Economic Crisis in Venezuela. Causes and Consequences

  • Michał Zaremba Uniwersity of Łódz, Poland

Keywords

Venezuela, Latin America, economic crisis, development economics

Abstract

Crude oil is the most important raw energy material in the world. Since the 1940s, the Venezuelan economy has become increasingly dependent on the production and sale of oil in the world markets – revenue from oil exports reached 50% of GDP and about 96% of total export revenue. As a consequence, the sharp fall in oil prices in recent years has led to a serious economic crisis, which now has the hallmarks of a humanitarian crisis. It seems plausible that the current crisis in which Venezuela found itself in is, to a large extent, the result of basing the economy on the monoculture of crude oil, which in times of recession had to significantly affect the functioning of the entire economy. Venezuela would therefore be a model example of “Resource curse” or “paradox of wealth” economy. The aim of the article is to present the economic situation of Venezuela, the sources of the crisis, the course and prospects of exiting the crisis.

Author Biography

Michał Zaremba, Uniwersity of Łódz, Poland
Research Assistant at the Department of Economics of Development University of Łódź. Research interests: development economics, Asian development problems, economic policy, international economics.

References

British Petroleum (2019). Statistical Review of World Energy. Pobrane z https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html.

De Gregorio, J. (2015). From Rapid Recovery to Slowdown: Why Recent Economic Growth in Latin America Has Been Slow, Policy Brief, 15-6, ss. 1-17.

Genser, J. (2017). Venezuela Needs International Intervention Now. Pobrane z https://www.nytimes.com/2017/05/30/opinion/venezuela-needs-international-intervention-now.html.

Gocłowska-Bolek, J. (2018). Proces uzależniania gospodarki Wenezueli od przemysłu naftowego, Ameryka Łacińska, 2(100), s. 123.

International Monetary Fund (2017). Statement by the IMF Executive Board on Venezuela. Pobrane z https://www.imf.org/en/News/Articles/2018/05/02/pr18158-statement-by-the-imf-executive-board-on-venezuela.

International Monetary Fund (2019). World Economic Outlook Database. Pobrane z https://www.imf.org/external/pubs/ft/weo/2018/02/weodata/index.aspx.

Keppel, S. (2013). 5 Ways Hugo Chávez Has Destroyed the Venezuelan Economy. ABC News. Pobrane z https://abcnews.go.com/ABC_Univision/News/ways-chavez-destroyed-venezuelan-economy/story?id=18239956.

Kohut, M., Herrea, I. (2017). As Venezuela Collapses, Children are Dying of Hunger. New York Times. Pobrane z https://www.nytimes.com/interactive/2017/12/17/world/americas/venezuela-children-starving.html.

McCarthy, M.M. (2017). Venezuela’s Manmade Disaster. Current History, 116(787), ss. 61-67.

Nelson, R.M. (2017). New Financial Sanctions on Venezuela: Key Issues. Congressional Research Service. Pobrane z https://fas.org/sgp/crs/row/IN10766.pdf.

Rathbone, J.P., Donnan, S. (2017). IMF Crunches the Numbers for Possible Venezuela Rescue. Financial Times. Pobrane z https://www.ft.com/content/3908e5c0-b19b-11e7-a398-73d59db9e399.

Rathbone, J.P., Wigglesworth, R. (2017). Venezuela Debt: US, Russia, and China Play for High Stakes, Financial Times. Pobrane z https://www.ft.com/content/f51c4880-cddc-11e7-b781-794ce08b24dc.

Ribando Seelke, C., Nelson, R.M. (2019), Venezuela: Background and U.S. Policy. Congressional Research Service. Pobrane z https://fas.org/sgp/crs/row/R44841.pdf.

Sullivan, M.P. (2019). Venezuela: Overview of U.S. Sanctions. Congressional Research Service. Pobrane z https://fas.org/sgp/crs/row/IF10715.pdf.

The Economist (2017). How Chávez and Maduro Have Impoverished Venezuela. Pobrane z https://www.economist.com/finance-and-economics/2017/04/06/how-chavez-and-maduro-have-impoverished-venezuela.

Torres, G. (2019). The Venezuelan Drama in 14 Charts. Center for Strategic & International Studies. Pobrane z https://www.csis.org/analysis/venezuelan-drama-14-charts?fbclid=IwAR2x6MhmoCw5BTb2N1kE_YdKp7eHXkMINytTMKDL7sVvjF-y041pQYQAhio.

UNHR (2018). UNHCR and IOM chiefs call for more support as the outflow of Venezuelans rises across the region. Pobrane z https://www.unhcr.org/news/press/2018/8/5b7e84134/unhcr-iom-chiefs-call-support-outflow-venezuelans-rises-across-region.html.

U.S. Energy Information Administration. Europe Brent Spot Price FOB. Pobrane z https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=rbrte&f=m.

Strategic Comments (2019). Venezuela’s deepening crisis, 23(6), ss. x-xii.

Vyas, K., Kurmanaev, A. (2017). Goldman Sachs Bought Venezuela’s State Oil Company’s Bonds Last Week. Wall Street Journal. Pobrane z https://www.wsj.com/articles/goldman-sachs-bought-venezuelan-oil-co-bonds-last-week-1496020176.

Vyas, K., Kurmanaev, A., Wernau, J. (2017). Goldman Sachs Under Fire for Venezuela Bond Deal. Wall Street Journal. Pobrane z https://www.wsj.com/articles/goldman-sachs-under-fire-for-venezuela-bond-deal-1496100583.

World Bank. World Development Indicators. Pobrane z https://databank.worldbank.org/data/reports.aspx?source=2&country=VEN#.
Published
2019-12-30
How to Cite
ZAREMBA, Michał. Economic Crisis in Venezuela. Causes and Consequences. Ameryka Łacińska. Kwartalnik Analityczno-Informacyjny, [S.l.], v. 2, n. 104-105, p. 77-88, dec. 2019. ISSN 2081-1152. Available at: <http://amerykalacinska.com/ojs/index.php/al/article/view/1029>. Date accessed: 07 apr. 2020.