Francoist Spain’s Transformation: From Isolation to Economic Growth
Francoist Spain’s End of Isolation: US Agreement
From 1948, however, the international situation began to turn in favor of the regime. The Cold War between the U.S. and the USSR led Western powers to overlook the totalitarian nature of Francoist Spain to incorporate it into the anti-communist alliance. Diplomatic pressure and trade restrictions began to fade, finally leading to favorable statements regarding Spain’s isolation.
In 1950, when negotiations had already begun between the U.S. and the Vatican, the UN lifted its recommendation for the withdrawal of ambassadors and authorized international agencies to operate in Spain. The decisive event in breaking Spain’s isolation was the signing of the agreement with the U.S. in 1953, which allowed the installation of U.S. military bases in Spain.
- The military agreement established the use of four joint bases for 10 years.
- The economic agreement provided $1,180 million in aid.
A new concordat was signed between the Vatican and the Spanish State, reaffirming the alliance between the Church and Francoism. Finally, Spain recognized the independence of Morocco and initiated the decolonization process of the Protectorate, following UN recommendations.
Wartime Autarky in Spain
In 1939, Spain was a country in demographic and economic ruin, and the majority of the population suffered from hunger. The authorities chose a regime of state economic autarky. An interventionist system was implemented through a series of decrees that set prices, and farmers were forced to hand over any surplus harvest. However, Franco’s state leaders lacked clear economic objectives. The consequences were disastrous. Crops were very poor, partly because the low prices set by the government led many farmers to abandon growing cereals, and the black market flourished. Corruption spread to all sectors.
Autarky in the 1950s: Economic Shift
At the beginning of the 1950s, the failure of autarkic policies was already clear, even for the Francoist hierarchy that defended the model. The shift in economic policy began with a government change in 1951. A partial liberalization of prices, trade, and the movement of goods was decreed. Its effects included a good harvest and the end of rationing in 1952. An economic expansion then began. U.S. aid, which began arriving in 1951, helped fuel this growth. Budgets remained in deficit, and the expected trade balance also. It took the crisis of 1957 to convince the dictator’s government, which then agreed to hand over economic direction to the Opus Dei technocrats.
Spain’s 1959 Stabilization Plan
The economic reform aimed at a strong pace of growth, rapid industrialization, and the integration of the Spanish economy into the international market. The new Decree-Law on Economic Management was approved in 1959. It was a stabilization plan. It aimed to liberalize the economy by removing bureaucratic barriers, cutting public expenditure, and opening up to the outside world.
Economic Development in the 1960s
The results were immediate. Between 1959 and 1960, there was, predictably, a sharp economic slowdown: falling wages, prices, and consumption. But the objectives, including deficit reduction, were achieved. The Spanish economy grew at a high rate, based mainly on the industrial sector and increased expansion of services. Low wages, combined with the arrival of massive foreign investment, fueled this growth. The growth of industry produced an intense migration of labor to the big cities. Thus, rural exodus, agricultural modernization, and depopulation of the interior were parallel phenomena. The scale of these phenomena helped alleviate the balance of payments deficit; the massive influx of tourists covered 80% of the trade deficit in foreign currency. This was further boosted by capital from emigrants and foreign investment. Overall, Spanish economic growth from 1961 to 1973 was consistently high, leading to a profound transformation of the productive fabric and closer ties with the international economy.
Francoist Spain: Society in the 1940s and 50s
Spanish society in the 1940s and 1950s was marked by poverty. Furthermore, there was a significant technical, scientific, and cultural setback, leading to absolute misery. Hunger most affected urban workers and peasants, but even the middle classes became impoverished.