Stabilizing and liberalizing policies are key elements of the WashingtonConsensus. This paper adds a historical dimension to the ongoing debate byassessing the economic impact of market-oriented reforms undertaken duringGeneral Franco’s dictatorship, the 1959 Stabilization and Liberalization Plan.Using an index of macroeconomic distortions (IMD) the relationship betweeneconomic policies and the growth record is examined. Although a gradualreduction in macroeconomic distortions was already in motion during the1950s, the 1959 Plan opened the way to a new institutional design thatfavoured a free-market allocation of resources and allowed Spain toaccelerating growth and catching up with Western Europe. Without the 1959Plan, per capita GDP would have been significantly lower in 1975.
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