Economic Impact of Franco's Victory in Spain

Economic Aspects of Franco's Victory

The victory of Franco in the Civil War had very negative economic repercussions. The three years of military clashes broke up the economy. Agricultural and industrial production declined. Many ways and means of communication were destroyed. Gold reserves and foreign exchange were sapped, and buildings and manufacturing facilities were utilized.

The Axes of Autarky

One of Franco's objectives was to achieve economic self-sufficiency (autarky). The result was blocking economic growth and competitiveness and reducing the waste of the economic upturn that met in Europe after World War II. The incorporation of Spain into the rapid growth phase was substantially delayed. Autarky had two major areas of activity:

1. Regulation of Imports and Exports: The regime also weighed the gold and foreign currency shortages. It was intended to limit foreign exchanges. With this same objective, the change of the peseta was regulated, the products became more expensive, and the economy had to import, and there was an acute shortage of essential goods.
2. Time for the Industry: In 1941, the institution that was to be the promoter of this industrial policy was founded: the National Institute of Industries (INI). Through the INI, numerous public companies were created to produce the goods that the private sector did not produce.

Rationing and the Black Market

The slow pace of post-war economic recovery was related to the application of the ideas of the victors, who granted the State an interventionist role in economic relations. The state directly controlled the market, and the producers were required to sell all production at a price fixed in advance. The administration was the only one that could sell products to consumers while also regulating the price. This caused many producers to prefer to hide the production for sale on the black market. The result was widespread shortages of food, and price regulation led to the appearance of the black market, where black marketeers conducted transactions outside the law. The autarkic policy enforced international isolation, to which the regime was subjected, gave rise to all kinds of scarcity. This led to hunger for the population in large cities and also affected the industry.