Institutional Change in Spain from Francoism to Democracy: The Effects of the Great Recession

Abstract

Institutional Change in Spain in the second half of the twentieth century has been a story of success. After the Spanish Civil War, a dictatorship was established in the country in 1939 and the political regime implied an institutional design that evolved over time. In 1959 there was an important reform that propelled economic markets and development, and the death of General Franco in 1975 opened up a period of institutional change that conduced to democracy. The new self-enforcing institutional framework that emerged in the political reform of democratization has implied a modern democratic system, the adhesion to the EU and an Europeanization of civil society, a decentralization political process, social and cultural modernization, the making of a Welfare State, and the expansion of the economy. These institutional foundations adequately worked until the Great Recession that has intensely affected the Spanish economy since 2008. The huge economic crisis has implied electoral changes, new social movements, and distrust on political institutions, and understanding these trends is relevant to study how the economic crisis can influence the process of institutional change in Spain. Therefore, this study attempts to provide new and original empirical evidence on the existence of a long-run relationship between economic crisis and political trust in Spain using monthly data. Specifically, the Autoregressive Distributed Lag (ARDL) approach to cointegration is employed to discover such relationship and to quantify the impact of the economic crisis on the Spanish political trust. The empirical findings indicate that the economic crisis has a negative impact on political trust and provide an estimation of this effect.