Spain's Post-Civil War Economy: Autarky and Liberalization

Spain's Post-Civil War Economy: Autarky and Stagnation

The three-year Civil War severely disrupted the Spanish economy. Agricultural and industrial production declined, and much communication infrastructure was destroyed, along with damaged buildings and manufacturing plants. However, this deterioration of production equipment alone does not fully explain the negative evolution of the Spanish economy in the years after 1939.

The policies of the Francoist authorities consolidated a highly uncompetitive economy characterized by widespread hunger, poverty, influence peddling, and corruption. One of the main objectives of the Franco regime was to achieve economic self-sufficiency, or autarky. The result was a blocking of economic growth and a significant reduction in competitiveness.

Autarky: Lines of Action and Consequences

Autarky was pursued through several key lines of action:

• Regulation of Imports and Exports: Both were taken over by the state. Products that the economy needed to import became more expensive, leading to an acute shortage of staple goods.
• Industry Promotion: Special emphasis was placed on industries deemed strategic to ensure the military and political independence of the new state. Capital goods industries were particularly boosted. In 1941, the Instituto Nacional de Industria (INI) was founded, aiming to produce essential goods that private companies found unprofitable to manufacture.
• State Intervention in Economic Relations: The state directly controlled the market. Producers were forced to sell all their output at a previously set price. Thereafter, the administration was the sole entity permitted to sell products to consumers at a regulated price.

In short, these autarkic policies, also enforced by the international isolation faced by the Franco regime, gave rise to all kinds of scarcity. Insufficient amounts of food and high prices on the black market caused widespread hunger for a large majority of the population. The absence of labor unions further reduced workers' purchasing power.

The Beginnings of Economic Liberalization

The economic self-sufficiency policy exacerbated inequality in income distribution. The harsh living conditions for many citizens explain the appearance of the first worker and citizen demonstrations between 1945 and 1947. This discontent signaled to the regime that its objective of achieving self-sufficiency had failed.

The shortage of foreign currency, and its primary use for food purchases, impeded the import of raw materials and essential manufactured products for the industrial sector. In 1953, the US granted a loan to Spain for the purchase of agricultural products, raw materials, and industrial equipment, all within the mutual aid agreements signed that year. American assistance, however, was not significant in the industrial sector.

Despite this, new waves of worker protests emerged in the main industrial areas and university campuses. The entry of technocrats into government ministries from 1957 onwards led to a reorientation of economic policy, abandoning self-sufficiency and allowing for internal liberalization and external opening.