Spain’s Economic and Social Transformation Under Franco
I. Economic Evolution of Spain (1939-1975)
I.1. Autarky (1939-1950)
Economic policy in the early days of the Franco regime was marked by autarky due to the consequences of the civil war and international circumstances. Autarky aimed to maximize resources and minimize dependence on foreign trade, promoting self-sufficiency through strong state intervention. Notable measures included:
- Agricultural initiatives such as the creation of the National Wheat Foundation and the National Institute of Colonization, focusing on irrigation and settler placement.
- Industrial laws offering incentives, deductions, and licenses for strategic industries producing essential goods. The INI, a state-owned industrial holding, engaged in manufacturing weapons, ships, and steel cars.
- Trade restrictions requiring administrative authorization for imports and exports, leading to shortages, black markets, and rationing.
The postwar period, especially 1946-1949 (the “years of famine”), was characterized by scarcity, leading to widespread black markets and rationing. Rationing, introduced in 1939, lasted until 1951.
I.2. First Liberalization Measures (1950s)
Increased crop yields in 1951 allowed for the elimination of rationing and boosted industrial demand. Measures focused on removing administrative barriers for companies, coupled with U.S. assistance, resulted in strong industrial growth from 1953-1957. By the mid-50s, the positive effects of these measures and American loans waned, leading to economic stagnation, a negative balance of payments, and insufficient crop yields. Rising living costs caused inflation, unemployment, and protests, forcing the regime to choose between a return to autarky or embracing economic liberalization.
I.3. Stabilization and Economic Growth (1960s)
“Technocrats,” regime members with technical backgrounds and liberal economic leanings, led the 1959 Stabilization Plan. International loans helped restore economic equilibrium. The plan:
- Internally pursued balanced development by limiting spending and liberalizing prices.
- Externally removed trade barriers, enacted liberal foreign investment legislation, and devalued the peseta to boost competitiveness and tourism.
The plan’s success initiated economic takeoff, but social consequences included declining wages and rising unemployment, offset by emigration to Europe and migrant remittances.
Development Plans (1962-1973)
Minister Lopez Rodo initiated a planning program focused on industrial development and private investment. Four Development Plans (the last suspended due to the 1973 crisis) aimed to:
- Set mandatory standards for the public sector and provide private sector guidance.
- Create development polls in depressed areas like Valladolid, Huelva, Vigo, Zaragoza, and Burgos.
These plans relied on foreign investment, tourism, and migrant remittances. This period, known as the “Spanish miracle,” saw 7% annual economic growth, second only to Japan. Industry became the engine of growth, surpassing agriculture. Exports grew rapidly, and while the trade balance remained in deficit, the balance of payments improved due to remittances and tourism. This allowed for the import of capital goods for modernization.
Key drivers of economic development:
- Tourism became the leading industry, driven by low prices.
- Labor migration to Europe, facilitated by the government, provided crucial remittances.
- Foreign investment flowed into chemical, trade, and power sectors, attracted by cheap labor and a growing market.
Agriculture modernized through state-led colonization and land consolidation policies. Despite progress, Spain lagged behind Europe in machinery and fertilizer use. Rural exodus led to the disappearance of less profitable properties.
Despite growth, limitations included:
- Regional disparities
- Dependence on foreign technology
- Deterioration of farming incomes
- Persistent inflation
- Continued emigration preventing full employment
- Public sector deficit and inefficiency
- Pending tax reform
I.4. The Economic Crisis of 1973
The 1973 oil crisis significantly impacted Spain due to its reliance on tourism, foreign investment, and migration. The resulting stagflation made Spain one of the hardest-hit countries.
II. Social Transformation
The civil war and dictatorship disrupted Spain’s societal development. The Franco regime imposed a conservative, traditional, and Catholic society. However, economic development from the 1960s drove social transformations towards an urban, modern, and secular society. These changes, though incomplete under Franco, laid the groundwork for the pluralistic and advanced society that emerged after his death and the consolidation of democracy.
The regime’s initial focus was on repression and propaganda, dismantling opposition and the lifestyle of Republican Spain. The army, Church, and “national movement” enforced national-Catholicism and widespread censorship. The era was marked by hunger, poverty, and black markets. The regime introduced social security, family allowances, old-age security, compulsory health insurance, and the National Housing Institute. The aristocracy gained prominence during this period.
The 1950s saw continued conservatism and social inequality, with closer ties between the commercial, industrial, and financial bourgeois classes and the landowning oligarchy. Rural migration to industrial centers like Madrid and Barcelona began, with migrants often working in construction or domestic service.
The 1960s population boom and rural exodus fueled urban growth. Migrants often settled in slums, prompting the construction of cheap housing on city peripheries, exacerbating class divisions. The lack of urban planning in these new neighborhoods remains a problem in many Spanish cities.
Rising incomes from 1960 to 1975 improved living standards and increased consumption. The rise of the middle class (small business owners, officers, trained employees) and increased educational levels marked this period. Women’s status also began to change, with increased access to education and economic participation leading to greater awareness of their rights.
Emigration to Western Europe and the influx of foreign tourists exposed Spaniards to different political systems and lifestyles, contributing to the growing awareness of the need for democratic change.