Spanish miracle

This article is about an economic boom between 1959 and 1974. For more recent economic developments, see Economy of Spain.

The 142m high Torre de Madrid, built in 1957, heralded the "Spanish Miracle".

The Spanish miracle (Spanish: el milagro español) was the name given to a broadly based economic boom in Spain from 1959 to 1974. The international oil and stagflation crises of the 1970s ended the boom.

History

The pre-boom situation

The 19th century in Spain was marked by political instability and war that continually disrupted economic development, leaving Spain lagging far behind the leading western European countries. The period of the late 19th and early 20th centuries was one of relative stability during which there was considerable economic development. Political instability returned in the 1920s, which was made worse by the Great Depression, culminating in the devastating Spanish Civil War of 1936 to 1939. The war was won by right wing forces led by Francisco Franco, who was installed as dictator. Cut off from trade by both the western allies and the Communist pact, Franco's regime pursued a policy of autarky. The economic recovery was slow. Industrial production did not regain its 1936 level until 1955, and the crucial agricultural sector took until 1959 to recover its pre-civil war level. The re-establishment of diplomatic relations with the USA and its allies in the mid 1950s led to an easing in Spain's economic difficulties.

Initiation of the boom

The "economic miracle" was initiated by the reforms promoted by the so-called technocrats who, with Franco's approval, put in place policies developed in Spain under the guidance of the International Monetary Fund^{[citation needed]}. The technocrats were a new breed of politicians who replaced the old falangist guard. The implementation of these policies took the form of development plans (Spanish: Planes de desarrollo) and it was largely a success: Spain enjoyed the second highest growth rate in the world, only slightly behind Japan, and became the ninth largest economy in the world, just after Canada. Spain joined the industrialized world, leaving behind the poverty and endemic underdevelopment it had experienced following the loss of most of its imperium in the 1820s.

Course of the boom

Infrastructure development and tourist destination

The economic expansion was heavily based on public investment in infrastructure developmentand the opening of Spain as a tourist destination.^{[citation needed]} The "miracle" ended the period of autarky. The economic development brought noticeable improvements in Spanish living standards and the development of a large middle class in Spain.^{[citation needed]} While Spain remained less economically developed relative to the rest of western Europe in the 1970s (excepting Portugal, Ireland and Greece), in the "miracle's" heyday, 1974, Spanish per capita income had reached 79% of the western European average.^{[citation needed]} The production of electricity climbed from 3.61 million megawatt-hours in 1940 to 90.82 million megawatt-hours in 1976. Because of the country's limited fossil fuel resources and unreliable hydroelectric potential, the period saw the first stages in establishing a network of nuclear power stations to meet the rapidly growing energy demands.

1963 Spanish peseta coin with the image of Francisco Franco, Caudillo de España, por la gracia de Dios (Leader of Spain, by the grace of God)

Rural exodus

The Spanish miracle fed itself on a rural exodus which created a new class of industrial workers, similar to the French banlieue or, more recently, the vast migration of China's rural workers into its cities. The economic boom led to an increase in mostly fast, ugly, largely unplanned building on the periphery of the main Spanish cities to accommodate the new workers arriving from the countryside. Some farsighted cities preserved their historic centres, but most were spoilt by haphazard commercial and residential developments. The same fate befell long stretches of scenic coastline as mass tourism exploded.

Mass tourism

Being short of natural resources, the opening up of Spain to mass tourism provided the country with a large source of foreign exchange that was used to pay for the capital imports (machinery, etc) needed for a rapid expansion of infrastructure and industry. This labour intensive industry also provided much employment. Tourism accounted for about ten percent of GDP at its peak in 1970. Another important source of foreign exchange were the many workers who worked in the factories and construction sites of the postwar boom-time countries of Europe, especially Germany, Switzerland and France.

Domestic market

The expansion reinvigorated old industrial areas: the Basque country and Ferrol northern coast (iron and steel, shipbuilding), in and around Barcelona (machinery, textiles, chemicals) it also drove an enormous expansion in refining, petrochemicals, chemicals and engineering, and saw the emergence of the Madrid region as a major industrial and commercial zone. In well under twenty years, from being a largely rural country with just a few enclaves of dated industry and an antiquated agricultural sector, slowly recovering from war, Spain had developed a major industrial economy producing most items, ranging from shoes to aircraft. Most of this production supplied the domestic market which was heavily protected from international competition. Even after considerable liberalisation, the government still exercised much direct control of the economy, including the ownership of a number of important enterprises.

A monument in Spain for the SEAT 600, the car symbol of the Spanish miracle

Automotive industry

The automotive industry was one of the most powerful locomotives of the Spanish Miracle: from 1958 to 1972 it grew at a yearly compound rate of 21.7%; in 1946 there were 72,000 private cars in Spain, in 1966 there were 1 million. This growth rate had no equal in the world. The icon of the Desarrollo was the SEAT 600 car, produced by the Spanish company SEAT. More than 794,000 of them were made between 1957 and 1973, and if at the beginning of this period it was the first car for many Spanish working class families, at its end it was the first second one for many more.

See also

• Economic miracle
• German Wirtschaftswunder ("German economic miracle")
• Instituto Nacional de Industria
• Pegaso
• SEAT
• Spain under Franco