Franco's Spain: From Autarky to Economic Liberalization

Franco's Economic Policy: Autarky and Liberalization

The Axes of Autarky

The Franco regime implemented an economic policy of autarky. This policy aimed for a state to be considered politically and militarily strong, and thus had to be economically self-sufficient. At the conclusion of military hostilities, the Spanish economy was profoundly disjointed. Agricultural and industrial production was much lower than in 1935, gold and currency reserves were depleted, and the transport network was severely damaged. The regime sought to achieve economic self-isolation from the outside world and replace the liberal economic system with an interventionist state policy, taking charge of industrializing the country. Autarky had three main areas:

• The first was the regulation of external economic relations. Imports and exports became fully controlled.
• The second was industrial development, oriented towards activities of strategic interest, in order to achieve sufficient power to ensure the military and political independence of the new state. In 1941, the National Institute of Industry (INI) was founded, a conglomeration of public enterprises.
• The third affected the agricultural sector, which suffered deep state intervention. The National Wheat Board acquired the wheat crop at set prices. This policy was extended to other agricultural products. The result was severe shortages. Consequently, ration cards were created to organize the distribution of staple foods. The appraisal price, set below its true value, led to the proliferation of the black market (also known as estraperlo).

Steps Towards Economic Liberalization

Between 1950 and 1952, Spain received U.S. credits for the purchase of agricultural products, raw materials, and industrial equipment. Aid agreements expanded significantly. Since the early 1950s, the first liberalizing measures were introduced, decisively reducing state intervention and protectionism. In 1952, ration cards were removed. In industry, the government instigated expansion with strong support measures and public investments. Clearly, autarky was not working.

Further economic reforms came with the new government formed in 1957, which included a team of technocrats from Opus Dei. This cabinet ended the autarkic policies and established the Stabilization Plan, which allowed for spectacular economic growth, leading to Spain's incorporation into the small group of industrialized countries in the world.