Economic history of Venezuela

Venezuela, officially the Bolivarian Republic of Venezuela, is a country located on the northern coast of South America. It is known for its large proven oil reserves. Venezuela was historically among the wealthiest economies in South America, particularly from the 1950s to 1980s. During the 21st century, under the leadership of socialist populist Hugo Chávez Venezuela’s economy grew consistently, achieving its highest GDP of $482.36 billion in 2014 according to World Bank. Under his successor Nicolás Maduro, the Venezuelan economy has collapsed, prompting millions of citizens to flee Venezuela. Multiple factors contributed including a steep decline in the global price of oil and economic sanctions by the United States. GDP has fallen by 80 percent in less than a decade.

Before oil was discovered, Venezuelan production was primarily agriculture, such as coffee and cocoa. After the first commercial drilling for oil in 1917, oil production increased drastically due to the oil boom of the 1920s and was later furthered by World War II, as Venezuela supplied oil to the United States. From 1958 to 1989, democratic leaders attempted to use the large oil revenues to invest in other industry through various policies such as import substitution and other programs designed to diversify the Venezuelan economy away from a highly specialised export range. These attempts, for the most part, were unsuccessful as Venezuelan government revenues continued to be highly volatile due to the fluctuating price of oil, which was reflected especially throughout the 1980s due to the oil price crash. After struggling with fiscal debts due to a variety of trade protection measures and other policies, the President of 1989, President Andrés Pérez, worked with the International Monetary Fund in an attempt to rectify some of the issues plaguing the Venezuelan government. Perez was eventually unsuccessful due to political instability due to proposed austerity measures

Hugo Chávez was later elected in 1998, after a defeat of both major political parties. The Chávez government begun enacting various socialist programs, such as free education and healthcare. These programs would continue up until Chávez's death in 2013. President Nicolás Maduro, Chávez's successor, was elected on 14 April 2013 and pledged to continue Chávez's work. However, due to hyperinflation, shortages of food and medicine and political instability, about 3 million Venezuelans have fled the country since 2015.