Spain's Economic Shift: Autarky to Development (1939-1975)

From Autarky to Developmentalism: Spain's Economic Transformation (1939-1975)

The Autarkic Period in Spain (1939-1951)

After the Spanish Civil War, the Franco regime adopted an economic policy of autarky. This policy was highly dirigiste, interventionist, and characterized by isolation and self-sufficiency with regard to foreign markets. This resulted in widespread economic stagnation, shortages, famine, and the rationing of basic goods.

The adoption of autarkic policies was due to several factors:

• Significant material losses and the loss of human capital caused by the Civil War.
• Internal barriers, such as the Second World War.
• Condemnation of the Franco regime by the United Nations.

Both foreign trade and supplies hampered the opening of the Spanish economy. Autarky benefited certain elites, as it fostered widespread and structural corruption, where politicians and officials awarded export and import licenses to favored companies. The black market, known as "estraperlo," became deeply ingrained in the agricultural sector.

The black market went into a deep crisis. Ration cards were imposed, requiring personal documents sealed by the Administration in exchange for a ration of commodities. Industrial activity stagnated. A large public industrial sector was created, concentrated in the National Institute of Industry (INI). The state also nationalized companies such as Telefónica, RENFE, Endesa, and SEAT.

During the autarkic period, many Spaniards lived in poverty, with minimal wages.

The Exhaustion of Autarky (1951-1959)

Economic changes began within the regime, with the goal of progressively abandoning autarkic policies. The causes of these economic reforms were:

• The presence of individuals with more liberal economic views in government ministries. Manuel Arburúa spearheaded greater trade liberalization and price controls after the disappearance of rationing.
• The regime's leaders became aware of the exhaustion of the autarkic model, recognizing its inability to provide for and develop the country.
• The entry into government of technocrats from Opus Dei, led by López Rodó, promoted greater integration with the international economy. Spain joined organizations like the Organization for European Economic Cooperation (OEEC), the International Monetary Fund (IMF), and the World Bank.

Technocrats designed the Stabilization and Economic Liberalization Plan, marking the final step towards an anti-inflationary policy similar to those of liberal Western countries. These liberalizing trends had positive effects on the national economy, such as:

• Recovery of agricultural growth (through mechanization of the fields and the use of fertilizers).
• Conservative agrarian reform (taking the first steps in technical reforms, hydraulic policy oriented towards the expansion of irrigation, and the construction of dams and intensive swamps).
• Significant industrial increases (Spanish production doubled, but dependence on petroleum grew).

Developmentalism (1959-1975)

The Stabilization Plan of 1959 implemented a series of measures that halted the growth of the Spanish economy, as they were aimed at controlling inflation. These measures included reducing credit, removing regulations and subsidies. In addition, state expenditures were adjusted to income, imports were halted, and the peseta was devalued.

This economic policy allowed a radical break with the autocratic model and a commitment to a market economy, facilitating the entry of exports and foreign investment in the country's tourism sector to correct the imbalance in the balance of payments.

The focus of economic activity shifted from agriculture to industry, and the countryside became mechanized. Income from abroad also had great importance, as the trade deficit was offset by remittances sent by Spanish emigrants, foreign tourism, and the entry of foreign capital. These factors helped finance growth, maintain high wages, and reduce social conflict. As a result, the purchasing power of the Spanish people rose.