The Spanish economy has its roots in the age of Empire, when we owned half the world and gold from America arrived by the handful. But, as tends to happen with empires, the party ended, and with it our economic hegemony. The seventeenth and eighteenth centuries were times of decline for Spain, both politically and economically. Despite having been the world power, our resource management was, to put it mildly, disastrous. The gold arriving from America was not invested in productive industries or improving national infrastructure, but squandered on endless wars and maintaining a regal lifestyle that had little to do with the country's economic reality.
While other European countries, such as England and the Netherlands, were laying the foundations of their industrial revolutions, Spain remained trapped in an agricultural, feudal, profoundly unequal economy. Landowners retained control over enormous expanses of land while most of the population subsisted in poverty. The large-estate system was inefficient and offered no incentive to modernize, so industrialization arrived late and in fragmented fashion.
The nineteenth century was an age of continual crises. Between colonial wars of independence, the Carlist Wars, and internal political instability, Spain had neither time nor resources to build a solid economic base. At the beginning of the twentieth century, the Spanish economy remained largely agrarian and far behind the main European powers in industrialization.
With Primo de Rivera's dictatorship first, followed by the Civil War (1936–1939) and the long Franco dictatorship, the Spanish economy suffered decades of international isolation and autarky. In an attempt to make Spain self-sufficient, the Franco regime closed the country to foreign trade, leading to a stagnant economy, shortages of goods, and outdated infrastructure. It was an age when Spaniards juggled to obtain basic products and survive in an economic system held together with pins.
Not until the 1960s did Spain begin opening to the world. That decade's economic miracle, driven by tourism and foreign investment, pulled Spain out of the hole where it had spent decades. European tourists, with their stronger currencies, found an affordable paradise on Spain's coasts, and money began flowing into the Spanish economy. This, together with efforts to modernize industry and agriculture, allowed Spain to begin growing economically, though it remained a country of great inequalities.