SPAIN t 2 *v. 3. '"<*. SPAIN BASIC STATISTICS THE LAND Area (1,033 sq. km) (cid:9) 504.7 Major cities (I960 census, thousands cf Agricultural area (1.000 sq. km.). 208.3 inhabitants) : Madtid (cid:9) 2,263 Bcrcelcna (cid:9) 1.553 Valencia(cid:9) SOS Stvilla(cid:9) -<42 THE PEOPLE Population (I960 census; thousands) . . 30.903 Total labour force (I960 census; thou¬ Number ofinhabitants persq. km (I960). 61 sands) : I1.634 Net natural increase (average 1958-1962; in agriculture (cid:9) 4.803 thousands) (cid:9) in industry (cid:9) 2,749 Net rate of increase per 1,000 inhabitart; in construction (cid:9) 822 (average 1958-1962) (cid:9) 12.8 in services (cid:9) 3,260 PRODUCTION Gross national product 1962 (million Gross domsstic product at factor ces* by pesetas) . (cid:9) 795.556 origin in 1962(percentages): G.N.P. per head, 1962 (U.S.*). .... 430 Agriculture (cid:9) 24 Industry and construction. (cid:9) 32 Other (cid:9) (cid:9) - -44 THE GOVERNMENT Public consumption in 1962 (percentage of Current government revenues in 1562 (per¬ G.N.P.)(cid:9) 8 centage of G.N.P.)(cid:9) 12 Public investment in 1962 (percentage of Internal public debt (percentage cf central total investmsnt) (cid:9) 12 Government current revenue)(cid:9) 98 LIVING STANDARDS Electricity consumption (kWh psr head) in Number of radio sets per I.CC0 inhcbitar.ts 1963(cid:9) 788 in I960 (cid:9) 88 Illiteracy rate in 1960(p^rcenrage-ofpeople Number of private cars per I.0C0 inhabitants aged above 10). (cid:9) 13 in 1962 (cid:9) M Calories per head, per day (1961-1962). . 2.790 Number of telephones per I.0C0 inhabitants Annual meat consumption (kg. per head, in 1963(cid:9) 72 1961-1962) (cid:9) 20.8 FOREIGN TRADE Exportsofgoods and services as a percentcg; Imports ofgoods and services esapercentage of G.N.P. (1962)(cid:9) 12 ofG.N.P. (1962)(cid:9) 13 Exports in 1963 (percentage oftotal exports): Imports in 1963 (percentage oftotal imports): Foodstuffs (cid:9) 45 Foodstuffs (cid:9) 18 Raw materials (cid:9) 22 Raw materials(cid:9) 29 Manufactured products (cid:9) 33 Manufactured products(cid:9) 53 THE CURRENCY Monetary unit: peseta. Currency units per U.S.S. ECONOMIC SURVEYS BY THE OECD SPAIN ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The Organisation for Economic Co-operation and Development wasset up undera Conventionsignedin Parison14thDecember 1960 by the Member countries ofthe Organisationfor EuropeanEconomic Co-operation andby Canada andthe UnitedStates. This Convention provides that the O.E.C.D. shallpromotepolicies designed: toachievethehighestsustainableeconomicgrowthandemploy¬ ment and a rising standard of living in Member countries, while maintainingfinancialstability, andthus to contribute to the world economy: to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; tocontribute to theexpansionofworldtrade on amultilateral, non-discriminatory basis in accordance with international obligations. The legalpersonalitypossessedby the Organisationfor European Economic Co-operation continues in the O.E.C.D. which came into being on 30th September 1961. The members of O.E.C.D. are Austria, Belgium, Canada, Den¬ mark, France, the FederalRepublic ofGermany, Greece, Iceland, Ire¬ land, Italy, Japan, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. This document was approved by the Economic and Development Review Committee in July 1964. CONTENTS A. Output and Demand (cid:9) 5 Total output and demand factors (cid:9) 5 Agriculture (cid:9) 6 Industry (cid:9) 7 Construction (cid:9) 10 Employment (cid:9) 11 B. The Internal Financial Situation (cid:9) 11 Prices (cid:9) 11 Wages(cid:9) 13 Money and Credit(cid:9) 14 Public Finance (cid:9) 18 C. External Transactions (cid:9) 23 Balance of Payments (cid:9) 23 Foreign Trade (cid:9) 24 Invisibles and Private Transfers(cid:9) 28 Capital Movements (cid:9) 28 D. The Development Plan 1964-67 (cid:9) 29 Overall targets (cid:9) 30 Guide-lines of development policy (cid:9) 30 Fiscal Policy(cid:9) 31 Banking and Credit (cid:9) 32 Agriculture (cid:9) 32 Industry and Transport (cid:9) 32 Programme of Public Investment (cid:9) 34 E. Conclusions (cid:9) 35 * Statistical Annex (cid:9) 39 UJ CD < û. < CQ SPAIN 1. In 1963, the national product increased appreciably, with all the main factors of domestic demand expanding. The pronounced price rises of the 1962-63 winter gave way to more limited ones, restrained by plentiful harvests and a rapid growth of imports. A marked recovery ofexports after the summer of 1963 was not sufficient to prevent a sharp increase in the trade deficit. But booming receipts from tourism, considerable amounts of workers' remittances and an increased inflow ofcapital resulted in a further rise offoreign reserves, which stood, in May 1964, at $ 1.1 billion. 