Spain’s Economic Evolution (1959-2006)

Posted on Feb 16, 2025 in Business Administration and Management (BAM)

The Evolution of the Spanish Economy and Society (1959-1975)

The Spanish economy has gone through four distinct stages from the 1960s to the present day:

  • 1959-1973: During the second phase of the Franco regime, the Spanish economy experienced a remarkable growth pace.
  • 1974-1985: The political transition to democracy coincided with a period of persistent economic crisis.
  • 1985-1989: Economic growth resumed.
  • 1989-2006: The economy became more closely linked to the Eurozone, and the effects of the international economy were felt.

Between 1960 and 1973, the economy, consumption, and exports grew. The country industrialized, creating three million jobs, leading to a situation of full employment. This was somewhat mitigated by significant emigration to other European countries. In addition to an increase in per capita income, there was a shift away from rural life and a rise in service-sector employment. One can say that in these thirteen years, Spain transformed into a modern economy.

However, it’s important to remember that this strong growth occurred under a dictatorial regime that had maintained strong interventionist policies since the end of the 1950s.

With regard to the Economic Stabilization Plan of 1959, the autarkic economy was replaced by a new economy connected with the global economy.

Objectives of the Stabilization Plan

  1. Achieve balance by reducing domestic price inflation.
  2. Liberalize foreign trade and achieve the convertibility of the peseta to facilitate international trade.
  3. Liberalize the domestic economy.

To achieve this:

  1. Ensure the continuity of development.
  2. Facilitate the integration of the Spanish economy into the international economy.

Reasons for the plan:

  1. Deficits in the balance of payments.
  2. The booming Western economies and Spain’s entry into international bodies, promoting a commitment by the Franco regime to stabilization and economic liberalization.
  3. Criticism of the old autarkic policy.

Impetus for Strong Growth in the 1960s

  1. The strong desire of the Spanish people to achieve economic development, leading to willingness for internal and external migration.
  2. The large economic backlog, which explains the significant leap forward.
  3. The diffusion of technology, renewing the production structure, boosting productivity, and driving income growth.
  4. The growth of demand.
  5. The opening to foreign markets.
  6. Spain possessed a large number of financial resources and manpower.

Agriculture, for example, contributed to the supply of goods to feed the population and provided labor. As for the workforce, women entered the production process, and a large number of workers migrated from the countryside to the city.

However, over the decade, various events occurred that led to a return to state intervention, and even aspects of autarky. The maintenance of state intervention reflected the “implied covenant of Franco”: progress in development was bought with limited freedom of association, while privileged funding, limited competition, and reduced pressure earned the support of employers.