Historical Turning Points in Spanish Economic Growth and Development, 1808–2008

Concha Betrán, Maria A. Pons, Concha Betrán, Maria A. Pons

• Publisher: Palgrave Macmillan
• Year: 2020
• Print ISBN:
  9783030409098
• eBook ISBN:
  9783030409104
• Topic: Economics
• Subtopic: Development Economics
• Index: Economics

?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.

© The Author(s) 2020

C. Betrán, M. A. Pons (eds.)Historical Turning Points in Spanish Economic Growth and Development, 1808–2008Palgrave Studies in Economic Historyhttps://doi.org/10.1007/978-3-030-40910-4_1

Begin Abstract

1. Introduction

Concha Betrán¹ and María A. Pons¹

(1)

University of Valencia, Valencia, Spain

Concha Betrán (Corresponding author)

Email: [email protected]

María A. Pons

Email: [email protected]

Keywords

Turning pointsLong-run economic growthSpain

End Abstract

Turning points in history alter the basic rules, institutions and attitudes upon which a country’s past has been founded. Wars, revolutions, radical political regime changes, lasting economic crises and even natural disasters provoke ruptures and mark new departure points for the future of a country as a whole. When a turning point occurs, the previous circumstances do not vanish, they simply melt down into the new in a path-dependence dynamic, conditioning how countries face the next challenges.

In modern times, there have been some important watersheds, such as the French Revolution, the American War of Independence, the First World War, the Russian Revolution, the Great Depression, the Second World War, the Chinese Civil War or the financial crises that began in 2007–2008. For example, the French Revolution ended the feudal society of the Ancien Régime and brought about radical political, social and economic changes that marked the beginning of a new era. The Great Depression can also be considered a turning point: a severe, protracted economic crisis, which led to the fragmentation of the world economy, the emergence of totalitarian political regimes, the sinking of democracy in many nations, the rise of the State as a major economic agent and the implementation of new economic policies. Lastly, the recent financial crisis that began in 2007–2008 was the first economic crisis of the twenty-first century; this so-called Great Recession has entailed profound changes and challenges. All these events represent a sharp break with the past and launching pads into the future.

The aim of this book is to study the main turning points in the Spanish economy and the related challenges it faced; in so doing, we examine the country’s long-run economic development over more than 200 years. We concentrate on six turning points that changed the direction of the Spanish economy, although most of them also took place in the world economy. For this reason, the book also compares the Spanish trajectory with the international one. We explore 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 in the different periods. This is an interesting and innovative perspective since most of the turning points in economic history (the fall of an Ancien Régime or the Great Depression, for instance), as well as their long-term positive and negative consequences, are generally studied from the viewpoint of core countries such as the UK, the US or Germany.

Firstly, we explain why the chosen events marked a turning point in the Spanish economy. We also identify the economic, social or political origin of these watersheds and determine whether they were triggered by a domestic or an external shock. Secondly, we focus 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. We explore what ultimately changed, and what did not, considering both international differences and the problems that Spain had in common with other countries, as well as differences and similarities in terms of their policies and resolutions. We consider the changes in different aspects such as growth and structural change, the international sector and trade policy (openness or protectionism), the role of the State and distributive issues, including human capital. In addition to the economic changes, we also reflect on institutional aspects: the quality of institutions and the shift towards either more inclusive or more extractive institutions following a turning point. To sum up, this book takes a historical approach to analyse the main changes that Spain underwent and the challenges it faced at some specific points in the period 1808–2008. The ultimate objective is to learn useful lessons from Spanish economic history in order to better face future turning points.

We have selected the following turning points: 1808, 1898, 1936, 1959, 1977 and 2008. The perspective adopted in this book assumes that countries face turning points or shocks that cause economic challenges; the way countries respond to these challenges depends on the international context as well as international and domestic restrictions, which in turn are conditioned by the size of the country and its level of development. Finally, these challenges spark conflicts due to competing interests and ideas on how to tackle them; the resolution of these conflicts could lead to either continuity or change, and to failure or success.

