Economy of Venezuela

Economy of Venezuela

Plaza Venezuela in Caracas
Currency	Bolívar soberano (VES)
Fiscal year	Calendar year
Trade organizations	WTO, OPEC, Unasur, MERCOSUR, ALBA
Statistics
Population	28,870,195 (2018) 27,530,000 (2019 est.)
GDP	$70.140 billion (nominal, 2019 est.) n/a (PPP, 2019 est.)
GDP rank	68th (nominal, 2019) n/a (PPP, 2019)
GDP growth	−15.7% (2017) −18.0% (2018) −35.0% (2019e) −10.0% (2020e)
GDP per capita	$2,548 (nominal, 2019 est.) n/a (PPP, 2019 est.)
GDP per capita rank	121st (nominal, 2018) n/a (PPP, 2018)
GDP by sector	Agriculture: 4.7% Industry: 40.4% Services: 54.9% (2017 est.)
Inflation (CPI)	50,100.3% (AN estimate; annual; September 2019) 130,000% (Central Bank estimate; annual; 2018) 130,000% (IMF estimate; annual; 2018)
Population below poverty line	19.7% (2015 est.) 87.0% (2017 est.)
Gini coefficient	39 medium (2011)
Human Development Index	0.726 high (2018) (96th) 0.600 IHDI (2018)
Labor force	12,857,391 (2019) 56.47% employment rate (2019)
Labor force by occupation	Communal, social and personal services: 31.4% Commercial, restaurants and hotels: 23.4% Manufacturing industry: 11.6% Construction: 9.0% Transport, storage and communications: 8.7% Agriculture: 6.5% Financial, insurance and real estate: 6.1% (2015)
Unemployment	44.3% (2019 est.)
Main industries	Petroleum, construction materials, food processing, iron ore mining, steel, aluminum; motor vehicle assembly, real estate, tourism and ecotourism
External
Exports	$34.99 billion (2018)
Export goods	Petroleum, chemicals, agricultural products and basic manufactures
Main export partners	United States 42% China 23% India 19% Singapore 4.5% Spain 1.4% (2017)
Imports	$9.1 billion (2017)
Import goods	Food, clothing, cars, technological items, raw materials, machinery and equipment, transport equipment and construction material
Main import partners	United States 38% China 18% Mexico 12% Brazil 5.2% Colombia 3.5% (2017)
FDI stock	$32.74 billion (31 December 2017 est.) Abroad: $35.15 billion (31 December 2017 est.)
Current account	$4.277 billion (2017 est.)
Gross external debt	$100.3 billion (31 December 2017 est.)
Public finances
Government debt	38.9% of GDP (2017 est.)
Budget balance	−46.1% (of GDP) (2017 est.)
Revenues	92.8 billion (2017 est.)
Expenses	189.7 billion (2017 est.)
Credit rating	Standard & Poor's: SD (domestic) SD (foreign) Outlook: negative Moody's: C Outlook: stable Fitch: CC (domestic) RD (foreign) Outlook: negative
Foreign reserves	$7.409 billion (December 2019) $9.661 billion (31 December 2017 est.)
All values, unless otherwise stated, are in US dollars.

The economy of Venezuela is based largely on the petroleum and manufacturing sectors, and has been in a state of total economic collapse since the mid-2010s. In 2014, total trade amounted to 48.1% of the country's GDP. Exports accounted for 16.7% of GDP and petroleum products accounted for about 95% of those exports. Venezuela is the sixth largest member of OPEC by oil production. Since the 1920s, Venezuela has been a rentier state, offering oil as its main export. From the 1950s to the early 1980s, the Venezuelan economy experienced a steady growth that attracted many immigrants, with the nation enjoying the highest standard of living in Latin America. During the collapse of oil prices in the 1980s, the economy contracted, the currency commenced a progressive devaluation and inflation skyrocketed to reach peaks of 84% in 1989 and 99% in 1996, three years prior to Hugo Chávez taking office. The nation has experienced hyperinflation since 2015, far exceeding the oil price collapse of the 1990s.

Venezuela manufactures and exports heavy industry products such as steel, aluminum and cement. Production is concentrated around Ciudad Guayana, near the Guri Dam, one of the largest dams in the world and the provider of about three-quarters of Venezuela's electricity. Other notable manufacturing includes electronics and automobiles as well as beverages and foodstuffs. Agriculture in Venezuela accounts for approximately 4.7% of GDP, 7.3% of the labor force and at least one-fourth of Venezuela's land area. Venezuela exports rice, corn, fish, tropical fruit, coffee, pork and beef. The country is not self-sufficient in most areas of agriculture.

In spite of strained relations between the two countries, the United States has been Venezuela's most important trading partner. American exports to Venezuela have included machinery, agricultural products, medical instruments and cars. Venezuela is one of the top four suppliers of foreign oil to the United States. About 500 American companies are represented in Venezuela. According to Central Bank of Venezuela, between 1998 and 2008 the government received around US$325 billion through oil production and exports in general.^[17] According to the International Energy Agency (as of August 2015), the production of 2.4 million barrels per day supplied 500,000 barrels to the United States.^[18]

Since the Bolivarian Revolution half-dismantled its PDVSA oil giant corporation in 2002 by firing most of its 20,000-strong dissident professional human capital and imposed stringent currency controls in 2003 in an attempt to prevent capital flight, there has been a steady decline in oil production and exports and a series of stern currency devaluations, disrupting the economy. Further yet, price controls, expropriation of numerous farmlands and various industries, among other disputable government authoritarian and populist policies, including a near-total freeze on any access to foreign currency at reasonable official exchange rates, have resulted in severe shortages in Venezuela and steep price rises of all common goods, including food, water, household products, spare parts, tools and medical supplies; forcing many manufacturers to either cut production or close down, with many ultimately abandoning the country as has been the case with several technological firms and most automobile makers. In 2015, Venezuela had over 100% inflation—the highest in the world and the highest in the country's history at that time. According to independent sources, the rate increased to 80,000% at the end of 2018, with Venezuela spiraling into hyperinflation while the poverty rate was nearly 90 percent of the population. On 14 November 2017, credit rating agencies declared that Venezuela was in default with its debt payments, with Standard & Poor's categorizing Venezuela as being in "selective default".

History

Main article: Economic history of Venezuela

1498–1777

Christopher Columbus sailed along the eastern coast of Venezuela on his third voyage in 1498, the only one of his four voyages to reach the South American mainland. This expedition discovered the so-called "Pearl Islands" of Cubagua and Margarita off the northeastern coast of Venezuela. Later in 1499 Spanish expeditions returned to exploit these islands' abundant pearl oysters, enslaving the indigenous people of the islands and harvesting the pearls intensively. They became one of the most valuable resources of the incipient Spanish Empire in the Americas between 1508 and 1531, by which time the local indigenous population and the pearl oysters had been devastated.

Spanish colonization of mainland Venezuela started in 1502. Spain established its first permanent South American settlement in the what became the city of Cumaná. At the time indigenous people lived mainly in groups as agriculturists and hunters – along the coast, in the Andean mountain range, and along the Orinoco River.

Klein-Venedig (Little Venice) was the most significant part of the German colonization of the Americas, from 1528 to 1546, in which the Welser banking family of Augsburg obtained colonial rights on Venezuela Province in return for debts owed by Charles I of Spain. The primary motivation was the search for the legendary golden city of El Dorado. The venture based in Santa Ana de Coro, was initially led by Ambrosius Ehinger, who founded Maracaibo in 1529. After the deaths of first Ehinger (1533) and then his successor Nikolaus Federmann, Georg von Speyer (1540), Philipp von Hutten continued exploration in the interior, and in his absence from the capital of the province the crown of Spain claimed the right to appoint the governor. On Hutten's return to the capital, in 1546, the Spanish governor Juan de Carvajal had Hutten and Bartholomeus V. Welser executed at El Tocuyo. Subsequently, Charles I revoked Welser's charter.

By the middle of the 16th century, not many more than 2,000 Europeans lived in the region that became Venezuela. The opening of gold mines of San Felipe de Buria led to the introduction of slavery, at first involving the indigenous population, then imported Africans. This encouraged the founding of the city of Nueva Segovia de Barquisimeto, Valencia and Borburata. In 1559 the discover of gold mines of Los Teques and Baruta led to foundation of Caracas and La Guaira. The first real economic success of the colony involved the raising of livestock and tobacco, much helped by the grassy plains known as llanos. The society that developed as a result – a handful of Spanish landowners and widely dispersed native herdsmen on Spanish-introduced horses – recalls primitive feudalism, certainly a powerful concept in the 16th-century Spanish imagination that (perhaps more fruitfully) bears comparison in economic terms with the latifundia of antiquity.

In 1564, British pirates were the first to engage in the Atlantic slave trade in Venezuela. A fleet led by John Hawkins and his second cousin Francis Drake forced the Borburata settlers to buy his cargo of African slaves and goods.

The Spanish Governor of Trinidad, Antonio de Berrio made four failed expeditions to look for El Dorado. Between 1583 and 1589 he carried out his first two expeditions, going through the wild regions of the Colombian plains and the Upper Orinoco. In 1590 he began his third expedition in Guyana, ascending the Orinoco to reach the Caroní River with his own crew and another 470 men under command of Domingo de Vera. In March 1591, while he was waiting for supplies on Margarita Island, his entire force was taken captive by Walter Raleigh, who proceeded up the Orinoco in search of El Dorado, with Berrio as a guide. After several months Raleigh's expedition returned to Trinidad where San Jose de Oruña was burnt to the ground despite de Berrío's protests. Berrio was released at the end of June 1595 on the coast of Cumaná in exchange for some English prisoners. On July 13, Raleigh finally met up with his lieutenants Amyas Preston and George Somers and was told of their remarkable exploits in capturing Caracas, La Guaira and Coro. Fernando de Berrío y Oruña (1577–1622) also made numerous expeditions in search of El Dorado.

In 1596, Raleigh sent his lieutenant, Lawrence Kemys, back to Guyana, to gather more information about the golden city. During his exploration of the coast between the Essequibo River and the Orinoco, Kemys mapped the location of Amerindian tribes and prepared geographical, geological and botanical reports of the country.

The Dutch West India Company built a fort in 1616 on the Essequibo River in Guyana territory. The Dutch traded with the Indian peoples and, as in Suriname, established sugar plantations worked by African slaves. Although Guyana at east of the Essequibo river was claimed by the Spanish Empire, who sent periodic patrols through the region, the Dutch gained control over the region early in the 17th century.

