Working Papers in Economic History July 2011 WP 11-07 Economic Reforms and Growth in Franco’s Spain Leandro Prados de la Escosura, Joan R. Rosés and Isabel Sanz- Villarroya Abstract This paper is an attempt at assessing the economic impact of market-oriented reforms undertaken during General Franco’s dictatorship, in particular, 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 accelerate growth and catch up with Western Europe. Without the 1950s reforms and, especially, the 1959 Plan, per capita GDP would have been significantly lower in 1975. Keywords: Spain, Franco’s dictatorship, economic reforms, stabilization, liberalization, growth JEL Classification: E65, F43, N14, N44, O43. Leandro Prados de la Escosura: Professor of Economic History, Departamento de Historia Económica e Instituciones, and Researcher at Instituto Figuerola, Universidad Carlos III, Calle Madrid, 126, 28903 Getafe, Spain, and CEPR Research Associate. E-mail:
[email protected] http://www.uc3m.es/portal/page/portal/dpto_historia_economica_inst/profesorado/leandro_prados_escos ura Joan Ramón Rosés: Associate Professor of Economic History, Departamento de Historia Económica e Instituciones, and Researcher at Instituto Figuerola, Universidad Carlos III, Calle Madrid, 126, 28903 Getafe, Spain. Email:
[email protected] http://www.uc3m.es/portal/page/portal/dpto_historia_economica_inst/profesorado/joan_roses Isabel Sanz-Villarroya: Associate Professor of Economics, Departamento de Estructura, Economía Aplicada e Historia Económica, Universidad de Zaragoza, Gran Vía 2, 50005, Zaragoza, Spain, and Researcher at Instituto Figuerola, Universidad Carlos III.