Spanish Economic Transformation (1939-1959)

1.4) Economic Development under Franco (1939-1959)

1.4.1) Self-Sufficiency & Liberalization (to 1959)

Until 1959, the Spanish economy was marked by stagnation and a focus on agriculture. The 1959 Stabilization Plan initiated economic expansion.

a) Autarky, Stagnation, and Rationing (1939-1951)

Economic policy aimed for self-sufficiency. The primary goal was to prevent famine.

• Agricultural Policy: Focused on production recovery and returning expropriated land.
• Industrial Policy: The 1941 National Institute of Industry aimed to boost basic industries, hindered by resource and equipment shortages.

Autarky and interventionism led to:

• Emphasis on light industry over basic industry.
• Increased monopolies.
• Significant state investment.

b) Beginning of Liberalization (1951-1956)

Autarky led to strikes. The U.S. provided loans for agricultural products, raw materials, and industrial equipment. This enabled the end of rationing, the decline of the black market, and price stability until 1956. It also marked the regime's opening to external markets and the revival of the free market.

1.4.2) The Stabilization Plan (1957-1959)

Economic difficulties since 1956 prompted a radical policy shift. Technocrats guided economic policy in the 1960s. Ministers Navarro Rubio and Ullastres developed an Economic Stabilization Plan.

The plan, implemented by decree, included:

• Reduced spending.
• Credit restrictions.
• Wage freezes.
• Reduced government economic controls.
• Opening the Spanish economy to foreign markets.

Spain received significant international loans. The plan's immediate effects were positive: reduced domestic demand, lower inflation, and price stability. However, it also led to a notable increase in unemployment.