In 1617, Raleigh returned to the New World on a second expedition, this time with Kemys and his son, Watt Raleigh, to continue his quest for El Dorado on the Orinoco river. However, Raleigh, by now an old man, stayed behind in a camp on the island of Trinidad. Watt Raleigh was killed in a battle with Spaniards and Kemys subsequently committed suicide. Upon Raleigh's return to England, King James ordered him to be beheaded for disobeying orders to avoid conflict with the Spanish. He was executed in 1618. During the 1600s tobacco was a very lucrative crop in Venezuela due to its high demand in Europe. The climate and the soil lent itself very nicely to the cultivation of tobacco. Tobacco from Barinas was also backed by the gold standard, with an established conversion rate from tobacco to gold.

The classic era of piracy in the Caribbean lasted from circa 1650 until the mid-1720s. By 1650, France, England and the Netherlands began to develop their colonial empires. This involved considerable seaborne trade, and a general economic improvement: there was money to be made—or stolen—and much of it traveled by ship.

Caribbean colonial governors began to discard the traditional policy of "no peace beyond the Line", under which it was understood that war would continue (and thus letters of marque would be granted) in the Caribbean regardless of peace treaties signed in Europe; henceforth, commissions would be granted only in wartime, and their limitations would be strictly enforced. Furthermore, much of the Spanish Main had simply been exhausted; Maracaibo alone had been sacked three times between 1667 and 1678, while Gibraltar had been raided three times and Cumana six.

The western tip of the Araya Peninsula, knowed for its large, purple-colored natural salt pans, became the new world major site of salt mining during the colonial era. In the late 16th and early 17th centuries, the region was regularly mined for salt by Dutch smugglers, who reportedly numbered one hundred ships annually. The smuggling industry in the region was temporarily stymied by a Spanish punitive expedition sent in 1605, although it soon recovered. Eventually, in 1618, Spanish forces began constructing the fortress El Castillo de Santiago de Araya to guard the peninsula. On November 27, 1622, a fleet of forty-three Dutch salt freighters bombarded the Spanish defenses for two days, then immediately landed more than a thousand men who launched into the assault of the partially construct fort but were defeated. In January 1623 a new Dutch fleet anchored in Refriegas, fired for two days on the fort's defenses, but failed to subdue the garrison. When it was completed in 1665, the fortress permanently put an end to Dutch incursions.

In 1634, after the Netherlands achieved independence from Spain following the Eighty Years' War, the fleet of Dutch West India Company under Admiral Johann van Walbeeck invaded the island of Curazao and the Spaniards surrendered in San Juan. The approximately thirty Spaniards and a large part of the Caquetio indigenous were deported to Santa Ana de Coro in Venezuela. Dutch colonists started to occupy the Curazao and Aruba islands. Commerce, slaves trade, shipping and piracy became Curaçao's most important economic activities. Later, salt mining became a major industry.

The colony in Suriname river had originally been founded in the 1650s by Francis Willoughby, 5th Baron Willougby of Parham, the British governor of Barbados. It was captured by the Dutch under Abraham Crijnsen during the Second Anglo–Dutch War. On July 31, 1667, under the Treaty of Breda the Dutch offered New Netherland (including New Amsterdam, modern-day New York City) in exchange for their sugar factories on the coast of Suriname. In 1683, Suriname was sold to the Dutch West India Company. The new colony called Dutch Guiana developed an agricultural economy based on African slavery.

During the 16th and 17th centuries, the cities that constitute today's Venezuela suffered relative neglect by Spain crown. The Viceroyalties of New Spain and Peru (located on the sites that had been occupied by the capital cities of the Aztecs and Incas, respectively) showed more interest in their nearby gold and silver mines than in the remote agricultural societies of Venezuela. Responsibility for the Venezuelan territories shifted to and between the two viceroyalties. In the early 17th century, expensive fortifications and the size of the colonial garrisons at the major Spanish ports increased to deal with the enlarged presence of Spain's competitors in the Caribbean, but the treasure fleet's silver shipments and the number of Spanish-owned merchant ships operating in the region declined.

In the 18th century, a second Venezuelan society formed along the coast with the establishment of cocoa, sugar cane and indigo plantations manned by much larger importations of African slaves. Quite a number of black slaves also worked in the haciendas of the grassy llanos. Most of the Amerindians who still survived had perforce migrated to the plains and jungles to the south, where only Spanish friars took an interest in them – especially the Franciscans or Capucins, who compiled grammars and small lexicons for some of their languages. The friars founded several missións (the name for an area of friar activity) in the Guayana Region where developed an agricultural emporium based on livestock and cotton cultivation.

Between 1700 and 1728, only five vessels set sail from Spain to Venezuela. By the time unlicensed trading, especially in tobacco, which existed along the Orinoco River mostly benefited the Dutch, English, and French smugglers, who were preferred by the Spanish landholders as trade partners. The Venezuelan possessions and their managerial wealthy Creole class thus operated detached from the metropolis. The Venezuelan colonial system turned into an embarrassment and hardly productive for the Spanish Crown in terms of revenue.

Seat of the Guipuzcoana Company in La Guaira

The Province of Venezuela came under the jurisdiction of the Viceroyalty of New Granada (established in 1717). The Real Compañía Guipuzcoana de Caracas was created in 1728 by the King Phillip V to held a close monopoly on trade with Europe. Since 1730 it stimulated the Venezuelan economy, especially in fostering the cultivation of cacao beans, which became Venezuela's principal export. It opened Venezuelan ports to foreign commerce, but this recognized a fait accompli. Like no other Spanish American dependency, Venezuela had more contacts with Europe through the British, Dutch and French islands in the Caribbean. In an almost surreptitious, though legal, manner, Caracas had become an intellectual powerhouse. From 1721, it had its own university, which taught Latin, medicine, and engineering, apart from the humanities. José Gumilla, a Jesuit priest, is credited with introducing coffee into Venezuela, in 1732. By 1770, the Province of Venezuela, known as the land of plantations dependent on slave labour, the cocoa became the major crop, overshadowing tobacco and sugar cane.

1777–1893

The Province of Venezuela became the Captaincy General of Venezuela in 1777 by capitulation of Charles III of Spain including the islands of Margarita, Trinidad, and Tobago along with the Maracaibo, New Andalucia and Guayana Provinces at east of Essequibo river. From 1793, there were many large coffee plantations in the country. By the beginning of the 18th century, the crops of sugar cane and the assembly of mills and factories were scattered in Caracas, Guanare, Trujillo, Trinidad island, Carora, El Tocuyo, Mérida, Barquisimeto, Turmero, La Victoria, Boconó and San Cristóbal. The most prominent sugarcane areas of the time were: Cumaná, Cumanacoa, Carúpano and Río Caribe, which had optimal lands to extend the cultivation of the cane, however there were no less important ones such as La Grita, Bailadores, El Tocuyo, Trujillo, Ejido, Lagunillas, Barinas, small towns like Maracay, Mesa del Llano, Chiguará, among others. At the end of that century, in the Province of Venezuela, 348 sugar mills were stocked, which supplied melao to numerous people who kept taking sugarcane spirits, used as a drink and medicine. In the last decade of the 18th century, more than 50% of cocoa production was in Venezuela. At that time, a third of the world's cocoa production was consumed by the Spaniards and the cultivation begins to spread in Brazil. By 1796 Britain had control of the colonies of Essequibo, Demerara, and Berbice. On February 18, 1797, a Royal Navy fleet of 18 warships under the command of Sir Ralph Abercromby invaded and took the Island of Trinidad. Within a few days the last Spanish Governor, Don José María Chacón surrendered the island to Abercromby. In 1800 the German naturalist Alexander von Humboldt said "In Venezuela we saw the savagery of slavery” as he reported in his Studies. A phenomenon that Humboldt later denounced as "the greatest of all the evils that has afflicted mankind." Humboldt had estimated the population of the province of Venezuela at around one million. It was only in the 1810 when coffee became the major plantation crop. Independence wars saw Venezuela possibly the most impoverished country in Spanish America. A calculation made by Agustin Codazzi, an Italian officer put the population at 810,000 Whether these figures are reliable or not, it is undeniable that after over a decade of incessant warfare, Venezuela's population must have gone down, if not from the wars themselves, from the unstable social conditions they engendered.

The war of independence in the country also resulted in decline of growth of cacao due to neglect and destruction. However, growth of coffee took a rising trend as its prices in the North Atlantic nations was booming and Venezuela had free trade agreement with these nations. By the 1830s, Venezuela was the third largest coffee exporter in the world. The town of El Callao has been a gold-mining centre since 1853, following the discovery of the metal in that year, allowed that many workers from the British and French caribbean islands came to the town.

Lithography depicting the abolition of slavery in Venezuela

Social contract with the Venezuelan government issued in 1861, showing the existance of the Bank of Venezuela

In 1854, the president José Gregorio Monagas decree the abolition of slavish, paid the owners an amount of money stipulated by each slave, and in consequence many plantations went bankrupt. Despite the just freedom so longed for and achieved by the slaves; they were freed and stripped of their homes, thrown out of the lands they worked and did not belong to them, without food and without the possibility of education and development. Th same year a U.S. captain discovered the abundant quantities of guano on Isla de Aves and systematic mining started not long after. Both the Dutch and Venezuelan authorities found out and protested. The Dutch sent a warship to the island. Its captain found Americans loading guano. He informed them that the Dutch considered Aves to belong to the Netherlands Kingdom. After the Federal War (1859–1863) the Dutch authorities on Curaçao, sat down with the Venezuelans and together decided to find a mutually acceptable sovereign to decide about the ownership of Aves Island. The Queen Isabella II of Spain was accepted by both parties, and in 1865 ruled on the issue, deciding in favor of the Venezuelans acknowledged the time honored rights of the Dutch colonies of Saba and Sant Eustaquio to fish in the waters around Aves. During the presidency of the general Antonio Guzmán Blanco (three separate terms, from 1870 until 1877, from 1879 until 1884, and from 1886 until 1887), Venezuela witnessed all round development (development of Caracas is largely attributed to him). The coffee production and gold mining increased rapidly as there was an additional support in the form of loans from foreign countries. He stabilized the public debt, encouraged the construction of railroads and roads, promoted the free education and restricted ecclesiastical privileges.

