Two decades of deindustrialization in Venezuela

Venezuela entered the 21st century with challenges that were planned in the last century agenda. The country's industrialization is one of those postponed challenges for years.

The idea "to sow oil," suggested by Arturo Úslar Pietri in 1936, was not taken into account and oil seems to be a "curse" to national economy, nowadays.

Instead of reinvesting in the development of areas such as manufacturing or agriculture, the previous and the current governments have succumbed to the charm of the huge incomes obtained by the oil sale, and they have been engaged in more important issues.

A brief glance at the evolution of the Venezuelan industry shows an effort started in the 50's to promote industrialization. This effort remained for years, but the "neo liberal twist" in the 80's and Hugo Chávez's administration have not take into consideration the promotion of industry.

In 1987, according to Venezuela's Central Bank (BCV) data, the manufacturing sector represents 20% of the Gross Domestic Product (GDP). Since then, 25 years of mistakes and adverse results have passed.

In 1998, a year before Chavez's inauguration, the industry still represented 17.4% of the global economy. At the end of 2011 that indicator decreased to 14.4%.

Although the government insisted, in its beginnings, on the necessity to diversify the economy, other data confirmed that Chávez's administration did not escape from rent-seeking.

From Venezuela's total income in 2011, 95% was associated with the oil sale. In fact, between 1998 and 2011 the non-oil exportations went from USD 5.59 billion to USD 4.52 billion, and recorded a fall of almost 20%.

The latest BCV report indicates that sectors such as the textile production, shoes and leather products making, machinery and the car industry, are some of the areas that produce less than in 1997.

Translated by Karina Salas__