Growth in an oil abundant economy: the case of Venezuela
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Universidad de Granada. Departamento de Teoría e Historia Económica
Non-renewable resourcesGrowth accountingTFPOil rents
Agnani, B.; Iza, A. Growth in an oil abundant economy: the case of Venezuela. Universidad de Granada. Departamento de Teoría e Historia Económica (2008). (The Papers; 08/18). [http://hdl.handle.net/10481/31543]
SponsorshipFinancial support received from the Spanish Ministry of Education and Science through Projects SEJ2007-62081/ECON and SEJ2006-10827/ECON, the University of the Basque Country through UPV GIU06/41 and the Basque Government through HM-2007-1-4.
Venezuela's growth experience over the past fifty years is characterised by a high economic growth rate from 1950 to 1977 and a low economic growth rate over the 1977-2003 period. In particular, we show that the country has been in a ‘great depression’ since the late seventies. We also show that although Venezuela has an oil abundant economy, this growth experience is largely due to the evolution of its real non-oil GDP. We perform a growth accounting exercise to quantify the extent to which the growth experience in the non-oil sector is a result of physical capital accumulation, finding that non-oil sector behavior can largely be explained by the evolution of TFP. Finally, we also make some correlations to determine whether the oil sector has affected the non-oil sector, either through its capital accumulation or through its TFP. We find that the correlation between oil revenues and capital per worker or non-oil TFP is always negative.