Concept of education
T6 1960-1975:ST –
income+unemploy,imporv exter sector;LT:outstanding egrowth, inflows foreign currency +imports; Access interna market:
Imports were financed bc inflows of foreign currency through: Tourism(competitive adv, -salaries-prices+supply) ;Migrant remittances(emigrateeurope);Foreign investment(change compared to Franco, Franco’s government:Internal saving were not enough to finance the industrial growth;
Foreign capital was essential to finance imports;Foreign direct investment for technological change;Structural change: employment in the agri sector – 1959 to 1975; The industrial sector good role; incorporated technological change and improved productivity, employment creation was low.
Hence, the importance of external emigration to Europe.Low inflation rate and control of the labor market;catching up and technological gap;Convergence with Europe: income per capita in Spain increased from less than 40 % of the European average in 1960 to more than 60% in 1975.
Between 1959 and 1973 Spain received a huge inflow of foreign investment (more than 40 % as foreign direct investment.Export’s revenues did not outperform the other three items until the end of the Franco era.Trade opening:1960 Tariff still protectionist eliminate restrictions to imports;Participation in the GATT, Gradual tariff reduction;1970 Trade Agreement with the EEC: tariff reductions for European countries.
income+unemploy,imporv exter sector;LT:outstanding egrowth, inflows foreign currency +imports; Access interna market:
Imports were financed bc inflows of foreign currency through: Tourism(competitive adv, -salaries-prices+supply) ;Migrant remittances(emigrateeurope);Foreign investment(change compared to Franco, Franco’s government:Internal saving were not enough to finance the industrial growth;
Foreign capital was essential to finance imports;Foreign direct investment for technological change;Structural change: employment in the agri sector – 1959 to 1975; The industrial sector good role; incorporated technological change and improved productivity, employment creation was low.
Hence, the importance of external emigration to Europe.Low inflation rate and control of the labor market;catching up and technological gap;Convergence with Europe: income per capita in Spain increased from less than 40 % of the European average in 1960 to more than 60% in 1975.
Between 1959 and 1973 Spain received a huge inflow of foreign investment (more than 40 % as foreign direct investment.Export’s revenues did not outperform the other three items until the end of the Franco era.Trade opening:1960 Tariff still protectionist eliminate restrictions to imports;Participation in the GATT, Gradual tariff reduction;1970 Trade Agreement with the EEC: tariff reductions for European countries.
T6 transformation spanish society:Economic development led to social changes inherent to economic growth;Internal migration flows (increase in urban population);Mass consumption, improvement in living standards indicators (height, mortality rates, quality of goods consume). Food consumption increased dramatically (high income-elasticity goods);Educational standard rose sharply;Increasing social pressure for freedom.Labour market rigidity: – unemployment during 60s bc migratory outflow towards Western Europe.Underemployment + rigid legislation with low female the labour force. Wage discrimination;Although strikes were officially prohibited; Of all the functions that the agricultural sector can perform in generating economic growth, the most decisive in the Spanish case was the massive transfer of labour . Industry:+ in industry in GDP and in terms of employment.; rapid growth the Spanish economy became industrialized ;Fastest growing industries: (Automobiles highly income elastic good), rubber, chemicals, metal processing, shipbuilding, electrical machinery, iron and steel; REASONS GROWTH INDUSTRIAL; +income, foodandclothes expenditure; +demanad for services(health,leisre); Foreign demand: + industrial export (low levels60);no exports agricultural; industrial export low;High increase in labor productivity ;:Structural change (income and employment shift from the relatively low-productivity sector to the relatively high-productivity one) Lewis model; Increase in physical capital investment (in 1965 the capital stock had doubled over that of 1955, though it slightly decreased at the end of the period) → increase in K/L Solow model; Technological change (closing the gap): imports of machinery. Spanish technological innovation was, however, very low.
TPF GROWTH 60-73: Endogenous growth models: broad K (human capital), low R&D(in spite+ publicspending) “social capability.Conclusion: the significant improvement in physical and human capital was not enough to close the income-level gap with the advanced countries. Also, significant lack of R&D investment (technology absorption without innovation).
TPF GROWTH 60-73: Endogenous growth models: broad K (human capital), low R&D(in spite+ publicspending) “social capability.Conclusion: the significant improvement in physical and human capital was not enough to close the income-level gap with the advanced countries. Also, significant lack of R&D investment (technology absorption without innovation).
