Spain & Valencia's Economic Evolution: 1870-2007 Milestones

Industrial Revolution & Spanish Economic Union

Context: Global Industrial Transformation

• The Second Industrial Revolution brought significant advancements, including the widespread use of electricity, new chemical industries, and the development of artificial cement.

Spain: Economic and Monetary Unification

• This period saw the creation of the peseta in 1868, establishing an economic and monetary union.
• Inland customs disappeared, facilitating trade.
• Extensive railway construction modernized transport infrastructure.
• The feudal system was abolished, transforming land ownership and labor.
• A revision of the juridico-mercantile framework occurred, including the Act on Public Limited Companies (SA) of 1856.
• Despite these changes, Spain maintained commercial isolation and focused on internal cereal production.
• The steam engine was adopted for various transport applications.

Valencia: Finance, Agriculture, and Modernization

• Valencia's economy was driven by finance and agriculture, serving as a gateway to modernism.
• The region faced a financial crisis in 1866 due to management problems.
• Key agricultural exports included raisins, wine, and oranges.
• Valencia rapidly incorporated transport innovations and new agricultural techniques.
• The region showed a greater propensity to export compared to other parts of Spain.

Conflict: Free Trade vs. Protectionism

• A significant economic conflict arose between proponents of free trade and protectionists.

World Wars, Depression, & Spanish Industrial Growth

Context and Milestones: Global Conflicts and Economic Downturn

• This era encompassed two major World Wars and the Great Depression of 1929.

Spain: Industrial Expansion Amidst Isolation

• Spain experienced an extension and diversification of industry alongside technical innovations.
• However, the country largely maintained its economic isolation.

Valencia: The Golden Age of Oranges and Export Strength

• The 1920s marked the golden age of the orange for Valencia.
• New irrigation systems were implemented.
• The manufacturing base strengthened, driven by exports to countries at war and import substitution strategies.

Bretton Woods, EEC, & Spain's Economic Boom

Context: Post-War Global Economic Order

• Key developments included the creation of the Bretton Woods monetary system.
• The European Economic Community (EEC) was established.
• The Marshall Plan played a crucial role in European recovery.

Spain and Valencia: From Scarcity to Consumption

• The implementation of a Stabilization Plan led to an economic boom.
• Society transitioned from a world of scarcity to one of consumption.
• This period saw improving domestic demand, an influx of foreign capital, growth in tourism, remittances from emigrants, and the rise of outsourcing.

Global Oil Crisis & Spanish Democratic Transition

Global Level: Oil Crisis and New Economic Powers

• The world faced a severe oil crisis with rising prices.
• Challenges emerged for the monetary system, and Newly Industrialized Countries (NICS) gained prominence.
• The era marked increasing globalization.

Spain: Democratic Transition and Institutional Changes

• Spain navigated a complex democratic transition, characterized by initial government weakness.
• The 1977 Moncloa Pacts aimed to stabilize the economy and politics.
• Institutional changes included increased freedom of association, which led to higher unit labor costs (sometimes perceived as a 'tax' on employment).
• This period also saw a significant increase in unemployment and the creation of the state of the autonomies.

Valencia: Regional Autonomy Established

• Valencia participated in the creation of the state of the autonomies, gaining regional self-governance.

Recovery & European Integration

Spain's Entry into the European Community and Economic Recovery

• In 1986, Spain formally entered the European Community.
• The period was marked by a decline in oil prices, contributing to economic recovery.

Economic Crisis & Peseta Devaluation

OECD Region: Oil Prices and Interest Rate Volatility

• The OECD region experienced fluctuations in oil prices and high interest rates.

Spain: Inflation, Unemployment, and Peseta Devaluation

• Spain faced increasing inflation, rising unemployment, and high interest rates.
• The peseta underwent devaluation.

Comunidad Valenciana (CV): Housing and Export Challenges

• The Comunidad Valenciana dealt with housing stock issues and export problems.
• The weak Spanish economy significantly impacted Valencia's economic performance.

Sustained Growth & Construction Boom

Devaluations, Openness, and Export Growth

• This sub-period saw successive devaluations of the peseta.
• Increased external openness fostered export growth.

Domestic Consumption and Construction Boom

• The later years were characterized by rising domestic consumption.
• A significant increase in construction activity fueled economic expansion.