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About this book

​This book analyses the main historical turning points in the Spanish economy and the related challenges it faced. It focuses on six turning points that changed the direction of the Spanish economy, and identifies the economic, social or political origin of these watersheds. It also compares the Spanish trajectory with the international one, exploring the macroeconomic context in which these turning points happened, as well as the external and internal constraints on domestic political choices for a small country like Spain. The book focuses on how Spain faced up to each turning point, the reforms that were implemented, the differences between the Spanish response and that of other countries, the results of the policies enacted and what problems were not tackled. This is an interesting and unique perspective as most of the turning points in economic history are generally studies from the viewpoint of core countries such as the UK, US or Germany. The ultimate objective is to learn useful lessons from Spanish economic history in order to better face future turning points.

Table of Contents

Frontmatter

1. Introduction

Abstract
Turning points are moments in a country’s history that alter the basic rules, institutions and attitudes upon which its past has been founded. Countries face turning points that cause economic challenges, and the way they respond to them depends on the international context as well as domestic restrictions. The aim of this book is to study how a small, peripheral country such as Spain tackled crucial long-run economic changes. The book concentrates on six turning points in the Spanish economy (1808, 1898, 1936, 1959, 1977 and 2008). The book argues that Spain, as a peripheral country, faced greater restrictions than core countries when it came to resolving its main challenges and explains the vulnerabilities and restrictions that shaped its economic policy responses each time.
Concha Betrán, María A. Pons

2. 1808: The Napoleonic Wars and the Loss of the American Colonies

Abstract
Napoleon’s invasion sparked the liberal revolution in Spain and led to the loss of its continental American colonies. Civil wars and a series of coups ensued, giving rise to successive regime changes. The liberal reforms were followed by absolutist counter-reforms that allowed the survival of corrupt institutions and behaviours from the Old Regime. From 1845, a moderate State favourable to landowners was established, preventing the implementation of an industrial policy. The progressive revolutions of 1854 and 1868 liberalized the banking, railway and mining laws, allowing foreign investment. This change along with the introduction of capitalist institutions paved the way for the industrial revolution; however, it was not fully completed due to Spain’s poor factor endowment, political instability and huge budget deficits and outstanding public debt.
Francisco Comín

3. 1898: The “Fin de Siècle” Crisis

Abstract
The year 1898 was the year of the disaster. In two naval battles—one in the Caribbean and the other in the Pacific—the Spanish fleet was destroyed and Spain lost its remaining colonies: Cuba, Puerto Rico and the Philippines. The defeat, which brought an end to the nation’s imperial status, had a profound impact on the fabric of the country. It led to an identity crisis, with the awareness that the nation was politically weak and economically backward. The year 1898 is also a turning point because the defeat did not in fact lead to the collapse of the economy. In the decade and a half before World War I, the Spanish economy grew rapidly in response to a “regeneration” drive and a favourable international economic environment.
Pablo Martín-Aceña, Inés Roldán de Montaud

4. 1936. Frustrated Hopes: The Great Depression, the Second Republic and the Civil War

Abstract
The Great Depression was accompanied by the collapse of the monarchical regime and the establishment of a modern democracy with the Second Republic in April 1931. The new regime had to balance the importance of gaining domestic and international respectability (using orthodox fiscal and monetary policy) with efforts to shift towards a moderate protectionist policy, and enact land, labour and educational reforms. There were fierce confrontations from 1934 on, eventually culminating in a civil war in 1936. The consequences included a long-lasting impact on economic growth; autarky and interventionist policies; a huge loss of human capital; poverty and rising inequality; and a 40-year-long dictatorship. Hopes of reform were left unfulfilled, with a severe backlash against the earlier social and economic restructuring.
Concha Betrán

5. 1959: The Stabilization Plan and the End of Autarky

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.
Elena Martínez-Ruiz, María A. Pons

6. 1977: Hopes Fulfilled—Building Democracy in Turbulent Economic Times

Abstract
This chapter offers an analysis of the main economic and institutional transformations in Spain from 1977 onwards. The severe economic and financial crisis that hit Spain in the mid-1970s coincided with the arrival of democracy after Franco’s death and shaped the nature and scope of the implemented reforms (Pactos de la Moncloa). While the crisis and political instability limited the possibility of making a more radical adjustment, the consensus among different social actors, unions and political parties was fundamental to the reforms. This time hopes were fulfilled and although some reforms were left pending, those that were adopted played a seminal role in putting the Spanish economy and society on the path to international standardization and integration into Europe.
Joaquim Cuevas, María A. Pons

7. 2008: Spain in the Eye of the Perfect Storm

Abstract
Spain’s economic expansion and social modernization ended abruptly in 2008 when the turbulence of the US economy spread to international financial markets. This chapter analyses the impact of the international crisis in Spain, where the problems were to be deeper and longer-lasting, given the large imbalances accumulated. Spain’s membership in the EMU is essential to an understanding of both the gestation and development of the financial crisis in Spain, as well as the political response adopted by successive governments. Since 2014, the Spanish economy has been on the way to recovery. However, while some imbalances have been corrected, new problems have appeared that have ended up damaging the social cohesion in Spain. This chapter analyses how these events could affect the future development of Spain.
Jose Ignacio Conde-Ruiz, Elena Martínez-Ruiz

8. Epilogue

Abstract
All countries have had defining moments which have brought about important transformations in their economies and societies. These turning points, which may be triggered by wars, new technologies and markets, or crises, require new policies and reforms to help countries adapt to the fresh challenges. We have identified six turning points for the Spanish economy in its recent history. The aim of this book has been to explain this society’s capacity to respond to the challenges of shocks, and the resulting continuities and discontinuities. This book has studied how Spanish economic problems have been similar to international ones but have also been conditioned by domestic restrictions. It has also examined the responses to the challenges that the country adopted at key moments.
Concha Betrán, María A. Pons

Backmatter

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