Spain's Economy Under Franco: Autarky to Expansion (1939-1975)

Spanish Economic Development: The Franco Era (1939-1975)

Post-War Stagnation and Recovery (1939-1959)

The long post-war period (1939-1959) brought great devastation and a high economic price to Spain. The country experienced stagnation and economic crisis for almost 20 years. The standard of living was significantly lower; it only returned to the 1935 level between 1953 and 1954. The economic hardship was not strictly due to war-related causes but also stemmed from Francoist policies that favored this depression.

Autarky Period (1939-1950)

This phase was characterized by two main policies:

• The desire for economic isolation from the outside world, limiting imports and exports.
• An emphasis on exploiting Spain's own resources.

To achieve this, the INI (Instituto Nacional de Industria) was created. It aimed to produce goods that private companies could not manufacture, often implying a state deficit. State intervention in the production and distribution of goods led to rationing and the proliferation of a black market (estraperlo). This resulted in:

• Deterioration of living conditions.
• Lower real wages.
• General impoverishment.

Slow Recovery (1950s)

In the 1950s, the economic situation began a slow recovery towards 1935 levels. Some interventionist measures were relaxed, but the policy of autarky was not fully abandoned. While there was real economic growth, it was unbalanced, leading to two major consequences:

• Difficulties in paying for necessary imports.
• Rising inflation.

Economic Expansion (1959-1973)

By the end of the 1950s, Spain's economic situation remained serious. Faced with this reality, the so-called technocrats joined the Francoist government. They prepared the crucial Stabilization and Liberalization Plan (1959) with two primary objectives:

• To stop rampant inflation.
• To liberalize the external sector, allowing greater freedom for imports and exports.

Positive effects were noticeable from 1961 onwards, triggering a period of significant economic expansion. During this time:

• Spain began its transformation into an industrialized country.
• Foreign tourists arrived in large numbers.
• Foreign capital investment was attracted.
• Many Spaniards emigrated to work in other European countries, sending back remittances.

Development Plans were created to channel investment into specific geographical areas. The state invested heavily in designated industrial development poles (polos de desarrollo) in cities like Seville, Vigo, Valladolid, and Zaragoza.

The Crisis and End of the Regime (1973-1975)

The period of expansion ended abruptly with the onset of an economic crisis starting in 1973. This was primarily triggered by external causes, most notably the sharp increase in global oil prices (the first oil crisis). The main consequences for Spain were:

• Soaring inflation.
• A rising trade deficit.
• An increasing state budget deficit.

Franco's Death and Political Testament

Amidst this economic turmoil, Francisco Franco died on November 20, 1975. In his political testament, he reiterated the core tenets of his regime:

• Catholicism as the foundation of political ideology.
• Staunch patriotism.
• Authoritarianism.
• Rejection of democratic and liberal ideas.
• The complete identification of Spain with his own figure.

Despite this, the Francoist regime dissolved relatively quickly after his death. Thanks in large part to the organized opposition forces and societal demand for change, the transition to democracy was possible relatively swiftly and without excessive social conflict.