Spain’s international position, 1850-1913^,

Abstract

Spain's financial position during the late 19 th and early 20 th centuries has usually been presented as one of persistent deficit on current account, which resulted from her integration into international commodity and factor markets and this, in turn, slowed down the growth of the economy. In this essay a preliminary reconstruction of the balance of payments on current account allows us to reject this view. In fact, a net capital inflow made possible to meet the demand for investment-boosting economic performance. Current account reversals in a context of macroeconomic domestic imperfections help to explain the economic slowdown at the turn of the century.

The Current Account of the Spanish Economy, 1850-2016: Was It Optimal?

“…The broad pattern detected by Prados de la Escosura (2010), that is, current account deficits in the periods of higher growth, and surpluses in the periods of lower growth, remains roughly valid in subsequent years. Current account deficits, then, reappeared throughout the booming 1920s, after the highest surplus of the whole series: 7.4 per cent of GDP in 1919, coinciding with the acute crisis after the end of the First World War.…”

“…Once the Spanish economy had been able to leave behind all the disruptions brought about by the loss of the American colonies, through the second half of the 19 th century foreign trade began to grow at a faster pace than in France or Britain (Tortella 2000). Regarding the current account, Prados de la Escosura (2010) characterised two main periods in its evolution during the period before the First World War: one of persistent deficits between 1850 and 1890; and another where surpluses prevailed, between 1891 and 1913 (with the exception of the years 1899-1904). According to this author, economic growth at the end of the 19 th century was stimulated by high amounts of foreign capital inflows, which helped to finance current account deficits and complemented domestic savings.…”

Capital Flow Bonanzas as a Fundamental Ingredient in Spain's Financial Crises, 1850-2015

“…Public debt was divided into national and foreign debt, with only the latter being paid in gold in order to guarantee the payment in gold to foreign bondholders (Comín 2012). This resulted in a massive capital flight and a sudden stop in 1880 (Prados de la Escosura 2010). As gold flowed out of the country, the Bank of Spain, faced with large reserve losses, was forced to suspend gold convertibility 21 .…”

Market potential and regional economic growth in Spain (1860–1930)

“…-1850-1913: data for exports and imports from Prados de la Escosura (2010);1914-1935, Tena (2005; GDP figures from Prados de la Escosura (2003) The advances registered in the integration of Spanish national markets for goods and factors drove an intense process of regional specialization. In respect of the industrial sector, from the middle of the 19 th century to the outbreak of the Civil War (1936)(1937)(1938)(1939), production gradually agglomerated in a small number of provinces, a development that is well documented by the historiography (Nadal, 1987, Paluzie et al, 2004.…”