While Venezuelan politicians sought unsuccessfully to entice European farmers to the coffee frontier, Andean peasants and others from Colombia spontaneously colonized extensive areas of the mid-slopes suitable for coffee harvest. On September 3, 1878, the Regional Executive of Tachira State granted Manuel Antonio Pulido the required license to extract oil of La Alquitrana. Immediately, he founded Táchira's Petrolia Mining Company, on October 12, 1878 th first private oil company of Venezuela. The concession was granted for 50 years and extendable for another 49, until 1928. In 1878 the Aves island was again occupied by American guano miners until supplies were exhausted in 1912. In 1883 the government of Venezuela signed a contract with Americans Horacio R. Hamilton and Jorge A. Phillips who received concessions for 25 years to mine the asphalt of lake Guanoco the major of the world. This concession caused some debate as the profits went to foreign companies. By 1885 Venezuela was the world's nation leading producer of gold. The mine El Callao, at that time was one of the richest in the world, and the goldfields as a whole saw over a million ounces exported between 1860 and 1883. The gold mining was dominated by immigrants from the British Isles and the British West Indies, giving an appearance of almost creating a British colony on Venezuelan territory. In October 1886, Britain declared the Schomburgk Line to be the provisional frontier of British Guiana near of Venezuelan goldfields but far west of the original boundary of Essequibo river. Venezuela finally broke diplomatic relations with Britain in 1887 and appealed to the United States for help. Proposals for a renewal of relations and settlement of the dispute failed repeatedly, and by summer 1894, diplomatic relations had been severed for seven years. In addition, both sides had established police or military stations at key points in the area, partly to defend claims to the Caratal goldfield of the Yuruari basin, which was within Venezuelan territory but claimed by the British.

In 1890, the asphalt mining of Lake Guanoco started by the New York & Bermúdez Company, a subsidiary of General Asphalt based in New York. The product used in the manufacturing and road surfacing industries was exported to the United States and Brasil. By the time grew the European demand for heron pen, animal skin, caucho, tropical woods and sarrapia which served to postpone the inevitable economic debt crisis a little, when the price of the heron pen reached $ 500 per pound.

1894–1922

In 1894, the Venezuelan coffee production peaked to 106,338 tonnes and as export country were second only to Brazil. Coffee grown in Venezuela was largely consumed by locals and the rest was sold mainly to the United States, Belgium, Italy and Germany. In 1895, the dispute of the Essequibo territory became a crisis, the key issue became Britain's refusal to include in the proposed international arbitration the territory east of the Schomburgk Line. The crisis ultimately saw Britain accept the United States diplomatic intervention to force arbitration of the entire dispute territory, and tacitly accept the US right to intervene under the Monroe Doctrine. A tribunal convened in Paris by 1898 to decide the matter, and in 1899 awarded the bulk of the disputed territory to British Guiana. By 1899 the first gold rush at El Callao was over and the mines were for long thought to be exhausted. The same year Cipriano Castro successfully attacked Caracas after a blitzkrieg expedition from Colombia boundary to overthrow the regime of Ignacio Andrade. Installed as the supreme military commander and later as president of Venezuela, Castro inaugurated a period of plunder and political disorder. In 1900–1901 the Venezuelan government put higher taxes on the foreign companies; in response these companies supported a coalition of regional caudillos under the tycoon banker Manuel Antonio Matos with the intention to overthrow Castro. The conflict escalated in a civil war named as the Revolucion Libertadora that shook the country and brought the government to the brink of collapse, but after the revolution's defeat suffered in the Siege of La Victoria (November 1902), the vast network of armies and its extraordinary power was weakened, being a wound that could not be recovered.

In December 1902, when Castro refused to make payments on foreign debts, British, German, and Italian warships set up a blockade to force payment. The issue was eventually resolved in 1903 through arbitration in Washington promoted by US President Theodore Roosevelt. The revolution succumbing finally in 1903 in the battle of City Bolivar, with which Matos decides to leave Venezuela, establishing itself in Paris. The conflict led to a temporary interruption in the diplomatic relations with the USA between June and December 1908, after Castro had expropriated the New York & Bermudez Company.

In 1908, Juan Vicente Gómez replaced by coup d'état his ailing predecessor, Cipriano Castro, as the president of Venezuela absent. Over the next few years, Gómez granted several concessions to explore, produce, and refine oil. Most of these oil concessions were granted to his closest friends, and they in turn passed them on to foreign oil companies that could actually develop them. On 15 April 1914, the Caribbean Petroleum Company (filial of Royal Dutch Shell) completed the Zumaque-I oil well and was discovered the first Venezuelan oilfield of importance, Mene Grande in the Maracaibo Basin. This major discovery encouraged a massive wave of foreign oil companies to Venezuela in an attempt to get a piece of the action.

From 1914 to 1917, several more oil fields were discovered across the country including the emblematic Bolivar Coastal Field by Pan American Oil; however World War I slowed significant development of the industry. By the end of 1917, began the San Lorenzo refinery to process the Mene Grande field production, and the first significant exports of Venezuelan oil left from the San Lorenzo terminal. By 1918 Shell open the Isla Refinery in Curazao to process Venezuelan oil.

In the Andean frontier region coffee production had increased ten times (between 1830 and 1930) making it the second largest coffee producing nation in the world. More than 82,000 tonnes of coffee were produced in 1919; however, poor agricultural practices, soil erosion, less incidence of rainfall and over use of soil strength caused a drastic decline in the yield, in the 1920s.

Venezuela heron pen supplied the French market (66.6%) followed by the English market (21.9%); on a smaller scale the markets: German (7.71%) North American (3.6%). Unscrupulous people hunted herons and killed by thousands in order to seize the valuable plumage. The price fell vertically in 1914, therefore the pen trade was reduced the 19 years of boom stimulated the disorder and almost exterminated the herons.

1922–1958

All that changed on December 14, 1922, when Shell drilled Los Barrosos II beneath Cabimas at the Lake Maracaibo basin, a blowout spouting wildly at the rate of 100,000 barrels a day. The president Juan Vicente Gómez allowed that many oil American companies (Standard, Socony, Chevron, Gulf, Sinclair, Phillips, Amoco, Texaco) and workers from other parts of Venezuela and abroad came to Maracaibo, Cabimas, Lagunillas increasing its population. Most foreign personnel were of American or Dutch origin. Gomez brought about the end of civil wars by exerting power over regional caudillos and, as a result, Venezuela became a peaceful country and would remain so for decades. Ironically, the elimination of the caudillo problem and the choosing of Eleazar López Contreras as his last minister of war and marine paved the way to the emergence of modern democracy; see Generation of 1928. Gómez managed to deflate Venezuela's staggering debt by granting concessions to foreign oil companies, which won him the support of the United States and the European powers. He repaid all foreign and internal debt using excess reserves from oil and coffee revenous; his fiscal conservatism helped the country get through the Crash of 1929 and led to an increase in the value of the bolívar to the point of becoming hard currency. In just ten years, from 1920 to 1930, Venezuela became the world ́s leading oil exporter, remaining so for four decades, the oil sector rose from 2.5% of gross domestic product to almost 40%, with agriculture falling from 39% to 12.2%. By the 1920s two refineries were built in Aruba Island to process Venezuelan oil, The Eagle at Oranjestad and Lago at Sint Nicolaas, bringing greater prosperity to the Netherlands islands. The Great Depression caused the fall of coffee and other commodities prices, prompting most countries in the region to devalue their currency to maintain the competitiveness of their exports. Venezuela, on the contrary, gives in to pressure from the trade lobby and organizes the importation of everything the country consumes. Between 1929 and 1938, the Central Bank of Venezuela raised the value of the Bolivar by 64%, closing the doors of international trade to the agricultural sector that still provided 22% of GDP and employed 60% of the labor force. Venezuela has thus moved from a 96% economy based on cocoa and coffee to an oil economy resulting in an phenomenon known as ‘The Dutch Disease’, where a commodity increases income for one sector of the economy to the detriment of other sectors due to a strong currency. Due to this, Venezuela fell behind other Latin American countries in terms of the level of industrialisation.

In 1936, the Venezuelan government first introduced the motto ‘Sembrar el petroleo’, meaning ‘to sow the oil’. The idea of this was that oil revenues were fleeting, and so reinvesting oil income into agriculture and other industry would benefit Venezuela. This ended up having limited effects in the economy as World War II broke out and Venezuela continued supplying large amounts of oil to the United States.

Previously in 1934 the commercial mining of the asphalt in Guanoco lake stopped and has not been re-established since.The beginning of World War II in 1939 and the increase in oil demand (internationally) placed Venezuela in the third largest producer of crude oil, in the world, and in the first exporter, of those years (1939–1945). By the time the refineries of Curazao and Aruba grew to become one of the largest industrial complex in the world. Petroleum revenues declined sharply in 1941–42 because of War transportation squeeze, and President Medina used a 1943 oil law to transform the Gomecist oil concessions regime into new concessions for 40 years based on tougher fiscal terms and more government control raise the nation's share to 43 % of profits from the petroleum industry. As the transportation shortage eased, his government granted new concessions and stimulated a petroleum boom. At that time Venezuela was the Allies' top oil supplier during the war occurring in the European continent. In 1945, after a coup d'état brought to power a left-leaning government of Romulo Betancourt and election of president Romulo Gallegos the oil companies accepted a reform of 1943 law based on the 50 % share profit principle with no concessions, described as "a landmark event", which was subsequently replicated in several producing countries as Saudi Arabia. Nevertheless, army officers Carlos Delgado Chalbaud, Marcos Pérez Jiménez and Luis Felipe Llovera Páez, threw him out of power November in the 1948 Venezuelan coup d'état. In Paraguana peninsula the capacity of oil refining grew dramatically when the Cardón Refinery of Royal Dutch Shell started operations in 1949 with capacity to refine 30 thousand barrels per day (4,800 m³/d). The Amuay Refinery was established by Creole Petroleum in 1950 with a capacity of 60 thousand barrels per day (9,500 m³/d)

During Pérez Jiménez dictatorship from 1952 to 1958, Venezuela enjoyed remarkably high GDP growth, so that in the late 1950s Venezuela's real GDP per capita almost reached that of West Germany. The continuous growth of oil and manufacture industries during that period attracted many European immigrants.

In 1950, Venezuela was the world's 4th wealthiest nation per capita. From the 1950s to the early 1980s, the Venezuelan economy, which was buoyed by high oil prices, was one of the strongest and most prosperous in South America.

However, after fraudulent plebiscite of December 1957 the 23 January 1958, the dictator Pérez Jiménez was overthrown. A transition government was established under Rear Admiral Wolfgang Larrazábal and then Edgar Sanabria. During the interim presidency Sanabria implemented the Supplementary Tax Law through which the tax rate is raised to oil companies from 50 to 60% and the December 1958 general elections saw Democratic Action candidate Rómulo Betancourt elected as new president.

1959–1990s

Take office on 13 February 1959, Betancourt inherited an enormous internal and external debt caused by rampant public spending during the dictatorship. Nevertheless, he managed to balance Venezuela's public budget and initiate an unsuccessful agrarian reform.

After the Eisenhower Administration decreed oil import quotas to protect U.S. domestic producers from cheap Middle East oil, a world glut quickly developed that forced Venezuela to sell its oil at $1.40 a barrel in 1959, when a similar volume of mineral water was selling for $5. The oil glut led Juan Pablo Pérez Alfonzo, Venezuelan petroleum minister, to travel among the producing countries of the Middle East and North Africa to form an international oil cartel, that would become OPEC with Venezuela as top oil exporter in the world. The creation of the Venezuelan Petroleum Corporation (Corporación Venezolana del Petróleo — CVP), conceived to oversee the national petroleum industry, was considered a radical revolutionary idea at the time by its opponents, but essential to Venezuela's independence and fiscal solvency by a visionary nationalistic Betancourt.