2. Information available for the early months of 1964 suggests a continuation of last year's trends; although there are risks of im¬ balances in particular sectors, there generally seems to be sufficient margin to allow the authorities to continue their policy ofencouraging productive investment. And the present situation would seem favour¬ able for the adoption ofmeasures and reforms aimed at solving Spain's longer term problems. The Development Plan for 1964-67, which was approved last December, could make an important contribution in this sense. A. OUTPUT AND DEMAND Total output and demand factors 3. According to preliminary official estimates, the net domestic product increased last year by nearly 11 per cent at current prices and 7 per cent in real terms. For a large part, Spanish economic statistics do not allow quantitative descriptions of total output and demand to be made with great confidence. But the rate of growth was certainly high, with good harvests, most branches of industry continuing to show significant advances, construction booming and the service sector probably expanding considerably. 4. On the demand side, consumers' expenditure was boosted in 1963 by higher agricultural incomes, increased non-farm employment and wages, and by rising workers' remittances from abroad; govern¬ ment expenditure rose appreciably; and both house-building and other private investment expanded substantially (as evidenced by the sharp increase ofcapitalgoodsimports and bankcreditsto theprivate sector). Foreign demand for services continued to grow rapidly and commodity exports after falling in the first part of 1963 showed a marked recovery since the summer. There have been certain indications, more recently, that the trend of private productive investment might be flattening out, with a slowing-down of bank credit and an increase in the liquid position of the banking system; however, imports of equip¬ ment goods remained very high in the first months of 1964, and the business surveys which have recently been started point to a continued expansion. Agriculture 5. Since the summer of 1963, most harvests including the tra¬ ditional export products have been quite satisfactory1. Meat pro¬ duction has also increased. For the year as a whole, the rise in the index of agricultural output (products for human consumption only) is provisionally estimated at 13 per cent and the increase in average prices received by farmers at about 4 per cent. The shortages and high prices prevailing during the winter of 1962-63 led to increased imports of essential foodstuffs mainly by the State Procurement Agency which continued until the early months of 1964. These helped to keep food prices down but the very fact that in many cases they have reduced prices received by farmers below their previous peak levels has caused certain difficulties. Policy has, therefore, moved progressively towards regulating both the quantities and the prices of imported foodstuffs through the mechanism of special import levies, the proceeds of which will be used either for offsetting possible losses of the Procurement Agency or for financing support prices of local agricultural products. 6. It is, clearly, important to even out excessive fluctuations of producers' and consumers' prices. This should be possible through certain price support measures and through a more flexible use of regulatory food imports and stock-building operations; in this connec¬ tion, the respective rôles of the State Procurement Agency (which at present seems to deal with too wide a range of products) and private trade could usefully be re-examined. A more fundamental problem, however, concerns the extent to which agriculture should be supported through the maintenance ofhighprices ratherthan measuresto increase productivity. Ifpolicy wereto move too farin the former direction2, it would risk adding to the pressures on consumers' food prices and consequently on wages. It is essential to apply the greatest possible effort to raise agricultural yields and re-shape the pattern ofproduction to fit the new patterns of demand. And also to undertake overdue 1. For production figures, see Table I of the Statistical Annex. 