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Kay Bradley

Venezuela: The Rise and Fall of a Petrostate | Council on Foreign Relations - 0 views

www.cfr.org/...venezuela-crisis

petroleum petrostate Latin America

shared by Kay Bradley on 15 Nov 21 - No Cached
  • Punto Fijo pact, which guaranteed that state jobs and, notably, oil rents would be parceled out to the three parties in proportion to voting results. While the pact sought to guard against dictatorship and usher in democratic stability, it ensured that oil profits would be concentrated in the state.
  • OPEC. V
  • OPEC embargo on countries backing Israel in the Yom Kippur War quadrupled oil prices and made Venezuela the country with the highest per-capita income in Latin America.
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  • mismanagement. Analysts estimate that as much as $100 billion was embezzled between 1972 and 1997 alone.
  • A country that discovers a resource after it has formed robust democratic institutions is usually better able to avoid the resource curse, analysts say. For example, strong institutions in Norway have helped the country enjoy steady economic growth since the 1960s, when vast oil reserves were discovered in the North Sea,
  • Strong democracies with an independent press and judiciary help curtail classic petrostate problems.
  • Many countries with vast resource wealth, such as Norway and Saudi Arabia, have established sovereign wealth funds (SWF) to manage their investments
  • climate change.  
  • Analysts anticipate that a global shift from fossil fuel energy to renewables such as solar and wind will force petrostates to diversify their economies. Nearly two hundred countries, including Venezuela, have joined the Paris Agreement, a binding treaty that requires states to make specific commitments to mitigate
  • Summary Venezuela is an example of a decaying petrostate, where the government is highly dependent on income from fossil fuels, power is concentrated in an elite minority, and corruption is widespread.  Petrostates are vulnerable to what economists call Dutch disease, a dynamic in which a government develops an unhealthy dependence on natural resource exports, and other important industrial sectors are deprived of investment. Venezuela has descended into economic and political turmoil under President Nicolas Maduro, as its once-substantial oil outflows have slowed to a trickle. Absent a power transition, analysts say the country’s prospects are grim.
  • Jeffrey Sachs,
Kay Bradley

The Political Economy of Venezuela and PDVSA - Georgetown Journal of International Affairs - 1 views

gjia.georgetown.edu/...economy-of-venezuela-and-pdvsa

Venezuela hyperinflation inflation Latin America petrostate petroleum economy international Less Developed World:

shared by Kay Bradley on 16 Nov 21 - No Cached
  • Under the direction of Luis Giusti in the 1994-1998 period, PDVSA’s production soared. This trend changed in 1999, when Hugo Chavez became Venezuela’s president and introduced Chavismo as the guiding economic doctrine.
  • Chavez responded by purging PDVSA of its professionals en masse, replacing them with “reliable” hands—those loyal to Chavez’s socialist regime.
  • This trend has left Venezuela’s output drastically lower than when Chavez took power in 1999.
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  • with capital expenditures far below the value of equipment that is being consumed each year by depreciation and amortization.
  • On top of PDVSA’s reduced capital stock and its deteriorating quality, there has also been a drop in the stock and quality of its human capital.
  • It is important to note that PDVSA’s decreased output is not due to dwindling oil reserves,
  • Venezuela’s reserves—which are the world’s largest, at 9.26 billion barrels
  • At the end of 2018, Exxon’s depletion rate was 6.74 percent per year—a rate comparable to that realized by most major oil companies. That rate implies that it would take 9.9 years for Exxon’s oil reserves to be halfway depleted. That is 370.5 years earlier than when PDVSA would deplete half of its reserves
  • The country with the world’s largest oil reserves, Venezuela is plagued by a mismanaged, state-owned oil company in a death spiral—PDVSA.
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