Agrarian reform of 1961 distributed unproductive private properties and public lands to halt the decline in agricultural production. Landowners who had their properties confiscated received generous compensation. Circa 200,000 families receive land, largely in the early 1960s.

The president Rafael Caldera administration took advantage of momentous developments in the international oil trade in 1969. In his official visit to the U.S.A. in 1970, Caldera obtained a commitment from the Nixon administration to increase the market share of Venezuelan petroleum exports to the United States. But at his return Caldera nationalized the natural gas industry, and enacted stringent laws regulating the oil companies that operated in Venezuela. In response the 1970 Venezuelan oil production reached an all-time high of 3.8 million barrels per day (BPD). In 1971, Caldera raised the oil profit tax from 60 to 70 per cent. In addition, he passed the hydrocarbons reversion law which provided that all oil company assets would go to the State once the concessions had elapsed. This law paved the way for the nationalization of the oil industry.

The gold mines of El Callao, for long thought to be exhausted, were reactivated by Minerven, a Venezuelan national mining corporation. due a combination of new technology and high gold prices in the 1970s.

One of the most radical aspects of Carlos Andres Pérez's 1973 electoral program was the notion that oil was a tool for under-developed nations like Venezuela to attain first world status and usher a fairer, more equitable international order. Dramatic events in the Middle East, including the Yom Kippur War of 1973, contributed to the implementation of this vision. His policies, including the nationalization of the iron and petroleum industries, investment in large state-owned industrial projects for the production of aluminium and hydroelectric energy, infrastructure improvements and the funding of social welfare and scholarship programmes, were extremely ambitious and involved massive government spending, to the tune of almost $53 billion. After the oil embargo promoted by OPEC Arabs countries in 1974, Venezuela remains one of the principal exporters of oil to the United States. Drastic increases in petroleum prices led to an economic bonanza just as Pérez started his first term. The Congress of Venezuela voted to nationalize its iron industry, effective 1 January 1975, and oil industry outright, effective 1 January 1976, with Petróleos de Venezuela (PDVSA) presiding over a number of holding companies. In subsequent years, Venezuela built a vast refining and marketing system in the United States and Europe.

Buoyed by a strong oil sector, Venezuela's governments were able to maintain social harmony by spending fairly large amounts on public programs including health care, education, transport and food subsidies. Literacy and welfare programs benefited tremendously from these conditions. Because of the oil wealth, Venezuelan workers "enjoyed the highest wages in Latin America". During that period Venezuela attracted many Latin American immigrants pushed by dictatorships. The president Luis Herrera Campins Government continued President Pérez policy of borrowing on a world market awash with petrodollars, and by the early 1980s Venezuela owed the banks more than $20 billion. Campins signed an agreement with Mexico in 1980 to jointly provide Central American and Caribbean countries with a steady flow of oil, a precursor of Hugo Chávez's wide-reaching oil diplomacy in the developing world. The Government's tacit assumption was that oil prices would remain high forever, and would sustain high levels of public and private sectors. This situation was reversed when oil prices collapsed in 1983. The Central Bank of Venezuela, which had always been zealous about national reserves, took fright at their growing depletion, but instead of counter-acting with incentives to reverse the outward flow, the Bolivar was officially devalued by over 50% on its previous 4.30 to the Dollar in the called Black Friday of February,13. The government, in brief, was not going to subsidize the Bolivar at its previous rate. But the measure encouraged a further massive flight of dollars, and the government then clamped full currency control. The economy contracted and inflation levels (consumer price inflation) rose, remaining between 6 and 12% from 1982 to 1986. The agency called "Differential Change Regime" (Régimen de Cambio Diferencial(RECADI)) was established to manage a system of differential exchange rates and capital controls. RECADI saw widespread corruption, and became a substantial scandal when five former ministers were arrested, although the charges were later dropped.

The term of Jaime Lusinchi started in 1984, promising to govern with fairness, transparency, social sensitivity and austerity in the use of public funds, while presenting himself as a moderate president. The first three years of his presidency were characterized by efforts to achieve economy stability, the paying off of the foreign debts, the reduction of public spending, the implementation of social programs benefiting the people and the promotion of industrial growth. These goals were not accomplished. However, agriculture and the coal, bauxite and iron mining were developed during his administration, the country achieved positive growth rates at the end of 1984, with a growth rate of 6% in GDP, but the official rate of unemployment inherited from the previous government of Luis Herrera Campins was 20%.

During this period, the government started negotiations to restructure interest payments and amortizations of the foreign debt, which in 1985 was 36 billion dollars (of which 28 billion was from the public sector), contracted with the international private banking and multilateral agencies. Between 1970 and 1985, oil production in Venezuela experienced a decline of over 50%, but then production there once again began to grow after the opening of El Furrial oilfield. The first positive result of this effort was that Venezuela regained a credit-eligibility rating. In addition, Lusinchi took initiatives to increase oil prices via OPEC and PDVSA in 1986, acquired fifty percent of Citgo (an American company that controlled 10% of the US domestic oil market), Nynas Oel (Sweden) and leased the Isla Refinery in Curaçao.

The inflation rate peaked in 1989 at 84%, the year the capital city of Caracas suffered from rioting during the Caracazo following the cut of government spending and the opening of markets by President Carlos Andrés Pérez second term. After Pérez initiated such liberal economic policies, the differential exchange rate system (RECADI) was abolished and made Venezuelan markets more free, Venezuela's GDP went from a −8.3% decline in 1989 to growing 4.4% in 1990 and 9.2% in 1991, though wages remained low and unemployment was high among Venezuelans. With regard to oil policy, Perez opened the mature oilfields to foreign investment which served as leverage to significantly increase oil production to 2.6 million barrels a day, with the potential to reach the goal of 5 million barrels a day in a few years. In 1990 PDVSA acquire the remainder fifty per cent of Citgo, creating a lucrative export chain from Venezuelan soil to American consumers, as the two largest buyers of Venezuelan petroleum are the United States and China, respectively.

Some state that neoliberalism was the cause of Venezuelan economic difficulties, though overreliance on oil prices and a fractured political system without parties agreeing on policies caused many of the problems.

In 1992, his government survived two coup attempts. The first attempt took place 4 February 1992, and was led by Lieutenant-Colonel Hugo Chávez, who was later elected president. The second, and much bloodier, insurrection took place on 27 November 1992, with many more deaths than the first.

On 20 March 1993, Attorney General Ramón Escovar Salom introduced action against Pérez for the embezzlement of 250 million bolivars belonging to a presidential discretionary fund, or partida secreta, used to support and hire bodyguards for President Violeta Chamorro. On 21 May 1993, the Supreme Court considered the accusation valid, and the following day the Senate voted to strip Pérez of his immunity. Pérez refused to resign, but after the maximum 90 days temporary leave available to the President under 1961 constitution, the National Congress removed Pérez from office permanently on 31 August.

Rafael Caldera's second term (1994–1999} inherited and faced three adversities of great magnitude: a steep decrease in oil prices, the economic recession and high inflation of 1993, and a huge banking crisis, primarily caused by lax government oversight that allowed bank owners and executives to take loans for themselves without appropriate guaranties.

The fiscal deficit forced Caldera's government to apply a severe austerity plan that included a ten per cent cut of the federal budget in 1994 and, simultaneously, a reform of fiscal legislation and the creation of SENIAT, a new tax collection agency. In January 1994, less than a month before Rafael Caldera's inauguration, the second largest bank in Venezuela, Banco Latino, failed and was taken over by the government. As of October 1994, the government had seized more than ten failed banks. As René Salgado explains in his research on government and economics in Venezuela, "the government's bailout of the financial sector guaranteed approximately 6 billion dollars to depositors, which represented roughly 75 percent of the annual national budget and an alarming 13 percent of the gross domestic product. Additional bank failures continued throughout the year and into 1995". In light of this situation, the government applied currency exchange and price controls temporarily until 1996 when the crisis was overcome. With regard to oil policy, Caldera opened the industry to foreign investment which served as leverage to significantly increase oil production from 2.6 to 3.3 million barrels a day, with the potential to reach the goal of 5 million barrels a day in a few years.

By the mid-1990s, Venezuela saw annual inflation with an exceptional peak in 1996 at 100%. The percentage of people living in poverty rose from 36% in 1984 to 66% in 1995, with the country suffering a severe banking crisis (Venezuelan banking crisis of 1994).

In agreement with the International Monetary Fund, Caldera implemented in 1996 a new economic plan, called Agenda Venezuela, which "increased domestic fuel prices, liberalized interest rates, unified the exchange rate system under a temporary float, abolished controls on current and capital transactions, eliminated price controls (except for medicines), and strengthened the social safety net".

By 1997 the Paraguaná Refinery Complex (Template:Lang-es) was created after PDVSA project of operational interconnection of Amuay, Bajo Grande and Cardón refineries. At that time it was considered the world's largest oil refinery with a capacity of 940 000 barrels per day. A noteworthy achievement in this administration was the tripartite agreement over labor benefits, social security, and pension funds, reached between labor unions, the private business sector, and the State, after ten years of stalled negotiations. The same year, as it sought to attract foreign investment and develop the heavy oil in the Orinoco Belt, Venezuela opened up its oil industry to foreign investment, the gross domestic product (GDP) grew above five per cent and inflation rate was cut in half but the 1997 Asian financial crisis brought oil prices to dramatic low levels, forcing government to make large budget cuts.

By 1998, violating the lower OPEC quotas Venezuela's oil production had recovered to 3.5 million BPD, nearly reaching its 1970 former high . The economic crisis had grown even worse with the per capita GDP at the same level as 1963 (after adjusting 1963 dollar to 1998 value), down a third from its 1978 peak; and the purchasing power of the average salary was a third of its 1978 level. In this environment of economical weakness an the collapse of confidence on political parties, Hugo Chávez was elected President in December 1998.

1999–2013

Main article: Economic policy of the Hugo Chávez government

In 2016, Venezuela had the highest annual inflation in the world (Venezuela is the country colored pink in northern South America)

Venezuela's historic inflation rate beside annual oil revenues.

