MASSIVE INDUSTRIALISATION POLICY

The progress of each country is said to be dependent on the policies and regulations formulated by the national government. Since different countries believed in the importance of industrial and business development as a major part of economic progress, these countries are trying to use or develop distinctive policies to meet such objective. Principally, the purpose of this essay is to critically analyse the given statement, i.e. “Spain was the only peripheral country that followed a massive industrialisation policy under the direct intervention of an authoritarian regime.” The discussion will attempt to provide insightful details regarding the link of industrial and business development with the past authoritarian regimes in Italy and Spain.

A massive industrialisation policy means that the government tries to enhance the industrial and business corporations enormously. As mentioned, the only peripheral nation that has been able to follow this kind policy even if it is under authoritarian regimen. Various economists have interpreted the course of industrialisation policy in Spain under General Franco’s authoritarian government.

Under Franco’s governance, it can be said that the development of Spain has passed through three phases. At first, Franco implemented strong autarkic policies dominated the Spanish industrials and economic scenario in the period 1939 to 1959, a period which ended with the enactment by the government of the Stabilization Plan of 1959. Because of this a rising deficit of Spain's balance of trade and the gradual depletion of the country's foreign exchange reserves further spurred the authoritarian regime of General Franco to modify its economic policy at the end of the 1950s (Lieberman, 1995). The National Stabilization Plan of 1959 announced the beginning of a decade of rapid economic and industrial growth.

This growth in the 1960s was further stimulated by the impact on Spanish economic life of booming Western European economies. The average annual real rate of growth of the Spanish Gross Domestic Product in the 1960s attained 7%, a rate of growth which Spain had never experienced before. Accordingly, it has been said that the Stabilization Plan of 1959 and not the Development Plans of the 1960s which launched the 'Spanish economic miracle' of that decade (Delgado, 1990).

The Plan was recognition by the Francoist authorities that it was no longer possible for the Spanish economy to continue growing in isolation. It was an admission that Franco's policies had resulted in constantly rising costs of production and increased technological backwardness. It became clear to government economists that the sole demand of a domestic market of limited acquisitive capacity could no longer be counted upon to provide industrial modernization and the achievement of economies of scale. The Plan expressed the desire of Spain's contemporary industrial and financial bourgeoisie to partially and prudently open the domestic economy to the rest of the world and to liberalize the country's foreign trade.

The economy started experiencing rapid economic growth as of 1961. The controlled liberalization of imports increased the inflow of badly needed foreign capital equipment, equipment which soon allowed an increase in levels of production and of productivity. Spanish firms, eager to improve their productive processes, invested as much as they could in the acquisition of such imports. Expanding imports were also supported by rising exports made possible by the liberalization of Spain's foreign trade. The country's balance of payments was strengthened by expanding foreign investment in Spain, by remittances from Spanish workers who had migrated to other countries and, in a major way, by Spain's rapidly rising exports of tourist services.

Spain is not the only European country that has experienced to be under authoritarian leadership. Another country that has been experienced this is Italy. Under Mussolini, Italy has experienced industrial development which has been under a direct control of the government by using powerful economic bodies. In order to achieve industrial development Mussolini pushed the contemporary capitalistic sectors within the state service. Herein, the government directly intervenes as necessary in order to establish a connection between the industrialists, the state and the workers as well. The government of Italy crushed basic class conflicts benefiting corporatism (Baldassari, 1993). Under Mussolini’s regime, the government of Italy has been able to work in reforming the widely-abused tax policies, dispose ineffective state-owned industries, lessen government costs and introduce tariff policies to safeguard the modern industries. In order to counter the shortages of industrial resources, the government of Italy has established intensive development approach using the available local resources and by trying a strategic colonisation.

All in all, it is said that even if Italy and Spain have been under authoritarian regime, their leaders has been able to provide plans to be able to adjust to the industrial and business development that has been occurring in other European countries.

Reference

Baldassarri, M. (1993) (ed.). Industrial Policy in Italy, 1945–90. New York: St. Martin's, Delgado, G. J.L., (1990) ed., La Economía Española de la Transición y la Democracia, Madrid, CIS. pp. 81-117.

Lieberman, S. (1995). Growth and Crisis in Spanish Economy, 1940-1993. Routledge: New York