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Historical Turning Points in Spanish Economic Growth and Development, 1808–2008 pp 123–158Cite as

Palgrave Macmillan

1959: The Stabilization Plan and the End of Autarky

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Abstract

This chapter analyses the contribution of the 1959 Plan de Estabilización (Stabilization Plan) to the economic changes that occurred in Spain during the 1960s. Economic growth improved in the 1950s after a decade of stagnation, but it was autarkic growth and the country accumulated serious imbalances. By reducing interventionism, initiating a process of liberalization and creating an appropriate economic framework, after two decades of autarky, the Plan contributed to promoting economic growth and helped change attitudes and mentalities. Moreover, the Plan had a long-term impact by allowing Spain to take advantage of a favourable international context during the 1960s. However, the dictatorship and its political interests restricted the scope of the reforms and negatively shaped the long-term evolution of Spanish economic development.

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Notes

  1. 1.

    The sample includes France, Germany, Italy, Sweden, the UK, the US, Portugal and Spain.

  2. 2.

    Whereas the average annual change in the consumer price index (CPI) from 1952 to 1957 increased by more than 4.5% in Spain, the UK—one of the countries in our sample with higher inflation at that time—had an annual rate of growth of 3.7%, followed by Sweden (3.1%) and Italy (2.9%). By contrast, France and Germany had very low inflation growth (with an annual rate of 0.8% and 0.9%, respectively).

  3. 3.

    The entry in 1957 of a new government with Alberto Ullastres (Ministry of Commerce), Mariano Navarro Rubio (Ministry of Finance) and their closest collaborators (Juan Antonio Ortíz Gracia, Manuel Varela, and Joan Sardà) was essential. They were conscious of the limitations of the autarkic model and of the magnitude of the proposed reforms. The persuasive skills of this new team were also a key factor (Fuentes Quintana 1984). These economists, linked to the Faculty of Political Science and Economics of the University of Madrid, identified their programme with the notions of the Falange, and that gave them considerable influence over the Franco government. Also a group of liberal managers, bankers and economists linked to Opus Dei acted as a “pressure group” and both had great influence on the political changes at the end of the 1950s. Franco never explained or justified the change in the cabinet in 1957, and therefore it is very difficult to know whether he was conscious of the importance of this change but the limitations of the nationalist economic programme were evident and Franco did not have many alternatives (Pons 2002).

  4. 4.

    The US government, alerted by its scepticism about the determination of the Turkish government to take the necessary steps to stabilize the economy, even warned Germany not to extend bilateral financial assistance to Turkey without regard to the views of the IMF and OEEC on its economic conditions (Fry 1971).

  5. 5.

    However, there were other political exchanges (the withdrawal of its forces from Egypt) and the aid was preceded by the announcement of an array of economic policy measures by the Chancellor Harold Macmillan (mainly spending cuts). Moreover, in 1958 the IMF advised the British government to restrict demand to reduce inflation and to improve the balance of payments and reserve positions (Clift and Tomlinson 2008).

  6. 6.

    The only country that had a Stabilization Plan with strong political instability at that time was Argentina.

  7. 7.

    For example, the ratio of exports to GDP for Spain was 0.024 in 1950. This was clearly below the European average (0.053 in 1950) and also below that of the other countries that received international aid (Argentina (0.057), Chile (0.15), France (0.06) and the UK (0.1)) according to Federico and Tena (2019).

  8. 8.

    See, for example, Carreras and Tafunell (2003) or Fuentes Quintana (1984, 1986).

  9. 9.

    Only between August and November 1959 foreign reserves increased by more than $80 million (OEEC Report 1960). On 1st February 1960 foreign reserves stood at $212 million.

  10. 10.

    Data on unemployment only reflect official figures, which are not credible. However, even these official figures show a clear increase in the number of unemployed people: from 92,828 in 1958 to 130,304 in 1960 and 133,151 in December 1961. Only in 1962 was the number of unemployed people around the figure of 1957: 88,145.

  11. 11.

    As Viñas (1982: 71) indicates: “In the years 1950-1960, the only ambitious operation of high economic policy of the Franco regime was carried out: the stabilization and liberation plan. This represented a sea-change in defining the interaction with the exterior, even if at the beginning the economic contacts with the surroundings were of the most limited scope”.

  12. 12.

    It should be borne in mind that in early 1959, before the Plan was passed, liberalized trade represented only 9% of total trade. The rest was subject to quotas, special trade or bilateral agreements (Martínez-Ruiz 2003).

  13. 13.

    The level of nominal protection in 1950 was 11.8, and in 1959 decreased to 5.9. After the 1960 Tax it was 15.9 and in 1962 it rose to 18.2. In terms of effective protection, it was very high as a consequence of the introduction of other protection mechanisms such as the Impuesto de compensacion de gravámenes interiores (tax adjustments at the border) (Buisán and Gordo 1997) and several modifications of the 1960 tariff, with more than 1000 decrees that were passed as a result of specific interests of productive sectors and even pressure from individual companies (Requeijo 2005).

  14. 14.

    As Joan Sardà explained in an interview in 1991, the monetary policy measures adopted in the Plan were too rudimentary and far removed from other more sophisticated monetary policy instruments used in other European countries. However, the IMF considered that it was too early to introduce these instruments and that “the banking sector and country were not prepared” (Perdices and Baumert 2010).

  15. 15.

    For a more detailed analysis of the factors behind the 1960s economic growth, see Barciela et al. (2001), Carreras and Tafunell (2003), Prados and Sanz (1996), Serrano Sanz and Pardos (2002), Martín-Aceña and Martínez-Ruiz (2007), among others.

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Authors and Affiliations

  1. University of Alcalá, Madrid, Spain

    Elena Martínez-Ruiz

  2. University of Valencia, Valencia, Spain

    María A. Pons

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  1. Elena Martínez-Ruiz
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  1. University of Valencia, Valencia, Spain

    Concha Betrán

  2. University of Valencia, Valencia, Spain

    Maria A. Pons

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Martínez-Ruiz, E., Pons, M.A. (2020). 1959: The Stabilization Plan and the End of Autarky. In: Betrán, C., Pons, M. (eds) Historical Turning Points in Spanish Economic Growth and Development, 1808–2008. Palgrave Studies in Economic History. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-40910-4_5

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