Hugo Chavez took Presidential office in February 1999. In 2000, oil prices soared, offering Chávez funds not seen since Venezuela's economic collapse in the 1980s. Chávez then used economic policies that were more social democratic than those of his predecessors, using populist approaches with oil funds that made Venezuela's economy dependent on high oil prices. Chávez also played a leading role within OPEC to reinvigorate the organization and obtain members' adherence to lower quotas designed to drive up the oil price. Alí Rodríguez Araque, the Venezuelan oil minister, gave an announcement in 1999 that his country would respect OPEC production quotas, which marked "a historic turnaround from the nation's traditional pro-US oil policy". Additionally the government sought international assistance to finance reconstruction after massive flooding and landslides in December 1999 caused an estimated US$15 billion to $20 billion in damage.

In the first four years of the Chávez presidency, the economy grew at first (1999–2001), then contracted from 2001–2003 to GDP levels similar to 1997. At first, the economic decline was due to low oil prices, but it was fueled by the turmoil of the 2002 coup attempt and the 2002–2003 business strike. Other factors of the decline were an exodus of capital from the country and a reluctance of foreign investors. GDP was 50.0 trillion bolivares in 1998. At the bottom of the recession in 2003, it was 42.4 trillion bolivares (in constant 1998 bolivares). However, GDP rebounded 50.1 trillion bolivares with a calmer political situation in 2004 and rose to 66.1 trillion bolivares in 2007 (both in constant 1998 bolivares). He created Petrocaribe to provide Central American and Caribbean countries with a steady flow of oil, an example of wide-reaching oil diplomacy in the developing world.

The hardest hit sectors in the worst recession years (2002–2003) were construction (−55.9%), petroleum (−26.5%), commerce (−23.6%) and manufacturing (−22.5%). The drop in the petroleum sector was caused by adherence to the OPEC quota established in 2002 and the virtual cessation of exports during the PDVSA-led general strike of 2002–2003 that fired 20000 workers. The non-petroleum sector of the economy contracted by 6.5% in 2002. The bolivar, which had been suffering from serious inflation and devaluation relative to international standards since the late 1980s, continued to weaken.

The inflation rate as measured by consumer price index was 35.8% in 1998, falling to a low of 12.5% in 2001 and rising to 31.1% in 2003. Historically, the highest yearly inflation was 100% in 1996. In an attempt to support the bolivar, bolster the government's declining level of international reserves and mitigate the adverse impact from the oil industry work stoppage on the financial system, the Ministry of Finance and the central bank suspended foreign exchange trading on 23 January 2003. On 6 February, the government created CADIVI, a currency control board charged with handling foreign exchange procedures. The board set the US$ exchange rate at 1,596 bolivares to the dollar for purchases and 1,600 to the dollar for sales.

From 1999 til mid 2008, the price of oil rose significantly. It was explained by the rising oil demand in countries like China and India. After recession in 2003 the political situation began to stabilize, throughout the current economic expansion. Real (inflation-adjusted) GDP has grown by 76 percent . It is likely that the government's expansionary fiscal and monetary policies, as well as exchange controls, have contributed to the current economic upswing. Central government spending has increased from 21.4 percent of GDP in 1998 to 30 percent in 2006. Real short-term interest rates have been negative throughout all or most of the recovery (depending on the measure—see Figure 4). The government's revenue increased even faster than spending during this period, from 17.4 to 30 percent of GDP over the same period, leaving the central government with a balanced budget for 2006. The government has planned conservatively with respect to oil prices: for example, for 2007, the budget plans for oil at $29 per barrel, 52 percent under the average $60.20 dollars per barrel that Venezuelan crude sold for last year. The government has typically exceeded planned spending as oil prices come in higher than the budgeted price, so it is possible that spending would be reduced if oil prices decline.

In the middle of the financial crisis of 2007–2008, the price of oil underwent a significant decrease after the record peak of US$147.27 it reached on July 11, 2008. On December 23, 2008, WTI crude oil spot price fell to US$30.28 a barrel, the lowest since the financial crisis of 2007–2008 began. The price sharply rebounded after the crisis and rose to US$82 a barrel in 2009.

The housing market in Venezuela shrunk significantly with developers avoiding Venezuela due to the massive number of companies who have had their property expropriated by the government. According to The Heritage Foundation and The Wall Street Journal, Venezuela had the weakest property rights in the world, scoring only 5.0 on a scale of 100, with expropriation without compensation being common. The shortage of housing is so significant that in 2007 a group of squatters occupied Centro Financiero Confinanzas, a cancelled economic center that was supposed to symbolize Venezuela's growing economy.

The Venezuelan economy shrank 5.8% in the first three months of 2010 compared to the same period of 2009 and had the highest inflation rate in Latin America at 30.5%. President Chávez expressed optimism that Venezuela would emerge from recession despite the International Monetary Fund (IMF) forecasts showing that Venezuela would be the only country in the region to remain in recession that year. The IMF qualified the economic recovery of Venezuela as "delayed and weak" in comparison with other countries of the region. Following Chavez's death in early 2013, Venezuela's economy continued to fall into an even greater recession.

2013–present

Main articles: Crisis in Venezuela, 2013–present economic crisis in Venezuela, and Hyperinflation in Venezuela

Shortages in Venezuela leave store shelves empty

Upon the death of Hugo Chávez on 5 March 2013, Nicolas Maduro assumed the powers and responsibilities of the president. He appointed Jorge Arreaza to take his place as vice president. Since Chávez died within the first four years of his term, the Constitution of Venezuela states that a presidential election had to be held within 30 days of his death. On 14 April 2013 Nicolás Maduro was elected President of Venezuela, narrowly defeating opposition candidate Henrique Capriles with just 1.5% of the vote separating the two candidates. Capriles immediately demanded a recount, refusing to recognize the outcome as valid. Maduro was later formally inaugurated as President on 19 April, after the election commission had promised a full audit of the election results.

According to the misery index in 2013, Venezuela ranked as the top spot globally with the highest misery index score. Due to such complications, many Venezuelans died avoidable deaths with medical professionals having to use limited resources using methods that were replaced decades ago.The International Finance Corporation ranked Venezuela one of the lowest countries for doing business with, ranking it 180 of 185 countries for its Doing Business 2013 report with protecting investors and taxes being its worst rankings. In early 2013, the bolívar fuerte was devalued due to growing shortages in Venezuela. The shortages included necessities such as toilet paper, milk and flour. Shortages also affected healthcare in Venezuela, with the University of Caracas Medical Hospital ceasing to perform surgeries due to the lack of supplies in 2014. The Bolivarian government's policies also made it difficult to import drugs and other medical supplies. During 2014–2015, OPEC members consistently exceeded their production ceiling, and China experienced a marked slowdown in economic growth. At the same time, U.S. oil production nearly doubled from 2008 levels, due to substantial improvements in shale "fracking" technology in response to record oil prices. A combination of factors led a plunge in U.S. oil import requirements and a record high volume of worldwide oil inventories in storage, and a collapse in oil prices. Owing to high oil reserves, lack of policies on private property and low remittances, by 2012, 90% of Venezuela's revenues came from oil and its derivatives. With the fall in oil prices in early 2015 the country faced a drastic fall in revenues of the US currency along with commodities.

In addition, the government had not made policy changes to adapt to the low petroleum price.

An opposition protester during the 2014 Venezuelan protests holding a sign saying: "I protest for the scarcity. Where can we get these?"

In 2014, Venezuela entered an economic recession having its GDP growth decline to −3.0%. Venezuela was placed at the top of the misery index for the second year in a row. The Economist said Venezuela was "[p]robably the world's worst-managed economy". Citibank believed that "the economy has little prospect of improvement" and that the state of the Venezuelan economy was a "disaster". The Doing Business 2014 report by the International Finance Corporation and the World Bank ranked Venezuela one score lower than the previous year, then 181 out of 185. The Heritage Foundation ranked Venezuela 175th out of 178 countries in economic freedom for 2014, classifying it as a "repressed" economy according to the principles the foundation advocates. According to Foreign Policy, Venezuela was ranked last in the world on its Base Yield Index due to low returns that investors receive when investing in Venezuela. In a 2014 report titled Scariest Places on the Business Frontiers by Zurich Financial Services and reported by Bloomberg, Venezuela was ranked as the riskiest emerging market in the world. Many companies such as Toyota, Ford Motor Co., General Motors Company, Air Canada, Air Europa, American Airlines, Copa Airlines, TAME, TAP Airlines and United Airlines slowed or stopped operation due to the lack of hard currency in the country, with Venezuela owing such foreign companies billions of dollars. Venezuela also dismantled CADIVI, a government body in charge of currency exchange. CADIVI was known for holding money from the private sector and was suspected to be corrupt.

Venezuela again topped the misery index according to the World Bank in 2015. The IMF predicted in October 2015 an inflation rate of 159% for the year 2015—the highest rate in Venezuelan history and the highest rate in the world—and that the economy would contract by 10%. According to leaked documents from the Central Bank of Venezuela, the country ended 2015 with an inflation rate of 270% and a shortage rate of goods over 70%. In early 2016, The Washington Post reported the official price of state-retailed petrol was below US$.01 per gallon, and the black market valued the dollar at 150 times what the official state currency exchange rate did.

Venezuelans eating from garbage in late 2015

President Nicolás Maduro reorganized his economic cabinet in 2016 with the group mainly consisting of leftist Venezuelan academics. According to Bank of America's investment division Merrill Lynch, Maduro's new cabinet was expected to tighten currency and price controls in the country. Alejandro Werner, the head of IMF's Latin American Department, stated that 2015 figures released by the Central Bank of Venezuela were not accurate and that Venezuela's inflation for 2015 was 275%. Other forecast inflation figures by IMF and Bank of America were 720% and 1,000% in 2016, Analysts believed that the Venezuelan government has been manipulating economic statistics, especially since they did not report adequate data since late 2014. According to economist Steve Hanke of Johns Hopkins University, the Central Bank of Venezuela delayed the release of statistics and lied about figures much like the Soviet Union did, with Hanke saying that a lie coefficient had to be used to observe Venezuela's economic data.

By 2016, media outlets said that Venezuela was suffering an economic collapse with the IMF saying that it expected it to reach a 500% inflation rate and 10% contraction in the GDP. In December 2016, monthly inflation exceeded 50 percent for the 30th consecutive day, meaning the Venezuelan economy was officially experiencing hyperinflation, making it the 57th country to be added to the Hanke-Krus World Hyperinflation Table.

On 25 August 2017, it was reported that new United States sanctions against Venezuela did not ban trading of the country's existing non-government bonds, with the sanctions instead including restrictions intended to block the government's ability to fund itself.

On 26 January 2018, the government ended the protected, subsidized fixed exchange rate mechanism that was highly overvalued as a result of rampant inflation. The National Assembly (led by the opposition) said inflation in 2017 was over 4,000%, a level other independent economists also agreed with. In February, the government launched an oil backed cryptocurrency called the petro.

