Venezuela: A Nation In Need of Reform

The Venezuelan economy is currently undergoing tremendous economic and political upheaval. However, of the Latin American countries, it was one of the least damaged by the events in 2001 and also made a steady recovery from the Asian crisis of 1997. Using a combination of economic indicators, it is shown that Venezuela’s difficulties occurred not through contagion from other countries’ problems but through (a) its reliance on the oil sector and (b) poorly constructed and ill-sequenced policy. Given this, the paper then explores the country’s policy options and asks what can be done to make it an emerging market success.