The process taking place in Venezuela is usually looked at from a political angle – the 21st Century Socialism project of Hugo Chavez. There is, however, another interrelated dimension – the question of what economic processes underpinned Hugo Chavez coming to office and of the economic policies now being pursued? This blog will consider these issues.
A necessary starting point is the economic situation, to be more precise the catastrophic economic situation, which led to Hugo Chavez’s election.
The present so called ‘Opposition’ to Chavez are in fact the previous ruling groups in Venezuela. The reason they lost power is that they produced an economic disaster in Venezuela without comparison in any major country in Latin America – indeed with few parallels in any major country in the world.
The fundamental features of this disaster may be seen in Figure 1, which shows the total growth in GDP per capita of the major Latin American countries between 1950 and 1998 – the year Chavez was elected. In this entire 48 year period GDP per capita in Venezuela rose by only 20 per cent – compared to 65 per cent in Peru, 78 per cent in Uruguay, 83 per cent in Argentina, 149 per cent in Colombia, 178 per cent in Chile, 185 per cent in Mexico, and 224 per cent in Brazil. 
In terms of country comparisons, Venezuela’s GDP per capita grew at 0.4 per cent a year throughout this period compared to 1.0 per cent a year in Peru, 1.2 per cent in Uruguay, 1.3 per cent in Argentina, 1.9 per cent in Colombia, 2.1 per cent in Chile, 2.2 per cent in Mexico, and 2.5 per cent in Brazil. These figures alone show that the ‘Opposition’ in Venezuela represented the greatest group of economic incompetents in Latin America.
Examination of more detailed figures, however, shows that the trends produced by the Venezuelan ‘Opposition’ were in fact even worse than those shown by the averages for the period.
Figure 2 shows Venezuelan GDP per capita for each year up to 1998, the year Chavez won the election, compared to the 1950 level. It shows not only the extraordinary stagnation of Venezuelan economic development for almost half a century after 1950 but that for the 24 years up to 2003, when Chavez broke the ‘Opposition’ control of the state oil company PDVSA (Petróleos de Venezuela, S.A.), GDP per capita in Venezuela was actually falling.
Examining this is the goal of this blog.
 Calculated from Angus Maddison World Population, GDP and Per Capita GDP, 1-2003 AD. Angus Maddison is the world’s leading authority on long term economic statistics – former head of the Organisation for European Economic Cooperation (OEEC) economics division. He is first professor, and then emeritus professor at Groningen University and remained there until his retirement. Angus Maddison received a royal decoration as Commander in the Netherlands Order of Orange Nassau. All figures in this article are calculated from this source unless otherwise specifically stated.