ABSTRACT
This chapter looks at both aspects of Spain's economic liberalization: domestic markets and foreign trade and capital flows. The financial markets started their liberalization in 1978 when savings banks were allowed to act as full banks and foreign banks were allowed to establish themselves in Spain, with a limit as to the number of branches and domestic resources they could open or capture. From 1980 to 1985, the second oil shock on the one hand and Spain's difficult negotiations with the EEC on the other had slowed the pace of liberalization. Spain's experience, which may or may not be generalizable, was that it could not synchronize perfectly economic restructuring and economic liberalization, even though they are interrelated. The reverse holds true also: only when the level of reserves is high enough and the balance of payments is in surplus or equilibrium are economic liberalization decisions taken.
