07/09/2017 by Lindau *
Oil was discovered in the early 20th century, and Venezuela has the world’s largest known oil reserves and has been one of the world’s leading exporters of oil.
Previously an underdeveloped exporter of agricultural commodities such as coffee and cocoa, oil quickly came to dominate exports and government revenues. The 1980s oil glut led to an external debt crisis and a long-running economic crisis, in which inflation peaked at 100% in 1996 and poverty rates rose to 66% in 1995 as (by 1998) per capita GDP fell to the same level as 1963, down a third from its 1978 peak. The recovery of oil prices in the early 2000s gave Venezuela oil funds not seen since the 1980s. The Venezuelan government then established populist policies that initially boosted the Venezuelan economy and increased social spending, significantly reducing economic inequality and poverty. However, such policies later became controversial, since they destabilized the nation’s economy, resulting in hyperinflation, an economic depression, and drastic increases in poverty, disease, child mortality, malnutrition, and crime.