Unexpected Prosperity How Spain Escaped the Middle Income Trap

Only a handful of economies have successfully transitioned from middle to high income in recent decades. One such case is Spain. How did it achieve this feat? Despite its relevance to countries that have yet to complete that transition, this question has attracted only limited attention. As a result, Spain's development into a prosperous society is a largely under-reported and often misunderstood success story. Unexpected Propserity takes a different look at the questions that usually frame the debate about Spain's economic development. Instead of asking why Spain's catching up was delayed, Calvo-Gonzalez asks how it happened in the first place; instead of focusing on how bad institutions undermined economic prospects, as the literature has done, he explains how growth took place even in the presence of poor institutions. This wider view opens new perspectives on Spain's development path. For example, comparisons are drawn not only with the richest countries but also with those that were in a similar stage of development as Spain. Drawing on a wide range of material, from archival sources to text analytics, the book provides a new account of why reforms were adopted, the role of external and internal factors, as well as that of unintended consequences. The result is an original interpretation of the economic rise of Spain that speaks also to the wider literature on the political economy of reform, the role of industrial and public policy more broadly, and the enduring legacy of political violence and conflict.

Oscar Calvo-Gonzalez, School of Foreign Service at Georgetown University and the World Bank

Oscar Calvo-Gonzalez is a Director in the World Bank's evaluation department. He has been with the World Bank since 2006, leading lending operations and analyses in multiple countries. He is also an Adjunct Professor at Georgetown University's School of Foreign Service. He was previously at the European Central Bank and trained as an economic historian at the London School of Economics. He has published widely on economic policy issues, including on the application of behavioral insights to public policy, and on Spanish economic development.

Introduction
Part I - Foundations
1. The Control of Violence
2. A Critical Juncture
3. Political Stability
Part II - Take-off
4. More than Macro Stability
5. Why Reform?
6. Openness
7. Contestability
Part III - Turning Growth to Development
8. Policy Tinkering
9. Ideas and Aspirations
10. Lucking Out
Conclusions