Economic History of Spain - European Integration, 1985 - 2000

2000

Until 1975, Spain was ruled by the right wing dictator General Franco. After his death, the country returned to democracy in the form of a constitutional monarchy, with elections being held in 1977 and with the constitution being ratified in 1978. The move to democracy saw Spain become more involved with the European integration.

Felipe Gonzalez became prime minister when his Socialist Party won the 1982 elections. He enacted a number of liberal reforms, including partially legalizing abortion, creating a social security system, increasing civil liberties and implementing universal free education for those 16 and younger. He also lobbied successfully for Spain to join the European Economic Community (EEC) and to remain part of the North Atlantic Treaty Organization.

The European Union at the time Spain joined, in 1986, existed primarily as a trading union - the EEC, and better trade links were vital to the fragile Spanish economy. Unemployment was high, about 18 percent, and the Spanish GDP was 71 percent of the EU average. The single market and European funding offered a chance to bring the Spanish economy up to the standards of the rest of Western Europe, along with the support of Spain's wealthier neighbors. There was the promise of lucrative deals with influential countries such as Germany, France and the UK.

Although the Spanish Miracle years (1959-1974) witnessed unprecedented improvements in infrastructure and social services, Spain still lagged behind most of Western Europe. Education was limited, women were largely excluded from the workforce, health care was largely private and unevenly distributed and the country's infrastructure was relatively poor. In 1985, Spain had only 1,300 miles of motorways. People were emigrating due to unemployment. Since the end of the economic miracle in 1974, the country's economy had been stagnant. Joining the European Economic Community was perceived by most of the population as a way to restart the process of modernization and improvement of the population's average purchasing power.

Spain joined the European Economic Community, as it was then known, in 1986 at the same time as neighbor Portugal. The ECC was renamed the European Union (EU) in 1992. Spain has been a driving force in the European community ever since. The country was a leading proponent of the EU single currency, the euro, long before it had been put into circulation in 2002. The first two decades of European integration were a success for the Spanish economy. Both economic growth and development improved. The European Structural Funds and Cohesion Funds were a major component in Spain's economic restructuring as it opened its highly protected markets to foreign competition. However, in the early 1990s Spain, like most other countries, was hit by the global recession.