Economic Shifts in Francoist Spain: Autarky to Development
Spain’s Economic Transformation Under Franco: 1939-1975
With the end of the Civil War, the insurgent side imposed their political and ideological model, which can be characterized as a military dictatorship based on Spanish nationalism. It incorporated ideas of the Falange, the non-parliamentary conservatism of traditional Catholicism, the denial of Republican reformism, and the prevention of liberalism, communism, anti-separatism, and anti-Catholicism.
Two Economic Stages During the Franco Years
During the Franco years, the economy went through two stages: first, from 1939 to 1959, autarky, and the second from 1959 to 1975, called technocratic, developmentalist, or indicative planning.
The Stage of Autarky (1939-1959)
The stage of autarky is so named because its aim was self-sufficiency. The establishment of the autarkic policies was a combination of the following factors: the state of destruction after the Civil War, the lack of capital to invest and buy, the beginning of World War II, the subsequent isolation of the regime from 1945 by the victors of WWII, the culmination of protectionist tendencies, the Spanish defense, and the political interest in practicing this policy, which helped to establish the dictatorship.
In these circumstances, the autarkic economic policy was the best fit. Document 1, a text by Franco on the fundamentals and guidelines of the recovery plan for the economy, refers to the problems it faced. The text highlights the unfavorable balance of payments, meaning that Spain was buying a lot from outside and not offsetting it with overseas sales or capital inflow, producing a deficit balance that could not be maintained. In this context, it was necessary to reduce purchases while keeping the economy running, and this required:
- Tight control of external trade to reduce imports, as noted in paragraphs 1 and 2 of the text, eliminating non-essential imports and reducing those that could be reduced.
- The rapid development of industry to ensure self-sufficiency. Efforts were made to produce goods in Spain to prevent imports.
- With regard to agriculture, attempts were made to boost it, but in the absence of fertilizers and machinery, low productivity and drought caused negative results.
The results of these autarkic policies were negative. Restrictions, regulations, and intervention led to a situation of backwardness and stagnation. Production levels were very low. The lack of supply imposed rationing, forcing people to turn to the black market and black marketeers. As noted by J.L. García Delgado in Document 2, autarky marked the pinnacle of the growth process since the last third of the nineteenth century and an economic failure that ran parallel to political and social regression.
The Shift to Development (1959-1975)
That situation was untenable, so the system sought a solution. This came through international aid and a good harvest in agriculture that allowed an end to rationing.
Anti-Franco policy was favorable to American interests in the context of the Cold War, so financial aid began. Aid was received starting in 1950 and specifically through the Hispanic-American agreement of 1953 to use military bases in exchange for money, machinery, and food. At that time, an economic boom started, but the Spanish economy needed foreign aid and international market integration to develop capitalism.
For these reasons, since 1957, a change began to occur in the regime. In 1957, Franco formed a new government composed of technocrats linked to Opus Dei. They proposed measures to stabilize the economy, leading to the Stabilization Plan in 1959 (Document 3).
As noted in Document 3, once the problems of economic reconstruction after the War of Liberation were addressed, it was necessary to give more freedom while maintaining state control.
To achieve the goals outlined in the Stabilization Plan, the State developed indicative planning.
The plans sought to set the growth of the economy, especially industry, and certain areas that were overdue but had potential for growth.
The planning was a major success, with average growth rates of around 7% annually (higher than the rest of Europe). All economic sectors grew.
This tremendous growth of the economy was introduced by the regime as “the Spanish miracle.” An example of this “miracle” was the growth of the automobile sector, with the development of industries such as SEAT, which produced the legendary SEAT 600 (Document 4), introduced by the regime as the car that any Spaniard could afford.
Factors Contributing to Development
The successful development planning was driven by the contribution of money provided by migration and tourism.
- Migration: In Document 5, we have a table showing migration from 1951 to 1980. The table shows a strong increase and a shift from America to Europe due to Europe’s recovery from World War II. The migration period decreased from 1971 to 1980 due to improved conditions in Spain and the crisis of 1973. Emigration acted as an escape valve for unemployment and wage tension. The effects were a decrease in unemployment in Spain, foreign exchange earnings, and increased consumption in Spain (due to the transfer of money from emigrants).
- Tourism: Document 6 shows that tourism was a key element of the “Spanish miracle.” The number of tourists grew from one million in 1952 to 34.5 million in 1973, as shown in the table.
The End of an Era
The pinnacle of this developmental stage occurred in 1975, motivated by the global crisis that began in 1973 and the death of Franco. In these circumstances, the whole economy fell into a deep crisis of stagnation and inflation.