Archive for July 12th, 2011

A graph of the Devil Excrement at work in Venezuela

July 12, 2011

There is an interview with Economist Asdrubal Baptista in last week’s El Nacional that had the following graph:

taken from apparently a book by him. I find this plot fascinating. It shows Venezuela’s per capita GDP since 1830 in constant Bolivars, that is adjusted for inflation. What is remarkable is how little GDP per capita has increased since essentially the 50’s. Since Venezuela went from producing zero oil in 1914 to producing half a million barrels of oil in 1950, the rise until 1950 can easily be understood. The rest, as they say, is pure Devils Excrement, production went up to one million barrels a day by 1960, without GDP per capita increasing significantly. Then, as seen below, the price of oil began to rise in 1969 (see chart below), production more than tripled and GDP per capita barely moved up. You can see how the peaks and valleys in price are clearly reflected in the GDP plot, but it never got above the level set in the 70’s, despite the fact that the price zoomed up.

The oil was never sowed.