Advanced Search
MyIDEAS: Login to save this paper or follow this series

Venezuela's Growth Experience

Contents:

Author Info

  • Omar D Bello
  • Juan S Blyde
  • Diego Restuccia

Abstract

The standard of living, measured as gross domestic product (GDP) per capita, increased dramatically in Venezuela relative to that of the United States from 20 percent in 1920 to 90 percent in 1958, but since then has collapsed to around 30 percent nowadays. What explains these remarkable growth and collapse episodes? Using a standard development accounting framework, we show that the growth episode is mainly accounted for by an increase in capital accumulation and knowledge transfer associated with the foreign direct investment in the booming oil industry. The collapse episode is accounted for equally by a fall in total factor productivity and in capital accumulation. We analyze Venezuela during the collapse episode in the context of a model of heterogeneous production units were policies and institutions favour unproductive in detriment of more productive activities. These policies generate misallocation, lower TFP, and a decline in capital accumulation. We show in the context of an heterogeneous-establishment growth model that distortionary policies can explain between 80 to 95 percent of the current differences in TFP, capital accumulation, and income per capita between Venezuela and the United States.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.economics.utoronto.ca/public/workingPapers/tecipa-431.pdf
File Function: Main Text
Download Restriction: no

Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-431.

as in new window
Length: 38 pages
Date of creation: 03 Jun 2011
Date of revision:
Handle: RePEc:tor:tecipa:tecipa-431

Contact details of provider:
Postal: 150 St. George Street, Toronto, Ontario
Phone: (416) 978-5283

Related research

Keywords: Productivity; physical capital; misallocation; policies;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
  2. James A. Schmitz, Jr., 1997. "Government production of investment goods and aggregate labor productivity," Staff Report, Federal Reserve Bank of Minneapolis 240, Federal Reserve Bank of Minneapolis.
  3. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," American Economic Review, American Economic Association, American Economic Association, vol. 92(2), pages 160-164, May.
  4. Robert J. Barro & Jong-Wha Lee, 2010. "A New Data Set of Educational Attainment in the World, 1950–2010," NBER Working Papers 15902, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Venezuela's downfall
    by Economic Logician in Economic Logic on 2011-06-29 14:22:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Diego Restuccia & Richard Rogerson, 2012. "Misallocation and Productivity," Working Papers, University of Toronto, Department of Economics tecipa-468, University of Toronto, Department of Economics.
  2. Alain Gabler & Markus Poschke, 2013. "Experimentation by Firms, Distortions, and Aggregate Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 26-38, January.
  3. Diego Restuccia, 2012. "The Latin American Development Problem: An Interpretation," Working Papers, University of Toronto, Department of Economics tecipa-466, University of Toronto, Department of Economics.
  4. Betty Agnani & Amaia Iza, 2005. "Growth in an oil abundant economy: The case of Venezuela," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c010_053, DEGIT, Dynamics, Economic Growth, and International Trade.
  5. Dhritiman Bhattacharya & Nezih Guner & Gustavo Ventura, 2012. "Distortions, Endogenous Managerial Skills and Productivity Differences," Working Papers 673, Barcelona Graduate School of Economics.
  6. Javad Sadeghzadeh, 2014. "Innovation Subsidies: Misallocation and Technology Upgrade," 2014 Papers, Job Market Papers psa1207, Job Market Papers.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Economic Logic blog

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:tor:tecipa:tecipa-431. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePEc Maintainer).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.