many have claimed that economic growth during the
previous thirteen years was a necessary prelude to this post-1975
democratic transition. The transformation of Spain from an
authoritarian state to a democracy was not a result of sustained economic
growth. Rather, economic growth significantly smoothed out this
transition. By the time the transition to democracy was complete -- in the
early 1980's -- Spain was in a serious stagflationary crisis. Inflation and
unemployment surpassed 20%. These - the worst of economic problems
- were born from Spain's exceptionally high dependence on foreign oil
for energy needs, and her effective refusal to address the economic crisis
until the democratic transition had been largely achieved.
The first half of the 1980's was marked by a frantic attempt to curb
unemployment and inflation before the country's historic entrance into
the European Community. Spain, furthermore, needed to convince
other member-nations that her entrance into the EC would benefit the
Community as a whole. Since its addition as twelfth member of the EC,
Spain has been the scene of impressive growth - double that of the EC
average. The reduction of inflation boosted confidence in the peseta and
this renewed confidence, in turn, enabled the Spanish currency to
officially become part of the ECU in 1989. When this happened, foreign
investment, already on the rise, was further encouraged.
Present day economic questions in Spain are dealt with in the context
of continuing integration into the EC. Spanish agriculture is in a painful
process of specialization, adapting itself to serve the needs of the
Community rather than Spain, alone. Industry is transforming quickly so
that Spanish firms can compete with their French, German, British, and
Italian counterparts. Of all Spanish sectors, the service sector has emerged
from the decades of reconstruction as the undisputed champion. This
sector now employs some 56% of the working population.
Foreign investment is paramount to Spanish economic growth.
Confidence in Spain's adaptive capabilities, in the government's
commitment to growth, in the reliability of the peseta, and the nation's
potential for further growth continue to lure investors into the
Peninsula. An important year will be 1992. The Olympics will be held in
Barcelona and the World's Fair in Seville. Madrid takes its tum as the
"Cultural Center of Europe," and European integration, for the most part,
will supposedly be completed. If investors are focusing on any place in
Europe in 1992, it will be on Spain.
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v, 107 p.
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