Spain's Economic Transformation 1959–1970s: Growth and Change

Socio-economic Developments

The Stabilization Plan

The economic reform launched in 1959 aimed to achieve strong growth, rapid industrialization and to connect the Spanish economy to international markets. The stabilization plan was designed along the lines recommended by the IMF and World Bank. It promoted a free economy by removing red tape, cutting public spending and opening to external trade. The plan began with a series of restrictive measures.

The Economic Development of the Sixties

The results were immediate. The Spanish economy grew at a high pace, driven mainly by expansion of the industrial and service sectors, which led to a profound change in Spanish society.

The industrial expansion was based on low wages and massive inflows of foreign investment. The Spanish economy came to depend heavily on external demand and capital.

The growth of industry produced an intense migration of rural labour to the large cities. Many also sought work in other European countries. This process prompted the mechanization of farming; thus, agricultural modernization and depopulation of the interior were parallel phenomena.

The balance of payments deficit ceased to be a major problem thanks to the influx of tourists, which brought significant foreign currency.

From 1963 the government attempted to regulate growth through development plans. These plans established, in three-year periods, a number of objectives for growth in key sectors and promoted them through measures such as:

• tax incentives
• state aid

Spanish Society of the Seventies: Migration and Imbalance

There was a mass migration of the rural population. The main stream moved to big cities in search of employment in industry. A second stream went abroad: more than a million workers emigrated, mostly to:

• France
• Germany
• Switzerland
• Belgium

Out-migration helped to reduce official unemployment figures in Spain. Economic growth accentuated imbalances in the distribution of wealth, both at the personal and regional levels.

Population Growth and Public Services

Economic growth led to a dramatic increase in population, the so-called "baby-boom." This resulted in a multiplication of the number of schools and colleges. As the Church could not meet the educational demand, the expansion focused on public education.

In 1963 the system of social and health benefits was reformed. Economic growth allowed the extension of the network of hospitals and the expansion of coverage for sickness, retirement and unemployment.

Public spending in Spain was limited and chaotic. Rapid urban growth caused many large cities to become metropolitan areas. Still, there remained a shortfall of one million homes.