The Chavismo Delusion: Oil and Development in Venezuela During the Twentieth Century

The chapter provides a historical analysis of the impact of petroleum on the economic and political landscape of Venezuela. The authors begin by examining the period from 1910 to 1922, during which time petroleum was not a significant contributor to the Venezuelan economy. From 1923 to 1929, the oil sector contributed to the country’s growth, as well as to the construction of infrastructure. However, during the depression from 1930 to 1936, the oil industry played a crucial role in protecting Venezuela from major economic impact. From 1937 to 1942, the oil sector expanded considerably, though this growth began to decline towards the end of the period. The authors then look at the government’s takeover of the oil industry through PDVSA in 1958 and the impact of petroleum on the Venezuelan economy from 1974 to 1985. Despite a positive impact at the beginning of this period, the Latin American debt crisis of the 1980s took its toll on the Venezuelan economy. The authors contrast the Venezuelan experience with that of other petro-states, such as Norway, which managed its oil wealth effectively to avoid the “resource curse.” The final period covered, 1991–2000, saw the start of inflationary growth and the collapse of oil production, as the government established a socialist dictatorship that led to the world’s highest inflation rate. The authors argue that while petroleum has played a role in the economic and political landscape of Venezuela, it has not necessarily contributed to the country’s actual economic growth.