Foreign sector and industrial growth. Spain and Europe, 1939-59

Abstract

The article analyzes the relationship between the foreign sector and industrial growth in Spain between the end of the Civil War and the launching of the stabilization plan. The attention is focused on Western Europe. During the Second World War the Francoist regime orientated its trade relationships and economic policy towards the Axis. Such a choice prevented the Spanish economy from fully benefitting from neutrality. Between 1945 and 1949, Spain re-orientated its foreign relationships towards Britain, but domestic economic policy remained essentially the same.

The final outcome was dramatic divergence in relation to the pattern of growth in Western Europe. During 1950-58 Spain slightly converged with Western Europe because bottlenecks in energy and raw materials moderated, trade with Europe diversified and economic policy was partially reviewed. In contrast to the experience in the forties, during the following decade the variables which explain Spanish economic growth are the same than in Western Europe: departing point in per capita GDP, expansion of engineering industries, size of the domestic market and degree of success in exports. Although these variables fit well to explain the Spanish performance in the fifties, exports expanded too slowly and growth remained under potential. The amount and the persistence of the trade deficit led to the radical change of economic policy of 1959.