Why Spain was not an economic engine after World War II

Why Spain was not Europe’s economic engine after World War II

Why did a country that did not fight in World War II not end up leading Europe’s economy while the rest of the continent burned? The quick answer is uncomfortable: because Spain had already had its own war, and the country reached 1939 in ruins. The idea that the country emerged untouched while Europe disintegrated collapses as soon as you look at 1939 GDP.

Spain came out of the Civil War with production on the floor. Between 1936 and 1938, GDP fell 30%, according to the figure used by one of the debate participants. And on that shattered base, with no money, no tools and a precarious industry, you do not build a miracle. At best, you build a recovery.

The rebound mistaken for growth

Between 1939 and 1944 the economy grew at an average of 5,3% a year, again according to the calculations circulating in the debate. It sounds excellent until you understand what it was: a simple rebound after the collapse. Recovering what was lost is not growing. Total prewar GDP was not reached again until roughly 1951, and GDP per capita not until 1955, one of the other participants argues.

That nuance —per capita— sparks one of the harshest arguments. Some maintain that this individual recovery is explained partly by there being fewer mouths to share it among: in years of hunger, the denominator shrinks. It is a brutal way of putting it, and it is disputed, but it points to something verifiable: Spain was not growing, it was holding on.

1945-1950: the lost five years

The figure that demolishes any epic narrative is provided by one participant: between 1945 and 1950 average growth was 0,14%. Practically zero. According to his account, Spain was excluded from the Allied reconstruction organizations, politically isolated, and with foreign trade that had halved during the conflict and did not recover until 1951. Without inputs, without credit and without markets, the economy does not start no matter how much will is applied.

Was autarky a choice or a punishment?

Here the analysis splits in two. One school argues that the regime’s autarkic policy was an ideological choice that strangled the country and left it with a tiny, undercapitalized domestic market. The other recalls that part of that isolation came from outside, with a blockade of essential goods that suffocated half of Europe. What almost no one disputes is the date that broke the dam: the bases agreement with the United States in 1955.

1951-1958: when the figures finally arrived

The period yields an average of 5,7% a year, according to the calculations circulating in the debate, driven by private credit, American aid and the Korean War boom. Steel production multiplied fivefold, electricity tenfold, and life expectancy at birth rose by almost twenty years from the 1950s to the 1970s. It was growth with feet of clay, mind you: a trade deficit and brutal technological dependence.

The fine detail —exactly how that takeoff was financed and what role the oligarchy played, which according to one participant was more attentive to its own income than to the country— is where the debate gets juicy.

With these figures in front of us, the question is no longer why Spain was not Europe’s economic engine. It is how anyone could imagine that a country with 30% of its GDP vaporized was going to take off before those that still had factories standing.