THE POLITICAL ECONOMY OF PETRODOLLARS: OIL AND DEMOCRACY IN VENEZUELA. (VOLUMES I AND II)

This thesis explores the impact of changes in the international petroleum economy upon the development strategy and political process of one oil-producing nation, Venezuela. It contends that sudden great wealth, like scarcity, can be a serious development curse, leading to policy decisions which provoke economic disruption and political decay. This "paradox of plenty" can best be explained by the interplay of an internationally-generated crisis of wealth with the skewed socio-economic arrangements and weak states characteristic of late-developers. This interaction results in management overload and a subsequent decline in the problem-solving abilities of the state, making the effective utilization of petrodollar surpluses exceedingly difficult.;Research is based upon a variety of quantitative and qualitative data taken from government reports, international business and bank publications, and Venezuelan newspapers and magazines reviewed between 1973-1979. Empirical evidence also derives from over 100 interviews with leading policy-makers, political party activists, and important figures in business.;An investigation of the political and economic consequences of the Perez Administration's attempt to build a diversified industrial structure following the quadrupling of oil prices in 1973 illustrates this central theme. President Perez' "project" of accelerated modernization, designed to meet the competing demands of party and business interests, led to a contradictory development model which was both populist and entrepreneurial. The model called for a reorganization of the economic policy process along corporatist lines, in reality an attempt to redistribute power between principal economic and political groups. It eventually resulted in: (1) a growing concentration of power in the state, particularly in the Executive; (2) an increased role for the private sector in decision-making; (3) a circumventing of democratic institutions such as Congress and the political parties. At the same time, the inability to consolidate this new redistribution of power within existing economic and political arrangements, when combined with the chaos provoked by the velocity of accelerated development, led to a general policy incoherence. The ultimate consequence has been a decline in both state capacity and the party system, witnessed by the crisis of Accion Democratica.