Spain stands as one of the few countries in the world which have completed a successful transition from authoritarianism and relative underdevelopment to democracy and economic abundance in the last half century. This paper explores the nature and causes of the economic underdevelopment of Spain since the 19th century and the violent collapse of its brief democratic experiment in the early 1930s. The Franco regime ? particularly its heavily regulated economy in place till the late 1950s, the decision to liberalize it in 1959, and the period of rapid growth that followed -- are discussed. A democratic transition, which occurred following the death of Franco in 1975, was possible due to the economic growth and the formation of a broad middle class in the 1960s. Also discussed is the impact of democratization on the structure of the welfare state in Spain.