The Economy of Venezuela
The Oil Boom and Nationalisation
Oil discovered in the early 20th century transformed Venezuela, and nationalisation in 1976 created the state company PDVSA.
Oil built modern Venezuela.
Discovery
Large-scale oil production began in the 1920s, making Venezuela a leading exporter.
Nationalisation
In 1976, the industry was nationalised and PDVSA created.
Rentier state
The government lived off oil rents rather than taxes on citizens.
Volatility
Booms and busts in oil prices caused cycles of spending and debt.
A windfall
When oil prices rose, the state spent generously and imported more.
Thinking oil revenue is stable income
Prices swing widely.
Key takeaways
- Oil began flowing in the 1920s.
- PDVSA was created in 1976.
- The state relied on oil rents.
- Prices caused cycles.
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