Venezuela’s economy, kept afloat by the long commodity boom, has not yet collapsed. But it is headed for crisis.

The Chávez Record

By IAN VÁSQUEZ

Hugo Chavez is dead. He leaves behind a country ruined by populist policies he referred to as “Socialism of the 21st Century.” Venezuela under 14 years of Chavez’s leadership benefited from about $1 trillion in revenues from the oil bonanza but has little to show for it. 

Instead, the country has largely followed the path described by economists Rudi Dornbusch and Sebastian Edwards in their 1991 classic, The Macroeconomics of Populism in Latin America.

"Again and again, in country after country, policymakers have embraced economic programs that rely heavily on the use of expansive fiscal and credit policies and overvalued currency to accelerate growth and redistribute income. In implementing these policies, there has usually been no concern for fiscal and foreign exchange constraints. After a short period of economic growth and recovery, bottlenecks develop provoking unsustainable macroeconomic pressures that, at the end, result in the plummeting of real wages and severe balance of payment difficulties. The final outcome of these experiments has generally been galloping inflation, crisis, and the collapse of the economic system."
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Venezuela after Chavez

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