Venezuela - a closed-loop chain of cause and effect
Oil creates an illusion of capacity (1999–2012)
- Venezuela with 17% of the global reserves, surpassing even Saudi Arabia.
- During Hugo Chávez's rule, the global oil price boom also drove Venezuela's GDP to soar, peaking around $350B
The issue is:
- No signs of industrial growth
- No productivity improvements
- No export diversification
-> The economy grew rapidly thanks to an external factor, the oil price, which increased too quickly and obscured the effective use of state capital, while vigorous domestic consumption masked a sharp decline
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