Working Paper: CEPR ID: DP7731
Authors: Leandro Prados de la Escosura; Joan R. Ross; Isabel Sanz Villarroya
Abstract: Stabilizing and liberalizing policies are key elements of the Washington Consensus. This paper adds a historical dimension to the ongoing debate by assessing the economic impact of market-oriented reforms undertaken during General Franco?s dictatorship, the 1959 Stabilization and Liberalization Plan. Using an index of macroeconomic distortions (IMD) the relationship between economic policies and the growth record is examined. Although a gradual reduction in macroeconomic distortions was already in motion during the 1950s, the 1959 Plan opened the way to a new institutional design that favoured a free-market allocation of resources and allowed Spain to accelerating growth and catching up with Western Europe. Without the 1959 Plan, per capita GDP would have been significantly lower in 1975.
Keywords: antimarket policies; dictatorship; growth; liberalization; macroeconomic policy; Spain; stabilization
JEL Codes: E65; F43; N14; N44; O43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 1959 stabilization and liberalization plan (E63) | Spain's economic growth trajectory (O52) |
| Without the 1959 plan (P11) | GDP per head in 1975 (P24) |
| Had the economic policies remained unchanged post-1951 (N14) | GDP by 1975 (N12) |
| Gradual reduction of macroeconomic distortions during the 1950s (E65) | Successful implementation of the 1959 plan (P11) |
| IMD negatively impacted GDP levels (F69) | Reduced efficiency gains and capital accumulation (F62) |
| 1959 plan (P11) | Spain caught up economically with Western Europe during Franco's regime (P17) |