"Dutch disease" threatens Venezuelan economy

As part of the CASE policy research seminar series, Teodoro Petkoff, Venezuelan journalist, economist and former politician delivered a lecture on his nation’s economy and politics.  Petkoff stated that as a member of OPEC, Venezuela’s economy bears a greater resemblance to oil-rich countries such as Nigeria, Algeria and Saudi-Arabia, than to some of its Latin-American neighbours. He explained that Venezuela suffers from the so-called curse of natural resources, or what Petkoff labelled the ‘Dutch disease’; the Venezuelan economy is dependant on oil exports to a degree which suffocates the development of other economic activities. During the seminar, Petkoff also discussed the effects of the political situation on the economy. The heavily state-sponsored aluminium industry is the only other noteworthy branch of flourishing industry. During the last decade, Chavez’ government elaborated a broad social policy and invested heavily in education and medical infrastructure, but neglected other essential investments, such as electricity provisions. Furthermore, Venezuela’s judicial uncertainty caused by the regime’s numerous legal changes deteriorates the business climate.  Foreign investments remain at an all-time low with the sole exception of the oil industry in the Orinoco Belt. 

Venezuela’s economy suffers from a double, intricately linked problem. First of all, the effect of the ‘Dutch disease’ leads to an economy revolving solely around oil. Secondly, Chavez’ government has the oil money at its disposal, but seems incapable of addressing economic problems.

Teodoro Petkoff is a Venezuelan journalist, economist and politician, as well as the editor-in-chief and founder of "Tal Cual", a newspaper critical of President Hugo Chávez.  Throughout the 1960's Mr. Petkoff was an active member of the Venezuelan Communist Party.  In 1971 he co-founded the MAS - Movimiento al Socialismo, the Social Democratic Party of Venezuela.  Mr. Petkoff has also been a presidential candidate, and an elected congressman.  He has also been the Minister of the Central Office of Coordination and Planning under the presidency of Rafael Caldera, where he was responsible for the economic policies of the administration.