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Growth in an Oil Abundant Economy: The Case of Venezuela

Author

Listed:
  • Betty Agnani
  • Amaia Iza

Abstract

Venezuela's growth experience over the 56–year period from 1950 to 2006 was characterized by a high economic growth rate from 1950 to 1974 and a low economic growth rate from 1974 to 2006. We show that the country has been immersed in a ‘great depression’ since the mid-seventies. We also show that although Venezuela is an oil abundant economy, this growth experience is largely due to the evolution of its non-oil GDP. We perform a growth accounting exercise to quantify the extent to which the growth experience in the non-oil sector is a result of physical capital accumulation, finding that non-oil sector behavior can largely be explained by the evolution of total factor productivity (TFP). Finally, we calculate the correlations between oil rents and physical capital accumulation and TFP in the non-oil sector, finding a high positive correlation during the good performance period, but a negative correlation in the implosion period.

Suggested Citation

  • Betty Agnani & Amaia Iza, 2011. "Growth in an Oil Abundant Economy: The Case of Venezuela," Journal of Applied Economics, Taylor & Francis Journals, vol. 14(1), pages 61-79, May.
    • Handle: RePEc:taf:recsxx:v:14:y:2011:i:1:p:61-79
    DOI: 10.1016/S1514-0326(11)60005-6
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    Cited by:

    1. Márquez-Velázquez, Alejandro, 2019. "Developing countries' political cycles and the resource curse: Venezuela's case," Discussion Papers 2019/14, Free University Berlin, School of Business & Economics.
    2. Pedro Elosegui y Nicolás Grosman & Nicolás Grosman, 2016. "Structural Economic Model for Ecuador: a Dollar-ized and Oil-ized Economy," Económica, Instituto de Investigaciones Económicas, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 62, pages 23-53, January-D.
    3. Miguel Santos, 2016. "The Right Fit for the Wrong Reasons: Real Business Cycle in an Oil-dependent Economy," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 53(1), pages 61-94, December.
    4. Diego Restuccia, 2018. "The Monetary and Fiscal History of Venezuela 1960-2016," Working Papers tecipa-614, University of Toronto, Department of Economics.
    5. Mohsen Mehrara, Mohsen & Alhosseini, Seyedmohammadsadegh & Bahramirad, Duman, 2008. "Resource curse and institutional quality in oil countries," MPRA Paper 16456, University Library of Munich, Germany, revised Mar 2009.
    6. Aray, Henry & Vera, David, 2024. "A tale of oil production collapse," Resources Policy, Elsevier, vol. 93(C).
    7. Yuri Quixina & Álvaro Almeida, 2014. "Financial Development and Economic Growth in a Natural Resource Based Economy: Evidence from Angola," FEP Working Papers 542, Universidade do Porto, Faculdade de Economia do Porto.
    8. Guevara, Zeus & Sebastian, Antonio & Carranza Dumon, Fabian, 2022. "Economy-wide impact of conventional development policies in oil-exporting developing countries: The case of Mexico," Energy Policy, Elsevier, vol. 161(C).

    More about this item

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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