m, remittances sent home by Spanish workers who emigrated to more developed European countries, and foreign investment. Although it was unstable, this new economic plan was much more successful than the Autarky economic policy. Also referred to as a stop-and-go policy, it generated a more intensive use of capital than would have been expected by the physical work capital resources of the country. The work force dramatically increased, with the loss of jobs in agriculture (the traditional way in which Spaniards made a living) and the growth of the tertiary sector, which incorporated women into the workplace. Steel, shipbuilding, textiles, and footwear were the main industries, which utilized standard technology and based its competitiveness on its cheap labor and its capital on a cheap money monetary system. In time, due to Spains lack of adapting to the rest of the worlds technological advances, an economic crisis broke out in the mid-1970s. A dramatic rise in the price of oil had an unfortunate affect on Spains economic situation, and because of its reliance on oil and the fall in world demand for steel and shipbuilding, Spain became less competitive with the new industrialized countries in South East Asia. As a result, the public deficit increased and there was a steep fall in commercial surpluses. Inflation soon followed when the authorities tried to make amends instead of adjusting domestic prices and applying an expansive financial policy. The government financed these losses by recurring to the currency reserves, putting Spain knee-deep into debt. Finally, in 1977, the Moncloa Pacts were adopted, which included the devaluation of the peseta, a moderately restrictive monetary policy, and an income policy with a commitment to begin structural reform. This was unsuccessful as the industry failed to adapt itself to the new parameters of prices and demand, continuing to throw Spain deeper and deeper into debt until 1982. To plainly sta...
