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Volume 53 / Social Sciences

ECONOMICS: VENEZUELA


ROBERT PALACIOS, Research Assistant, World Bank


MUCH OF THE RECENT ECONOMIC RESEARCH on Venezuela has been an attempt to understand the dramatic economic decline Venezuelans have witnessed over the lost decade of the 1980s. The focus on certain aspects of the crisis, such as foreign debt management and fiscal policy, is part of a reappraisal of economic policies in a country at a turning point in its history. In fact, many of the authors included in this survey became influential actors during the reforms of the Pérez Administration after 1989.

Many of those government officials were popularly known as "IESA boys," a reference to the Instituto de Estudios Superiores de Administración (IESA), where much of the relevant quality research on these and other subjects continues to be produced. For example, the most useful summaries of the events leading to the post-1982 economic crisis include the work of Palma (item bi 93016954), Hausmann (item bi 93017057), and a more controversial account by Rodríguez (item bi 93016928). In addition to the work of the IESA researchers, Mommer and Nissen's ¿Adiós a la bonanza? provides another insightful perspective on the failure of Venezuela's economic policies (item bi 91001928).

At least two foreign authors have contributed solid interpretations of the origins of the crisis. Cline's 1984 article (item bi 93017064) is a good counterbalance for the Rodríguez position that the origin of the debt crisis can be traced to the capital flight which took place between 1979-83. Bourguignon's chapter on Venezuela in the Gelb volume (item bi 93016808) is another objective account of the period leading up to the crisis. It should be noted that the Central Bank of Venezuela's four-volume collection of historic essays on the Venezuelan economy (item bi 92018431) includes the work of both Cline and Rodríguez, along with 44 other important articles.

In addition to these attempts to understand the roots of the current economic situation, the reality of economic decline also inspired serious research on fiscal policy reform. Thais and Maingon provide a much-needed historical context to the fiscal policy debate in Venezuela (item bi 92001428). The work of the Fiscal Reform Commission, compiled by Carrillo Batalla, has been translated into English and gives the excruciating details of the commission's findings (item bi 91000795). Why these findings were generally ignored is explained in McLure's article comparing the historical evolution of Colombian and Venezuelan tax reform (item bi 92019566). The Instituto de Investigaciones Económicas y Sociales at the Univ. Católica Andrés Bello continues to produce a working paper series which includes a solid work by Zambrano on the Venezuelan public sector (item bi 91001921). Finally, IESA's Gustavo Márquez makes a unique and important contribution on Venezuela's mismanaged social security system (item bi 93017051).

Influenced by the current debate in Latin America sparked by Hernando de Soto's El otro sendero (see HLAS 51:2336), several of the selected items represent some of the first serious research on the informal sector in Venezuela. The works of Cartaya (item bi 92019208) and Márquez (item bi 92018429) are among the best. Mailer's work on the informal sector in Mérida (item bi 93017053) is one of three items included from Economía, an economic journal published by the Univ. de los Andes which receives little attention outside of the Andean state of Mérida.

A notable feature of the literature surveyed during this biennium is the lack of information on distributional aspects of the adjustment. In comparison with the growth in research on the effects of austerity programs in other debtor countries like Brazil, Argentina, and Mexico, studies focusing on who bears the burden of adjustment have been scarce in Venezuela. While massive budget cuts and devaluations occurred even before the adjustment package of 1989, known popularly as el paquete, quantitative assessments of the effects of adjustment on poverty and income distribution are generally absent from the literature.

This situation has started to change since the riots of 1989 and the entrance of international organizations like the World Bank, the Inter-American Development Bank, and the United Nations into the policy-making arena. García and Cartaya's UNICEF-sponsored research (item bi 91001926), the World Bank Poverty Report (item bi 93016920), and an unpublished IDB-sponsored study by Márquez et al. have begun to answer some of the pressing questions in the area. These distributional questions and the changing role of the public sector can be expected to dominate the research in the next few years. I gratefully acknowledge the assistance of Anita Schwarz, Foreign Service Institute, US Dept. of State.


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