T6 Constraints to the 1960s Growth Model and the Institutional Inheritance of the Francoism:
-Highly regulated economy and intense government intervention;1) financial markets: privileged financing2) labour market- wages with employment stability3) Industry: 1963 granting of credit. The INI lost its leading role.- The Fiscal System: 1)Lack of fiscal reform and no a real Welfare State: low public spending in education and health ;1967: creation of the Social Security System;it was a regressive fiscal system and non-redistributive, low tax revenues but no deficit → low revenues and low expenditure.Urgent need of a fiscal system reform within the Moncloa Agreements.
The 1973 Crisis :1) The crisis coincided with the political transition ;nominal and real wages rose between 1973 and 1976 by compensating policies such as low energy prices and nominal wage indexation; Spanish economy was much affected for the oil crisis than during the Great Depression (1930s):During the 1930s Spain was isolated from the international crisis We were not part of the gold standard, and the Spanish banking system was isolated from international banks;Exports fall (40%) and the economy suffered from the collapse of prices of primary goods. 2)Decline in national income from 1974 to 1985 divergence with European income levels; inflation and external deficit; stagfation;
and the Transition to Democracy: 1) Increase in energy prices which deterioration in Terms of Trade 2) Exports -Industrial crisis => unemployment. 3) Francoist legislation for the labour market was still effective;4) Unemployment increase. On the eve of the Moncloa Agreements (1977), Spain was on hyperinflation.
The Moncloa Agreements (October of 1977): A) structural adjustment policies monetary policy: decrease inflation and Fiscal policy: public spending control and deficit reduction; Rise in nominal wages; devaluation peseta (B) reform policie; IRPF vat,corporatetax, social securities
consequences Moncloa Agreements: Control of inflation,External balance improved (thanks to the peseta devaluation) Fiscal reform: the most important; market: remained regulated until the 1980s; Labor market reform: New legislation Statute of Workers, but still inflexibility. Restrictive monetary policy but expansionary fiscal policy ;The balance is not so positive for the labor market and GDP growth.
The second oil crisis (1979):
Increase in oil prices, price of labor: wage increased with no relation to labor productivity due to trade unions pressure; increase in Social Security installments, Increase in the price of capital: increase in interest rates due to the (incomplete) banking sector liberalization in 1977. ; Banking crisis:banks required public help.
-Highly regulated economy and intense government intervention;1) financial markets: privileged financing2) labour market- wages with employment stability3) Industry: 1963 granting of credit. The INI lost its leading role.- The Fiscal System: 1)Lack of fiscal reform and no a real Welfare State: low public spending in education and health ;1967: creation of the Social Security System;it was a regressive fiscal system and non-redistributive, low tax revenues but no deficit → low revenues and low expenditure.Urgent need of a fiscal system reform within the Moncloa Agreements.
The 1973 Crisis :1) The crisis coincided with the political transition ;nominal and real wages rose between 1973 and 1976 by compensating policies such as low energy prices and nominal wage indexation; Spanish economy was much affected for the oil crisis than during the Great Depression (1930s):During the 1930s Spain was isolated from the international crisis We were not part of the gold standard, and the Spanish banking system was isolated from international banks;Exports fall (40%) and the economy suffered from the collapse of prices of primary goods. 2)Decline in national income from 1974 to 1985 divergence with European income levels; inflation and external deficit; stagfation;
and the Transition to Democracy: 1) Increase in energy prices which deterioration in Terms of Trade 2) Exports -Industrial crisis => unemployment. 3) Francoist legislation for the labour market was still effective;4) Unemployment increase. On the eve of the Moncloa Agreements (1977), Spain was on hyperinflation.
The Moncloa Agreements (October of 1977): A) structural adjustment policies monetary policy: decrease inflation and Fiscal policy: public spending control and deficit reduction; Rise in nominal wages; devaluation peseta (B) reform policie; IRPF vat,corporatetax, social securities
consequences Moncloa Agreements: Control of inflation,External balance improved (thanks to the peseta devaluation) Fiscal reform: the most important; market: remained regulated until the 1980s; Labor market reform: New legislation Statute of Workers, but still inflexibility. Restrictive monetary policy but expansionary fiscal policy ;The balance is not so positive for the labor market and GDP growth.
The second oil crisis (1979):
Increase in oil prices, price of labor: wage increased with no relation to labor productivity due to trade unions pressure; increase in Social Security installments, Increase in the price of capital: increase in interest rates due to the (incomplete) banking sector liberalization in 1977. ; Banking crisis:banks required public help.