Some research papers have dealt with how core countries such as the UK or the US have faced specific critical situations, including the First World War, the Great Depression or the oil crises of the 1970s. It is sometimes assumed that the general patterns derived from the experiences of these core countries could be extrapolated to the rest of the world. However, as we show in this book, the dynamics of the “core” and the “periphery” differ widely, even in the case of European periphery countries. For this reason, a deeper understanding is required of how a small, peripheral country such as Spain tackled crucial long-run economic changes. The book argues that Spain, as a peripheral country, faced greater restrictions than core countries when it came to resolving its main challenges. Consequently, the book concentrates on the fundamental vulnerabilities and restrictions that shaped the economic policy responses adopted in each moment and their impact.

Each chapter provides an in-depth analysis of the selected turning point and systematically sets out: (1) why the chosen event was a turning point in the Spanish economy, the origin of this watershed moment, whether it was triggered by a domestic or external shock, and how it related to the international context; (2) how Spain faced up to the situation, the policies adopted in response to the shock, the reforms that were implemented and what challenges were not tackled, the differences between the Spanish response and that of other countries, and the restrictions or limitations that determined the adoption of specific measures; (3) the results of the policies enacted, whether the end result represented a step forward in terms of the country’s development and modernization or whether it produced an economic setback.

The turning points chosen for analysis in this book are the following:

Chapter 2 is written by Francisco Comín and deals with the events of 1808 and the turning point they represented. The first turning point in modern Spain’s economic history was the Napoleonic invasion of the country, followed by the so-called War of Independence and the loss of its colonial empire on the American continent. The invasion sparked an economic disaster and divided the country in two. It was a complex conflict in which the war against the French troops was intertwined with revolutionary movements that challenged the essence of the Ancien Régime. The common people rallied together to drive the invaders out of the Iberian Peninsula, while the political and social elites split apart. The war, however, brought about significant changes: there was an acceleration in the enlightenment reforms, which had begun in the last decades of the eighteenth century, aimed at modernizing the fabric of the country; the first liberal constitution was enacted by the Cortes meeting in the city of Cádiz; and the remains of the feudal regime were abolished. However, as the implemented reforms were the result of a pact between liberals and the aristocracy, the institutions were less inclusive than in other countries and this had long-term political and economic consequences. The loss of the American colonies , which had been in possession of the Spanish Crown for more than three centuries, was a severe blow to the economy. Trade flows and Treasury finances were both significantly affected. Moreover, the people’s perception of their own country changed: Spain fell from being an imperial nation to a second-rate European power. Finally, the challenges Spain faced centred on how to change institutions to shape a more progressive society and move away from the old institutions which had benefitted the elites of the Ancien Régime.

Chapter 3 is about the 1898 turning point and is written by Pablo Martín-Aceña and Inés Roldán. In 1898, in two short naval battles—one in the Caribbean Sea and the other in the Pacific ocean—the Spanish fleet was destroyed and Spain lost possession of its remaining colonies: Cuba, Puerto Rico and the Philippines. That triggered the start of a political, social and economic crisis that determined events in the following decades. Even today, 1898 is remembered as a watershed moment in Spanish history. The military defeat and the end of what remained of its empire led to an identity crisis, as the nation as a whole became aware of its weakness on the international stage. The Industrial Revolution had failed in Spain and despite some progress, it lagged definitively behind developed western, central and northern Europe. In an attempt to close the gap with the most advanced European nations, a battery of economic reforms was introduced. They included measures in the fiscal and monetary spheres, government investment in infrastructure, legislation to promote and protect strategic industries, and facilities to attract foreign capital. The purpose of the new policies was to “regenerate” the country and modernize its economic fabric. Not all of the reforms and policy measures implemented were successful. Budgetary restrictions on the one hand, and political instability, on the other, affected the results of the “regeneration” programme. Nevertheless, despite the limitations of the regeneration drive, the Spanish economy grew at a faster rate after 1900. Income per capita increased, death rates fell and the population grew, accompanied by a rapid pace of urbanization. Labour started to move from low- to high-productivity sectors, such as the new industries emer...

Table of contents

• Cover
• Front Matter
• 1. Introduction
• 2. 1808: The Napoleonic Wars and the Loss of the American Colonies
• 3. 1898: The “Fin de Siècle” Crisis
• 4. 1936. Frustrated Hopes: The Great Depression, the Second Republic and the Civil War
• 5. 1959: The Stabilization Plan and the End of Autarky
• 6. 1977: Hopes Fulfilled—Building Democracy in Turbulent Economic Times
• 7. 2008: Spain in the Eye of the Perfect Storm
• 8. Epilogue
• Back Matter