Bloomberg's Cafe Con Leche Index calculated the price increase for a cup of coffee to have increased by 718% in the 12 weeks before 18 January 2018, an annualized inflation rate of 448,000%. The finance commission of the National Assembly noted in July 2018 that prices were doubling every 28 days with an annualized inflation rate of 25,000%.

The country was heading for a selective default in 2017. In early 2018, the country was in default, meaning it could not pay its lenders. August 24, 2017 President Trump imposed sanctions on the state debt of Venezuela which ban to make transactions with state debt of Venezuela including the participation in debt restructuring. November 13, 2017 the technical default period ended and Venezuela didn't pay coupons on its dollar eurobonds. This caused a cross default on other dollar bonds. November 30 ISDA committee consisting of 15 biggest banks admitted default on state debt obligations what in its turn entailed payments on CDS. According to Cbonds, nowadays there are 20 international Venezuelan bonds which are recognized in default. The overall amount of defaulted obligations is equal to 36 billion dollars.

Following increased international sanctions during the Venezuelan crisis in 2019, the Maduro government reversed policies established by Chávez such as price and currency controls which resulted in the country seeing a rebound from economic decline. The Economist wrote that the Maduro government had also obtained "extra money from selling gold (both from illegal mines and from its reserves) and narcotics". In a November 2019 interview with José Vicente Rangel, President Maduro described dollarization as an "escape valve" that helps the recovery of the country, the spread of productive forces in the country and the economy. However, Maduro said that the Venezuelan bolívar remains as the national currency.

Sectors

Under the tenures of Hugo Chávez and his successor Nicolás Maduro, many businesses abandoned Venezuela. In 1999, there were 13,000 companies in the country. By 2016, less than a third of companies remained in Venezuela, with only 4,000 companies operating in the nation.

Petroleum and other resources

See also: Energy policy of Venezuela

A map of world oil reserves according to OPEC, 2013.

Venezuela has the world's largest proven oil reserves, totaling 302,81 billion barrels at the end of 2017. The country is a major producer of petroleum products, which remain the keystone of the Venezuelan economy. The International Energy Agency shows how Venezuela's oil production has fallen in the last years, producing only 2,300,000 barrels (370,000 m³) daily, down from 3.5 million in 1998. However, the oil incomes will double its value in local currency with the recent currency devaluation. Venezuela has large energy subsidies. In 2015, the cost of petrol was just US$0.06 per gallon, costing 23% of government revenues. In February 2016, the government finally decided to raise the price, but only to 6 bolivar (about 60¢ at the official rate of exchange) per litre for premium and just 1 bolivar (10¢) for lower-grade petrol.

A range of other natural resources, including iron ore, coal, bauxite, gold, nickel, coltan, and diamonds, are in various stages of development and production. In April 2000, Venezuela's president decreed a new mining law and regulations were adopted to encourage greater private sector participation in mineral extraction. During Venezuela's economic crisis, the rate of gold excavated fell 64.1% between February 2013 and February 2014 and iron production dropped 49.8%.

Venezuela mostly utilizes hydropower resources to supply power to the nation's industries, accounting for 57% of total consumption at the end of 2016. However, persistent drought has severely reduced energy production from hydropower resources. The national electricity law is designed to provide a legal framework and to encourage competition and new investment in the sector. After a two-year delay, the government is proceeding with plans to privatize the various state-owned electricity systems under a different scheme than previously envisioned.

Manufacturing

Manufacturing contributed 12% of GDP in 2014. The manufacturing sector is experiencing severe difficulties, amidst lack of investment and accusations of mismanagement. Venezuela manufactures and exports steel, aluminum, transport equipment, textiles, apparel, beverages and foodstuffs. It produces cement, tires, paper, fertilizer and assembles cars both for domestic and export markets.

In 2014, General Motors Venezolana stopped automotive production after 65 years of service due to a lack of supplies while the Central Bank of Venezuela announced that the shortage rate of new automobiles was at 100%. By the first half of 2016, only 10 vehicles were manufactured per day in Venezuela with production dropping 86%.

In 2017, estimates showed that Venezuela's industrial production fell about 2%.

Agriculture

Main article: Agriculture in Venezuela

Agriculture in Venezuela accounts for approximately 3% of GDP, 10% of the labor force, and at least a quarter of Venezuela's land area. Venezuela exports rice, corn, fish, tropical fruit, coffee, beef and pork. The country is not self-sufficient in most areas of agriculture. Venezuela imports about two-thirds of its food needs. In 2002, American firms exported $347 million worth of agricultural products, including wheat, corn, soybeans, soybean meal, cotton, animal fats, vegetable oils and other items to make Venezuela one of the top two American markets in South America. The United States supplies more than one-third of Venezuela's food imports. Recent government policies have led to problems with food shortages.

Trade

Venezuela private sector nonpetroleum exports in millions of US$ from 1997 to 2015 (orange=goods, yellow=services)

Venezuela is a founding member of the Organization of the Petroleum Exporting Countries (OPEC), the Organization of Gas Exporting Countries (GECF), the Bolivarian Alliance for the Peoples of Our America (ALBA) and the Community of Latin American and Caribbean States (CELAC). Petroleum constitutes 80% of Venezuela's exports with a value of $22.2 billion in 2017. Thanks to petroleum exports, Venezuela usually posts a trade surplus. From 2005, nontraditional (i.e. nonpetroleum) private sector exports have been declining rapidly. By 2015, they constitute 8% of total exports. The United States is Venezuela's leading trade partner. During 2002, the United States exported $4.4 billion in goods to Venezuela, making it the 25th-largest market for the United States Including petroleum products, Venezuela exported $15.1 billion in goods to the United States, making it its 14th-largest source of goods. Venezuela opposes the proposed Free Trade Area of the Americas.

Since 1998, China–Venezuela relations have seen an increasing partnership between the government of the Venezuelan President Hugo Chávez and the People's Republic of China. Sino-Venezuelan trade was less than $500m per year before 1999 and reached $7.5bn in 2009, making China Venezuela's second-largest trade partner and Venezuela China's biggest investment destination in Latin America. Various bilateral deals have seen China invest billions in Venezuela and Venezuela increase exports of oil and other resources to China. China has demanded payment in oil for its exports to Venezuela because of its unwillingness to accept Venezuelan currency and the inability of Venezuela to pay in dollars or gold.

Top Trading Partners for Venezuela for 2017
Imports into Venezuela 2017 Ranking Country Value (USD) % World $9.1B 100.0% 1 United States $3.45B 38% 2 China $1.65B 18% 3 Mexico $1.08B 12% 4 Brazil $469M 5.2% 5 Colombia $318M 3.5% 6 Argentina $245M 2.7% 7 Germany $191M 2.1% 8 Italy $166M 1.8% 9 Spain $117M 1.3% 10 United Kingdom $86M 0.95%	Exports from Venezuela for 2017 Ranking Country Value (USD) % World $27.8B 100.0% 1 United States $11.6B 42% 2 China $6.4B 23% 3 India $5.25B 19% 4 Singapore $1.25B 4,5% 5 Spain $390M 1,4% 6 Brazil $363M 1.3% 7 Sweden $341M 1.2% 8 Malaysia $316M 1.1% 9 Germany $259M 0.93% 10 Colombia $210M 0.75%

Labor

Under Chávez, Venezuela has also instituted worker-run "co-management" initiatives in which workers' councils play a key role in the management of a plant or factory. In experimental co-managed enterprises, such as the state-owned Alcasa factory, workers develop budgets and elect both managers and departmental delegates who work together with company executives on technical issues related to production.

In November 2010, workers spent a week protesting outside factories in Valera and Valencia following the expropriation of the American bottle-maker Owens-Illinois.

Labor disputes have continued to increase since the financial crisis in 2008. According to the World Economic Forum, Venezuela is ranked as 134th of the 148 countries for economic competitiveness. Many in the private sector attribute these findings to the inflexible labor market.

In recent years, a barrage of pro-worker decrees have been passed. The most significant could be the 2012 labor laws known as the LOTTT. These laws included the virtual ban on dismissal, shorter work week, improved holidays and enhanced maternity benefits. The LOTTT offers job security to most workers after the first month. Employers have reported an absenteeism rate of up to 40% which they blame on the leniency of these labor laws. As expected, employers have been less willing to recruit.

On 17 November 2014, President Maduro issued a decree to increase the minimum salary for all workers by 15%. The decree became effective on 1 December 2014. As part of the May Day celebrations in honor of workers' day, President Maduro announced on 28 April 2015 that the minimum wage would increase 30%; 20% in May and 10% in July, with the newly announced minimum wage for Venezuelans being only about $30 per month at the widely used black market rate.

In September 2017, the National Union of Workers (UNETE) announced that Venezuela had lost 3,345,000 jobs since the election of President Maduro. By December 2017, the number of lost jobs increased by 400,000 to over 3,850,000 lost jobs since the start of Maduro's tenure.

Infrastructure

In the 20th century when Venezuela benefitted from oil sales, infrastructure flourished in Venezuela. However, in recent years Venezuela's public services and infrastructure has suffered, especially utilities such as electricity and water.

Transportation

Venezuela has an extensive road system that was initially created in the 1960s helped aid the oil and aluminum industries. The capital Caracas had a modern subway system designed by the French that was finished in 1995, with the subway tunneling more than 31.6 mi (51 km).

In 1870, Antonio Guzmán Blanco helped create Venezuela's railway system.

The Chavez government launched a National Railway Development Plan designed to create 15 railway lines across the country, with 8,500 miles (13,700 km) of track by 2030. The network is being built in cooperation with China Railways, which is also cooperating with Venezuela to create factories for tracks, railway cars and eventually locomotives. However, Venezuela's rail project is being put on hold due to Venezuela not being able to pay the $7.5 billion and owing China Railway nearly $500 million.

Lufthansa said it would stop all flights to Venezuela on 18 June 2016, citing difficulties with currency controls. Other airlines also cut back on flights and required that passengers pay fares in US$.

Energy

Main article: Energy in Venezuela

The Venezuelan electrical grid is plagued with occasional blackouts in various districts of the country. In 2011, it had so many problems that rations on electricity were put in place to help ease blackouts. On 3 September 2013, 70% of the country plunged into darkness with 14 of 23 states of Venezuela stating they did not have electricity for most of the day. Another power outage on 2 December 2013 left most of Venezuela in the dark again and happened just days before elections.

Energy statistics

• Electricity – production by source:
  • Fossil fuel: 35.7% (2012 est.)
  • Hydroelectric 64.3 (2012 est.)
  • Nuclear: 0% (2012 est.)
  • Other: 0% (2012 est.)
• Electricity production: 127.6 billion kWh (2012 est.)
• Electricity – consumption: 85.05 billion kWh (2011 est.)
• Electricity – exports: 633 million kWh (2009 est.)
• Electricity – imports: 260 million kWh (2009 est.)
• Electricity – installed generating capacity: 27.5 million kW (2012 est.)

