The Economy of Venezuela

Venezuela’s economy was one of the strongest economies in the South America since 1980’s. The country based its economy in large part on oil. The petroleum sector dominates the economy with accounting roughly a third of Gross Domestic Product or GDP around 80% of export earnings, and more than half of government operating revenues. The country is the largest foreign supplier of oil to the United States. Despite higher oil prices at the end of 2002 and into 2003, domestic political instability, culminating in a disastrous two-month national oil strike from December 2002 to February 2003, temporarily halted economic activity.

About 13% of Venezuelans are engaged in farming. The chief crops are corn, sorghum, sugarcane, rice, bananas, vegetables and coffee. There is also extensive livestock raising and fishing. The country has developed a fine highway system, but goods are still carried primarily by ship. The main trading partners are the United States, Colombia, and Brazil. Other exports are bauxite, aluminum, steel, chemical, iron ore, cocoa, coffee, rice, and cotton. Imports include raw materials, machinery, transportation equipment, and construction material.

The government has used oil revenues to stimulate manufacturing industries. It uses its rivers to great advantage as sources of hydroelectric power. A high percentage of the population lives in poverty but after the end of the oil boom in the early 1980s, the percentage of poor Venezuelans has increased dramatically from 28% to 68% in 2003. Many cities have squalid shanty towns, and in the countryside many people are still tenant farmers.