One of the punchiest descriptions of the “resource curse” comes from Venezuelan oil minister and OPEC founder Juan Pablo Perez Alfonso, who called oil “the devil’s excrement”. Yet the saying obscures more than it reveals. Perez Alfonzo’s pessimism about oil dated to an era before contemporary scholarship admits of an oil curse (the most recent resource-curse literature argues that the curse began in 1980 or so, and Perez Alfonzo’s bon mot dates to 1975). It is also the money from oil, not the properties of petroleum itself, that is said to be the cause of the curse, whether through the knock-on effects on productive sectors’ competitiveness through the Dutch Disease of currency appreciation or the conversion of productive competition into indolent rent-seeking through the corruption of political institutions by the replacement of taxation.
The biggest problem for Perez Alfonsz’s wit, however, is the simple fact that for much of the twentieth century, it was hard to say that Venezuela had been particularly cursed by oil revenues.
The statistics suggest that oil simply made Venezuela richer than it would have otherwise been (assuming that its neighbors supply a good idea of its counterfactual, non-oil-based economic outcomes). Similarly, Venezuela’s Polity score (a measure of democracy) show that the country was ranked most democratic by outside experts during periods of high oil income, and only began a slide away from a Polity score as high as France’s when oil prices entered a prolonged depression in the 1990s.
Since the leftist government of Hugo Chavez (and, since his death, Nicolas Maduro) came into power in 1999, however, all of this has changed dramatically. Today, Venezuela does indeed seem to have been cursed by oil wealth in some fashion, as Raul Gallegos documents in Crude Nation, a fine, readable survey of contemporary Venezuelan life, based on his work as a reporter in the country.