When oil prices were low: Petroleos de Venezuela and economic policymaking in Venezuela since 1989

There has been considerable literature on the role of institutions in economic performance in general, in Latin America as a whole, and in Venezuela in particular. Venezuelan state institutions have been seen as highly patrimonialist and poorly performing, despite the advantages of long-standing democracy and large-scale resource wealth. This discussion calls attention to the highly significant 'special case' of the oil sector where the state company, PdVSA, has been bureaucratically autonomous and relatively efficient. Such a situation creates rather unusual policy-making problems given the fact that the economy is structured around oil income, in many respects to its disadvantage. There has been a considerable literature on economic policy reform in Venezuela which has hardly mentioned the oil sector at all. This article discusses the oil industry under Presidents Perez (1989–93) and Caldera (since 1994) to rectify the balance and to use insights derived from the study of the oil sector to offer some fresh perspectives on Venezuelan political history since 1989.