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Developing countries' political cycles and the resource curse: Venezuela's case

Alejandro Márquez-Velázquez

No 2019/14, Discussion Papers from Free University Berlin, School of Business & Economics

Abstract: The resource curse literature's main lesson is that developing and natural resource-rich countries should save most of their oil windfalls in foreign currency. Moreover, the political cycle literature's recent contributions predict stronger cycles in these countries. This paper investigates how political cycles might explain low oil windfall savings. Using Venezuela's case, the paper argues that power concentration during periods of oil price explosiveness leads to increased public investment in prestige projects aimed at increasing the incumbent's − or his party's − re-election probabilities. The article backs the argument analyzing the Chavista democratic period of 1999-2016. It also identifies parallels with Venezuela's 1970-1988 period.

Keywords: oil windfalls; political cycles; resource curse; Venezuela (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-cdm, nep-ene and nep-pol
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DOI: 10.17169/refubium-25367

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