2. e.g.therecentdecisiontostopimportsoffrozenmeat,althoughcorrespond¬ ing categories of domestic production seem in no way excessive. improvements in the systems of distribution and marketing of agri¬ cultural products. The movement ofman-power away from the farms is gradually changing the economic basis of a large part of Spanish agriculture. The economic operations ofthe big agricultural holdings1 had been based on very cheap labour, on virtual immunity from taxa¬ tion(seepara. 28 below) and, inthecase ofwheatatleast, onfavourable price support policies. The substantial increase of agricultural credit in 1963 may reflect a trend towards increased investment by big and medium holdings; on the other hand, purchases of tractors and agri¬ cultural machinery showed no real increases in 1963, according to estimates by the Ministry of Agriculture. The simultaneous problem ofvery small holdings can certainly not be solved by emigration alone2. Industry 7. As shown in Table 1, the index ofindustrial production rose by about 8 per cent in 1963. This new provisional index is based on 1958 and adjusted to take account ofnew firms; it does not, however, cover certain branches and may under-estimate the growth of total output. As in 1962, machinery and appliances, chemicals, means of transport and construction materials were among the sectors which showed the highest rate of growth. Production of textiles stagnated and mining wasdepressed. Therate ofoutputofiron andsteelhas recentlyrecover¬ ed helped, no doubt, by a change oftrend in foreign markets and the special protective duties introduced early in 1963. 8. There is good evidence that investmentin industry has continued high, although it is difficult to make quantitative estimates. The pro¬ gress of a number of State-supported modernisation schemes (e.g. in textiles) seems, however, to have been rather slow. In December 1963 fiscal exemptions and preferential credit facilities were introduced to encourage the grouping of small enterprises, but it is too early yet to see concrete results. 9. Last year's O.E.C.D. Survey on Spain outlined certain measures which set minimum capacity requirements for the establishment of new production units in industry3 and expressed some apprehension about their economic effects. During the first year's implementation ofthese measures, it seems that in some sectors ofindustry practically all projects for new firms were authorised, even though they did not conform to the minimum capacity requirements. In other sectors the line taken by the authorities was less liberal. On the other hand, both 1. The first agricultural census has now provided official figures on their importance. See Table II in the Statistical Annex. 2. Fora detailedillustration ofthisproblem, see O.E.C.D.: " LowIncomes in Agriculture", 1964, Chapter on Spain. 3. This new method of control was established early in 1963; it replaced thepreviousmethodofsubjectingtopriorapprovalindustrialinvestmentexceeding in value 30 million pesetas. Table 1. INDUSTRIAL PRODUCTION INDICES Monthlyaverage 1960 = 100. 1963 19641 CHANGE CHANGE JAN.-APRI1. 1961 1962 1963 1962-1963 1963-1964 PER CENT JANUARY-APRIL PER CENT 1. Food, drinkandtobacco (cid:9) 0.16 106.0 116.9 120.5 3.1 118.0 120.6 2.2 2. Textiles (cid:9) 0.16 109.7 114.7 115.2 0.4 118.3 115.1 - 2.7 3. Basicmetals (cid:9) 0.06 134.3 136.0 144.6 6.2 145.1 174.6 20.3 4. Engineeringand transportequipment 0.18 149.6 162.6 183.2 12.7 159.7 204.3 27.9 5. Chemicalsandpetroleumproducts... 0.10 112.0 128.6 143.2 11.4 152.0 167.6 10.3 6. Othermanufacturingindustries (cid:9) 0.20 113.1 130.1 145.6 11.9 139.3 166.9 19.8 7. Totalmanufacturing (cid:9) 0.86 119.5 131.3 142.3 8.4 137.4 156.4 13.8 8. Mining (cid:9) 0.08 103.6 98.5 97.5 1.0 101.9 99.5 - 2.4 9. Electricityand gas (cid:9) 0.06 109.8 120.7 132.6 9.9 148.0 163.0 10.1 10. GeneralIndex (cid:9) 1.00 117.6 128.2 138.3 7.9 135.5 152.7 12.7 1. Provisional figures. Source: "Indicadores Economicos' ofthe National Institute ofStatistics.