Statistics

Economy data

The blue line represents annual rates whereas the red line represents trends of annual rates given throughout the period shown (sources: International Monetary Fund, World Bank and Central Intelligence Agency)

The production of steel by Sidor from 2007 to 2016. Data are from the Memoria 2011 and 2015 of the Ministerio del Poder Popular para Industrias of Venezuela. Data for 2016 is from Correo del Caroní (22. Jan. 2017).

The Macroeconomic Stabilization Fund (FIEM) decreased from US$2.59 billion in January 2003 to US$700 million in October, but central bank-held international reserves actually increased from US$11.31 billion in January to US$19.67 billion in October 2003. On the black market, the Bolívar fell 28% in 2007 to Bs. 4,750 per US$ and declined to around VEF 5.5 (Bs 5500) per US$ in early 2009.

The economy recovered and grew by 16.8% in 2004. This growth occurred across a wide range of sectors—the oil industry directly provides only a small percentage of employment in the country. International reserves grew to US$27 billion. Polling firm Datanalysis noted that real income in the poorest sectors of society grew by 33% in 2004.

On 7 March 2007, the government announced that the Venezuelan bolívar would be redenominated at a ratio of 1 to 1,000 at the beginning of 2008 and renamed the bolívar fuerte ("strong bolivar") to ease accounting and transactions. This was carried out on 1 January 2008, at which time the exchange rate was 2.15 bolívar fuerte per US$. The ISO 4217 code for the bolívar fuerte is VEF.

Government spending as a percentage of GDP in Venezuela in 2007 was 30%, smaller than other mixed economies such as France (49%) and Sweden (52%). According to official sources from the United Nations, the percentage of people below the national poverty line has decreased during the presidency of Hugo Chávez, from 48.1% in 2002 to 28% in 2008.

With the 2007 rise in oil prices and rising government expenditures, Venezuela's economy grew by 9% in 2007. Oil prices fell starting in July 2008, resulting in a major loss of income. Hit by a global recession, the economy contracted by 2% in the second quarter of 2009, contracting a further 4.5% in the third quarter of 2009. Chavez's response has been that these standards mis-state economic fact and that the economy should be measured by socialistic standards. On 17 November, the Central Bank reported that private sector activity declined by 4.5% and that inflation was averaging 26.7%. Compounding such problems is a drought which the government says was caused by El Niño, resulting in rationing of water and electricity and a short supply of food.

The year 2010 saw Venezuela still in recession as GDP had fallen by 5.8% in the first quarter of 2010. The Central Bank of Venezuela has stated that the recession is due largely "to restricted access to foreign currency for imports, lower internal demand and electricity rationing". The oil sector's performance was also particularly troubling, with oil GDP shrinking by 5%. More importantly, the Central Bank hints at the root cause of the oil contraction, saying that "the bank said it was due to falls in production, "operative problems", maintenance stoppages and the channeling of diesel to run thermal generators during a power crisis". While the public sector of the economy has fallen 2.8%, the private sector has dropped off 6%.

The year 2013 proved to be difficult for Venezuela as shortages of necessities and extreme inflation attacked the nation's economy. Items became so scarce that nearly one quarter of items were not in stock. The bolívar was devalued to 6.3 per US$ in early 2013 taking one third of its value away. However, inflation still continued to rise drastically in the country to the point President Maduro forced stores to sell their items just days before elections. Maduro said that the stores were charging unreasonable prices even though the owners were only charging so much due to the actual devaluation of the bolivar.

In 2014 The Central Bank of Venezuela stopped releasing statistics for the first time in its history as a way to possibly manipulate the image of the economy. Venezuela has also dismantled CADIVI, a government body in charge of currency exchange.

In May 2019, the Central Bank of Venezuela released economic data for the first time since 2015. According to this release, the inflation of Venezuela was 274% in 2016, 863% in 2017 and 130,060% in 2018. The new reports imply a contraction of more than half of the economy in five years, according to the Financial Times "one of the biggest contractions in Latin American history". According to two undisclosed sources from Reuters, the release of these numbers was due to pressure from China, a Maduro ally. One of these sources claims that the disclosure of economic numbers may bring Venezuela into compliance with the IMF, making it harder to support Juan Guaidó during the presidential crisis. At the time, the IMF was not able to support the validity of the data as they had not been able to contact the authorities.

The following table shows the main economic indicators in 1980–2017. Inflation under 5% is in green.

Year	GDP (in bil. US$ PPP)	GDP per capita (in US$ PPP)	GDP growth (real)	Inflation rate (in percent)	Unemployment (in percent)	Government debt (in % of GDP))
1980	117.2	7,838	4.9%	21.4%	n/a	n/a
1981	126.5	8,208	1.3%	16.2%	n/a	n/a
1982	137.9	8,690	2.6%	9.6%	n/a	n/a
1983	129.2	7,919	9.9%	6.2%	n/a	n/a
1984	140.8	8,392	5.2%	12.3%	n/a	n/a
1985	146.5	8,499	0.9%	11.4%	n/a	n/a
1986	158.6	9,088	6.1%	11.5%	n/a	n/a
1987	170.4	9,528	4.8%	28.1%	n/a	n/a
1988	187.9	10,247	6.5%	29.5%	n/a	n/a
1989	168.0	8,945	13.9%	84.5%	n/a	n/a
1990	185.5	9,557	6.5%	40.7%	n/a	n/a
1991	210.3	10,581	9.8%	34.2%	n/a	n/a
1992	228.2	11,214	6.1%	31.4%	n/a	n/a
1993	234.2	11,253	0.3%	38.1%	n/a	n/a
1994	233.6	10,976	2.3%	60.8%	n/a	n/a
1995	247.9	11,397	4.0%	59.9%	n/a	n/a
1996	251.9	11,338	0.2%	99.9%	n/a	n/a
1997	272.6	12,020	6.4%	50.0%	n/a	n/a
1998	276.3	11,946	0.3%	35.8%	n/a	31.4 %
1999	263.8	11,182	6.0%	23.6%	14.5 %	31.2%
2000	279.8	11,468	3.7%	16.2%	14.0%	28.2%
2001	295.8	11,928	3.4%	12.5%	13.4%	31.7%
2002	273.8	10,859	8.9%	22.4%	16.0%	55.0%
2003	257.6	10,053	7.8%	31.1%	18.2%	55.8%
2004	313.1	12,026	18.3%	21.7%	15,1 %	42.2%
2005	356.7	13,489	10.3%	16.0%	12.2%	24.5%
2006	403.8	15,034	9.9%	13.7%	10.0%	16.4%
2007	450.9	16,535	8.8%	18.7%	8.5%	19.1%
2008	483.9	17,479	5.3%	31.4%	7.4%	15.4%
2009	472.0	16,795	3.2%	26.0%	7.9%	18.9%
2010	470.4	16,493	1.5%	28.2%	8.5%	25.0%
2011	500.3	17,286	4.2%	26.1%	8.2%	31.7%
2012	538.6	18,342	5.6%	21.1%	7.8%	30.1%
2013	555.4	18,647	1.3%	40.6%	7.5%	33.3%
2014	543.7	17,999	3.9%	62.2%	6.7%	25.2%
2015	515.1	16,824	6.2%	121.7%	7.4%	11.1%
2016	431.8	14,059	17.0%	254.9%	20.6%	5.1%
2017	370.9	12,263	15.7%	438.1%	27.1%	23.1%
2018	311.6	10,797	18.0%	65,374.0%	33.4%	182.4%
2019 (est.)	n/a	n/a	35.0%	200,000%	n/a	n/a

Currency black market

According to DolarToday.com, the value of one US dollar in Venezuelan Bolivares fuertes on the black market through time: blue and red vertical lines represent every time the currency has lost 90% of its value, which has happened seven times since 2012, meaning that the currency is worth (as of mid-February 2019) 30,000,000 times less than in August 2012, since it has lost more than 99.99999% of its value

Inflation represented by the time it would take for money to lose 90% of its value (301-day rolling average, inverted logarithmic scale)

The parallel exchange rate is what Venezuelans believe the Venezuelan currency is worth compared to the US$. In the first few years of Chávez's office, his newly created social programs required large payments in order to make the desired changes. On 5 February 2003, the government created CADIVI, a currency control board charged with handling foreign exchange procedures. Its creation was to control capital flight by placing limits on individuals and only offering them so much of a foreign currency. This limit to foreign currency led to a creation of a currency black market economy since Venezuelan merchants rely on foreign goods that require payments with reliable foreign currencies. As Venezuela printed more money for their social programs, the bolívar continued to devalue for Venezuelan citizens and merchants since the government held the majority of the more reliable currencies.

As of January 2018, the strongest official exchange rate was 1 US$ to 10 VEF while the free market exchange rate was over 200,000 VEF to 1 US$. Since merchants can only receive so much necessary foreign currency from the government, they must resort to the black market which in turn raises the merchant's prices on consumers. The high rates in the black market make it difficult for businesses to purchase necessary goods since the government often forces these businesses to make price cuts. This leads to businesses selling their goods and making a low profit, such as Venezuelan McDonald's franchises offering a Big Mac meal for only $1. Since businesses make low profits, this leads to shortages since they are unable to import the goods that Venezuela is reliant on. Venezuela's largest food producing company, Empresas Polar, has stated that they may need to suspend some production for nearly the entire year of 2014 since they owe foreign suppliers $463 million. The last report of shortages in Venezuela showed that 22.4% of necessary goods are not in stock. This was the last report by the government since the central bank no longer posts the scarcity index. This has led to speculation that the government is hiding its inability to control the economy which may create doubt about future economic data released.

Socioeconomic indicators

Like most Latin American countries, Venezuela has an unequal distribution of wealth. Although distribution improved when the surplus of rural labor started to diminish and the educational system improved in the middle of the 20th century, equality is far from coinciding with western standards. The rich tend to be very rich and the poor very poor. In 1970, the poorest fifth of the population had 3% of national income while the wealthiest fifth had 54%. For comparison, the United Kingdom 1973 figures were 6.3% and 38.8% and the United States in 1972, 4.5% and 42.8%.

The more recent income distribution data available is for distribution per capita, not per household. The two are not strictly comparable because poor households tend to have more members than rich households, thus the per household data tends to show less inequality than the per capita data. The table below shows the available per capita data for recent years from the World Bank.

