EconPapers    
Economics at your fingertips  
 

Venezuela’s Growth Experience

Omar D. Bello, Juan Blyde () and Diego Restuccia ()

Latin American Journal of Economics-formerly Cuadernos de Economía, 2011, vol. 48, issue 2, 199-226

Abstract: The standard of living, measured as gross domestic product (GDP) per capita, increased dramatically in Venezuela relative to that of the United States from 20 percent in 1920 to 90 percent in 1958, but since then has collapsed to around 30 percent nowadays. What explains these remarkable growth and collapse episodes? Using a standard development accounting framework, we show that the growth episode is mainly accounted for by an increase in capital accumulation and knowledge transfer associated with the foreign direct investment in the booming oil industry. The collapse episode is accounted for equally by a fall in total factor productivity and in capital accumulation. We analyze Venezuela during the collapse episode in the context of a model of heterogeneous production units were policies and institutions favour unproductive in detriment of more productive activities. These policies generate misallocation, lower TFP, and a decline in capital accumulation. We show in the context of an heterogeneous-establishment growth model that distortionary policies can explain a large portion of the current differences in TFP, capital accumulation, and income per capita between Venezuela and the United States.

Keywords: Productivity; physical capital; misallocation; policies (search for similar items in EconPapers)
JEL-codes: O4 (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://www.economia.uc.cl/docs/482bela.pdf (application/pdf)

Related works:
Working Paper: Venezuela's Growth Experience (2011) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ioe:cuadec:v:48:y:2011:i:2:p:199-226

Ordering information: This journal article can be ordered from

Access Statistics for this article

Latin American Journal of Economics-formerly Cuadernos de Economía is currently edited by Raimundo Soto

More articles in Latin American Journal of Economics-formerly Cuadernos de Economía from Instituto de Economía. Pontificia Universidad Católica de Chile. Contact information at EDIRC.
Bibliographic data for series maintained by Jaime Casassus ().

 
Page updated 2021-10-14
Handle: RePEc:ioe:cuadec:v:48:y:2011:i:2:p:199-226