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Demand for Wealth-Reducing Institutional Change: The Role of Ideas and Interests Read chapter Read first chapter

2015 | OriginalPaper | Chapter

Institutional Change in Spain from Francoism to Democracy: The Effects of the Great Recession

Authors : Gonzalo Caballero, Marcos Álvarez-Díaz

Published in: The Political Economy of Governance

Publisher: Springer International Publishing

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Abstract

Institutional Change in Spain in the second half of the twentieth century has been a story of success. After the Spanish Civil War, a dictatorship was established in the country in 1939 and the political regime implied an institutional design that evolved over time. In 1959 there was an important reform that propelled economic markets and development, and the death of General Franco in 1975 opened up a period of institutional change that conduced to democracy. The new self-enforcing institutional framework that emerged in the political reform of democratization has implied a modern democratic system, the adhesion to the EU and an Europeanization of civil society, a decentralization political process, social and cultural modernization, the making of a Welfare State, and the expansion of the economy. These institutional foundations adequately worked until the Great Recession that has intensely affected the Spanish economy since 2008. The huge economic crisis has implied electoral changes, new social movements, and distrust on political institutions, and understanding these trends is relevant to study how the economic crisis can influence the process of institutional change in Spain. Therefore, this study attempts to provide new and original empirical evidence on the existence of a long-run relationship between economic crisis and political trust in Spain using monthly data. Specifically, the Autoregressive Distributed Lag (ARDL) approach to cointegration is employed to discover such relationship and to quantify the impact of the economic crisis on the Spanish political trust. The empirical findings indicate that the economic crisis has a negative impact on political trust and provide an estimation of this effect.

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previous chapter The Historical Origins of Regional Economic Inequality in Spain: The Cultural Legacy of Political Institutions
next chapter Institutional Determinants: A Case Study of IMF Programme and Non-programme Countries
Footnotes
1
In addition, the agreements with the USA allowed the entry of currency that was fundamental to importing the goods of equipment essential to increasing production. In this way, private investment and growth recovered. In these years, Spain experienced an industrial revolution that in 1958 allowed industrial production practically to double that of 1950 (González 1989).
 
2
The reserves of the Spanish economy were becoming exhausted. In parallel, toward 1958, two phenomena of doubtless relevance to the external position of the Spanish economy took place: (a) on the one hand, Spain entered international economic organizations (the IMF, OEEC, World Bank); (b) on the other hand, in December of 1958, the main European currencies adopted external convertibility.
 
3
The principles of the Plan have impregnated the processing of Spanish economic policy since 1959, but with different degrees of intensity depending on the moment. For example, the pressures of those in favor of the old autarkic policy provoked the establishment of the 1960 tariff (that maintained discriminated areas of protection) and the application of the Development Plans in the 1960s and early 1970s. Many economists continued to insist on the necessity of continuing the process of reform in the direction of the Plan (Requeijo 1989).
 
4
According to Caballero (2008), we can point out four causes that motivated the transition from the predatory state of Franco’s dictatorship to the contractual state model of the Constitution of 1978: (a) the economic development of the 1960s and early 1970s would become a cause of democracy. The argument goes that with the modernization of the 1960s, the Spanish economy entered into a “transition zone” (Huntington 1991), in which the possibilities for democratization were multiplied. An increasingly complex market economy calls for a democratic political regime, in such a way that market reform preceded political change. (b) When Franco died, the Spanish economy was affected by problems derived from the international economic crisis, and the crisis damaged the legitimacy of the Franco regime. (c) The Spanish citizens assumed the convenience of the political and economic model of European societies where the welfare level was higher. (d)~The democratic European environment demanded of Spain that she assume a democratic regime.
 
5
The creation of markets that were free from discretionary public interference was not credible under the Franco regime, as nothing stopped the regime from reneging on previous commitments and not fulfilling them. Thus, the Development Plans could be analyzed as a holdup phenomenon, which meant a step backward by not fulfilling ex post the political contract of the 1959 Plan.
 
6
There were only two reforms of two articles of the Spanish Constitution since 1978, and they did not imply a change in the institutional equilibrium of the country. The change of article 135 of the Spanish Constitution in 2011, regarding budgetary stability and the payment of the public debt, was the only relevant change, but it did not affect the self-enforcing political institutions.
 
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Metadata
Title
Institutional Change in Spain from Francoism to Democracy: The Effects of the Great Recession
Authors
Gonzalo Caballero
Marcos Álvarez-Díaz
Copyright Year
2015
Book
The Political Economy of Governance

Print ISBN: 978-3-319-15550-0

Electronic ISBN: 978-3-319-15551-7

Copyright Year: 2015

DOI
https://doi.org/10.1007/978-3-319-15551-7_6