Personal income distribution

Year	Share of personal income (%) received by:						GINI index
	Poorest fifth	2nd fifth	3rd fifth	4th fifth	Wealthiest fifth	Wealthiest 10%
1987	4.7	9.2	14.0	21.5	50.6	34.2	~43.42
1995	4.3	8.8	13.8	21.3	51.8	35.6	46.8
1996	3.7	8.4	13.6	21.2	53.1	37.0	48.8
2000	4.7	9.4	14.5	22.1	45.4	29.9	42.0
2004	3.5	—	12.9	—	54.8	—	45.59
2007	5.1	—	14.2	—	47.7	—	42.37
2010	5.7	—	14.9	—	44.8	—	38.98
2011	5.7	—	15.9	—	44.8	—	39.02
2013	—	—	—	—	—	—	44.8
2015	—	—	—	—	—	—	46.9
Note that personal (per capita) income distribution, given in this table, is not exactly comparable with household income distribution, given in the previous table, because poor households tend to have more members. Sources 1987 data: 1991 World Development Report, Table 30, pp. 262–63. 1995 data: 1998 World Development Report, Table 2.8, p. 70. 1996 data: 2000/2001 World Development Report, Table 5, pp. 282–83. 2000 data: 2006 World Development Indicators, Table 2.8. All of the above publications are by the World Bank. 2004 data: Instituto Nacional de Estadística, p. 8 2007 data: Instituto Nacional de Estadística, p. 8 2010 data: Instituto Nacional de Estadística, p. 8 2011 data: Instituto Nacional de Estadística, p. 8 2013 data: United Nations Development Programme 2015 data: United Nations Development Programme

Poverty in Venezuela increased during the 1980s and early 1990s, but it decreased greatly in the mid to late 1990s. The decreasing trend continued through the Chávez presidency, with the exception of the troubled years 2002 and 2003. Under the Bolivarian government, poverty decreased initially when Venezuela acquired oil funds, though poverty began to increase to its highest level in decades in the 2010s.

The table below shows the percentage of people and the percentage of households whose income is below a poverty line which is equal to the price of a market basket of necessities such as food.

Percentage of people and households with income below national poverty line

Year	1989	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017
Households	–	48.1	43.9	42.0	40.4	39.0	48.6	55.1	47.0	37.9	30.6	28.5	27.5	26.7	26.9	26.5	21.1	27.3	48.4	73.0	81.8	87.0
People	31.3	54.5	50.4	48.7	46.3	45.4	55.4	62.1	53.9	43.7	36.3	33.6	32.6	31.8	32.5	31.6	25.4	32.1	–	–	–	–
Sources World Bank, 1997 World Development Indicators, p. 52; Venezuela, Instituto Nacional de Estadística, Pobreza por línea de ingreso, 1er semestre 1997 – 2do semestre 2013. Retrieved December 2014. ENCOVI – Encuesta sobre Condiciones de Vida en Venezuela Febrero 2018 Note Datum is from the World Bank and as far as we know is a whole year average (1989) End of year data provided by Instituto Nacional de Estadística (1997–2013) ENCOVI used due to lack of government-provided statistics (2014–2017)

Venezuela's extreme poverty rate from 1990 to 2013
Source: INE
Note: interim presidents excluded and one-year delay of data transferred during presidential term changes due to new policies, inaugurations and so on

Venezuela economic indicators (2017)

indicator	%
Real GDP growth	−14.0%
Inflation	1.087.5%
Gross national saving (% of GDP)	12.1%

Foreign trade

Leading markets 2013	% of total	Leading suppliers	% of total
United States	39.1	United States	31.7
China	14.3	China	16.8
India	12.0	Brazil	9.1
Netherlands Antilles	7.8	Colombia	4.8

Foreign trade

Major exports	% of total	Major imports	% of total
Oil and gas	90.4	Raw materials and intermediate goods	44.5
Other	9.6	Consumer goods	24.5
		Capital goods	31.0

Social development

In the early 2000s when oil prices soared and offered Chávez funds not seen since the beginning of Venezuela's economic collapse in the 1980s, Chávez's government became "semi-authoritarian and hyper-populist" and consolidated its power over the economy in order to gain control of large amounts of resources. Domestically, Chávez used such oil funds for populist policies, creating the Bolivarian missions, aimed at providing public services to improve economic, cultural and social conditions. From 1999–2009, 60% of government revenues focused on social programs while social investment went from 8.4% of GDP in 1988 to 18.8% in 2008. Despite warnings near the beginning of Chávez's tenure in the early 2000s, Chávez's government continuously overspent in social spending and did not save enough money for any future economic turmoil, which Venezuela faced shortly before and after his death. On the year of Chávez's death, Venezuela was still categorized as having high human development on its Human Development Index in 2013 according to the United Nations Development Programme, although human development began to decline in Venezuela within a year, with the country dropping 10 ranks by 2014.

Poverty and hunger

Extreme poverty and lack of food and medicines has pushed more than three million Venezuelans to leave the country in recent years. Andres Bello Catholic University conducted a study of poverty that found the poorest 20% of Venezuelans had 1.4% of the nation's wealth, down from 3.4% in 2014, while the richest 10% had 61% of the nation's wealth, up from 30%.

According to government figures released in April 2017, 1,446 children under the age of 1 died in 2016, representing a 30 percent increase in one year. As of August 2017, 31 million people suffered from severe food shortages. The ENCOVI universities survey found that 73% of Venezuelans said they had lost 9 kg (19 lbs) of body weight in 2016 and 64% had lost 11 kg (25 lbs) in 2017.

When the country's economy collapsed in 2014, hunger and malnutrition became a severe problem. In 2015, close to 45% of Venezuelans said they were unable to afford food at times. In 2018, this figure rose to 79%, one of the highest rates in the world.

Although poverty initially declined under Chávez, Venezuela's poverty rate increased to 28% by 2013, with extreme poverty rates increasing 4.4% to 10% according to the Venezuelan government's INE. Estimates of poverty by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) and Luis Pedro España, a sociologist at the Universidad Católica Andrés Bello, showed an increase of poverty in Venezuela. ECLAC showed a 2013 poverty rate of 32% while Pedro España calculated a 2015 rate of 48%. The Venezuelan government estimated that 33% were in poverty in the first half of 2015 and then stopped producing statistics. According to Venezuelan NGO PROVEA, by the end of 2015 there would be the same number of Venezuelans living in poverty as there was in 2000, reversing the advancements against poverty by Chávez. The ENCOVI annual survey by three universities estimated poverty at 48% in 2014, 82% in 2016 and 87% in 2017.

In relation to hunger, under-nutrition, undernourishment and the percentage of children under the age of five who are moderately or severely underweight decreased earlier in Chávez's tenure. However, shortages in Venezuela as a result of price control policies left the majority of Venezuelans without adequate products after his death.

Education

Main article: Education in Venezuela

The total net enrollment ratio in primary education for both sexes increased from 87% in 1999 to 93.9% in 2009. The primary completion rate for both sexes reached 95.1% in 2009 as compared to 80.8% in 1991. The literacy rates of 15- to 24-year-olds in 2007, for men and women, were 98% and 98.8%, respectively. During the Bolivarian diaspora, a large percentage of the millions of Venezuelans who left the country were highly educated, resulting in a brain drain in the country.

Since starting in 2003, the free government program Mission Robinson had taught more than 2.3 million people to read and write as of 2012. The program also focused much of its attention on reaching out to geographically isolated and historically excluded members of the population, including indigenous groups and Afro-descendants. In 2008, Francisco Rodríguez of Wesleyan University in Connecticut and Daniel Ortega of IESA stated that there was "little evidence" of "statistically distinguishable effect on Venezuelan illiteracy" during the Chávez administration. The Venezuelan government claimed that it had taught 1.5 million Venezuelans to read, but the study found that "only 1.1m were illiterate to begin with" and that the illiteracy reduction of less than 100,000 can be attributed to adults that were elderly and died.

Health care

Main article: Health care in Venezuela

Healthcare spending by percentage of Venezuela's GDP
Source: World Bank

Following the Bolivarian Revolution and the establishment of the Bolivarian government, initial healthcare practices were promising with the installation of a free healthcare system parallel to the existing national public health system, with the assistance received from Cuban medical professionals providing aid. The Bolivarian government's failure to concentrate on healthcare for Venezuelans, the reduction of healthcare spending and government corruption eventually affected medical practices in Venezuela, causing avoidable deaths along with an emigration of medical professionals to other countries.

Venezuela's reliance on imported goods and its complicated exchange rates initiated under Chávez led to increasing shortages during the late-2000s and into the 2010s that affected the availability of medicines and medical equipment in the country. The United Nations reported an increase in the maternal mortality ratio, which increased from 93 per 100,000 in 1990 to 110 per 100,000 in 2013. Following shortages of many medical and common goods in 2014, Venezuelan women have had difficulties accessing contraceptives and were forced to change prescriptions or search several stores and the Internet for their medications. Shortage of antiretroviral medicines to treat HIV/AIDS affected about 50,000 Venezuelans in 2014 as well, potentially causing thousands of Venezuelans with HIV to develop AIDS.

Venezuela is also the only country in Latin America where the incidence of malaria is increasing, allegedly due to illegal mining. In 2013, Venezuela registered the highest number of cases of malaria in the past 50 years, with 300 of 100,000 Venezuelans being infected with the disease.

Technology

In 1990, the number of Internet users was minimal, but 35.63% of Venezuelans were Internet users by 2010. In fact, the number of Internet subscribers has increased sixfold. Programs such as the National Technological Literacy Plan, which provides free software and computers to schools, have assisted Venezuela in meeting this goal. However, several experts state that the poor infrastructure in Venezuela had created a poor quality of Internet in Venezuela, which has one of the slowest Internet speeds in the world. The lack of US$ due to the Venezuelan governments currency controls has also damaged Internet services because technological equipment must be imported into Venezuela.

The number of fixed telephone lines per 100 inhabitants was 7.56 in 1990. The number increased to 24.44 in 2010. In 2000, 2,535,966 Venezuelans had landline telephones. By 2009, this had increased to 6,866,626.

As of 2012, with a capacity of processing 955 thousand barrels per day (151,800 m³/d), the Paraguaná Refinery Complex is considered the world's third largest refinery complex, just after Jamnagar Refinery (India) and Ulsan Refinery (South Korea). The Paraguana Refinery Complex is still the largest refinery in the Western Hemisphere.

The Bolivarian government has also launched an aerospace program in cooperation with the People's Republic of China who built and launched two satellites that are currently in orbit—a communications satellite called Simón Bolívar and a remote sensing satellite called Miranda. In July 2014, President Maduro announced that a third satellite would be built by Chinese–Venezuelan bilateral cooperation.

See also

• 1980–1989 world oil market chronology
• 2010s oil glut
• List of Latin American and Caribbean countries by GDP (nominal)
• List of Latin American and Caribbean countries by GDP (PPP)
• List of Venezuelan companies
• List of banks in Venezuela
• List of Venezuelan cooperatives
• Siete maravillas de Venezuela
• Venezuela and the International Monetary Fund

Notes

• Petróleos de Venezuela, refining, Curaçao