This volume constitutes the most recent report in the World Bank’s distinguished country-by-country series on economic development. An independent mission of 17 members from seven countries was organized by the Bank, at the request of the Government of Spain, to make recommendations on a long-range economic development program at a crucial moment in that country’s economic orientation. “The report is divided into six sections: the first and second offer comments on public policies for development and the ways in which the Government can in general guide the economy, while the remaining four sections deal respectively with transportation, agriculture, industry and power and other sectors.”
Spain, when compared with the more industrial countries of the North Atlantic basin, exhibits some of the familiar characteristics of economically less-developed areas. For example, owing to low farm productivity, a large proportion (42%) of the working population is engaged in agriculture and the per-capita income in 1960 was only slightly more than $250. In sharp contrast to the recent experience of some of the Latin American countries which fall roughly into the same stage of growth (e.g., Mexico, Colombia, and Brazil), the projected rate of population increase in Spain is markedly lower, a factor which is in the latter country’s favor in its drive to raise living standards.
In July, 1959, after a quarter century of virtual economic isolation, Spain became a member of the Organization for European Economic Cooperation, and the Government drew up, in cooperation with the OEEC and the International Monetary Fund, a stabilization program with a view to move that nation steadily in the direction of greater economic interdependence with the rest of the world and, more particularly, closer integration with the European economy. The peseta was devalued and the exchange rate structure unified; inflation was curbed; and a program of trade liberalization was initiated.
The mission concluded that the most appropriate type of planning for Spain at this juncture is “indicative” planning. In its concrete proposals the report does not support the extreme “dirigista” formula; instead, increasing reliance on free, competitive markets is the favored approach. Rapid economic development, in the mission’s view, is less dependent on an increase in the resources through the exacting discipline of the market place and a more rational budget control over the non-market public sector. The report forecasts an annual rate of growth in national product of 5% per capita from 1960 onward, a growing relative position of industry and services in the national output, contraction in the agricultural labor force, and a progressive elimination of rural poverty and distressed areas as a consequence of an expanding national economy.
This reviewer concurs with the more-or-less orthodox principles which support the Government’s stabilization program of 1959 and the mission’s basic recommendations. The soundness of these economic prescriptions is tentatively confirmed by recent IMF statistics: Spain’s gold and foreign exchange reserves increased from a precariously low figure of $65 million in 1958 to over one billion dollars in 1962, and the rate of industrial output in December, 1962, exceeded the 1958 level by 53%. Further, between 1957-58 and 1961-62, foreign tourists receipts increased, on an average annual basis, from $70 million to $400 million, the inflow of private foreign capital increased from $28 million to $184 million, and the value of exports nearly doubled.
Considering that 17 specialists contributed to this volume and that the nature of the subject is technical, the result is nevertheless eminently readable. An excellent 42-page summary chapter reveals to the general reader an important dimension of Spain’s emergence into the modern world.
