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Oil wealth, high income, and international prestige marked Venezuela’s trajectory before a prolonged crisis turned the country into a symbol of economic loss, institutional deterioration, and extreme dependence on a natural resource that once sustained its peak.
Venezuela, owner of one of the largest oil riches on the planet, went from being a global economic highlight in the 20th century to a country marked by a prolonged income crisis, loss of quality in public services, and institutional deterioration.
In 1950, the country was pointed out as the fourth richest economy in the world in GDP per capita, behind only the United States, Switzerland, and New Zealand, according to Knowledge at Wharton, a publication of the Wharton School, University of Pennsylvania.
This turnaround helps explain why Venezuela was once nicknamed the “Saudi Arabia of Latin America”, an expression associated with the strength of the oil industry and the weight the country had in the regional economy.
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For decades, the income generated by oil sustained economic expansion, accelerated urbanization, and greater consumption capacity compared to much of Latin America, although prosperity did not eliminate internal inequalities.
Peak of a wealthy Venezuela in the 20th century
Between the 1950s and 1970s, the Venezuelan economy advanced driven by oil revenues, which financed urban infrastructure, increased the circulation of foreign currency, and consolidated an image of stability uncommon in the region.
With high disposable income and a strong currency, Caracas and other urban centers came to symbolize modernization, consumption, and opportunities, while the country attracted international attention for the contrast with more unstable Latin American neighbors.
The survey cited by Knowledge at Wharton records that, in 1950, the Venezuelan GDP per capita was $7,424, a value that placed the country ahead of economies that would later become much richer.
At that time, Germany and Japan were still feeling the effects of World War II, which reinforced Venezuela’s exceptional position in global income per capita rankings and fueled the perception of lasting prosperity.
Despite the impressive performance, the Venezuelan economy maintained significant vulnerabilities, especially due to the growing dependence on revenues obtained from oil exports and the difficulty in expanding a more diversified productive base.
Even so, the country occupied an unusual position for Latin America, with a strong influx of dollars, expanding infrastructure, and purchasing power superior to many neighbors during much of the boom cycle.
Dependence on oil increased vulnerabilities
The Venezuelan deterioration did not occur suddenly, as the economic concentration on oil made the country vulnerable to external shocks and reduced, over decades, the space for agriculture, industry, and other productive sectors.
When oil wealth guaranteed high revenues, the dependence seemed manageable; however, the lack of diversification left the State more exposed whenever production fell or the international price of the barrel dropped.
From the 2000s onwards, economic controls, concentration of political power, institutional weakening, and management problems in the state-owned PDVSA began to deepen imbalances that already existed within the Venezuelan model.
With less internal production capacity and a growing need for imports, the country became more vulnerable to dollar shortages, supply shortages, and loss of confidence in economic management.
When oil revenues stopped sustaining expenses and imports at the same pace, the pressure on public accounts, currency, and supply gained strength, making the accumulated fragility of the country more visible.
In this scenario, the issuance of currency to cover expenses, combined with price and exchange controls, contributed to the erosion of purchasing power and the disorganization of economic activity.
Exports concentrated in the oil sector
Oil was the main driver of Venezuelan prosperity, but it also became the center of the country’s economic vulnerability, by concentrating fiscal revenues, exports, and public financing capacity in a single product.
Without a productive structure capable of compensating for losses in the oil sector, Venezuela reduced its margin of reaction in the face of the drop in barrel prices and the decline in internal production.
Knowledge at Wharton states that, between 1998 and 2013, the share of oil-related products in the Venezuelan export agenda rose from 70% to 98%, based on a study cited by researchers linked to the Brookings Institution and Harvard.
This degree of concentration helped sustain public spending programs while oil was expensive, but made adjustments difficult when external income shrank and alternative sources of revenue proved insufficient.
With falling revenues, the economy began to simultaneously experience high inflation, loss of purchasing power, worsening supply, and weakening of the State’s ability to finance public services.
The dependence on oil, therefore, ceased to be just an economic characteristic and began to directly influence the daily life of the population, especially when the government’s financing mechanisms lost support.
Maduro took office amid signs of wear
Nicolás Maduro came to power in 2013, after the death of Hugo Chávez, when Venezuela was already showing significant signs of economic wear, fiscal pressure, and institutional weakening.
Shortly after, the fall in oil prices increased pressure on a model dependent on external revenues, amplifying difficulties that had already been accumulating before the presidential transition.
In addition to the economic crisis, Venezuela faced an increasingly intense political dispute, marked by the advancement of Executive control over institutions, loss of autonomy of oversight bodies, and recurring confrontations with the opposition.
In parallel, allegations of corruption and mismanagement hit strategic sectors, including PDVSA, the state-owned company responsible for oil exploration and production in the country.
With the worsening of the recession, millions of Venezuelans began to experience loss of income, difficulty accessing basic products, and deterioration of essential services, in an environment of prolonged economic instability.
The internal crisis also turned into a regional phenomenon, with a significant portion of the population leaving in search of work, security, and better living conditions in other countries.
GDP per capita shows contrast with Brazil
World Bank data shows that Venezuela’s GDP per capita appears in the series up to 2024, while Brazil recorded a GDP per capita of US$ 10,310.5 in the same year.
The comparison highlights distinct trajectories between two countries that, at certain times, had closer income levels and today occupy different positions in basic economic indicators.
In the Venezuelan case, the current result contrasts with the image of a regional power built in the last century, when oil sustained high average income and reinforced the perception of economic stability.
Over the years, the economy that once stood out for its prosperity became associated with loss of purchasing power, institutional instability, and dependence on a weakened oil sector.
The existence of large oil reserves remains a relevant asset, but the Venezuelan trajectory shows that natural resources alone do not guarantee lasting prosperity or economic stability.
Without stable institutions, productive diversification, and sustainable fiscal management, subsoil wealth can sustain cycles of expansion and then amplify the effects of a prolonged downturn.
Today, Venezuela remains among the most cited examples of economic reversal in Latin America, precisely because of the contrast between the rare position it occupied in the global income ranking and the reality faced in recent decades.
The country that was once among the most prosperous in the world in GDP per capita has become a case of how excessive dependence, institutional deterioration, and a crisis of confidence can turn a historical advantage into persistent vulnerability.
