Despite its extensive oil output, Venezuela's manufacturing industry today matches that of 50 years ago, news reports show.
According to Central Bank of Venezuela data released Tuesday by El Universal, Venezuela's most respected newspaper, Venezuela's oil boom hides the downfall of the country's production apparatus – in 1965, manufacturing accounted for 14 percent of the gross domestic product, the same figure recorded in the first half of 2012.
Imports have become the only way to meet growing demand.
"We have lost everything we had achieved," said economist José Guerra to the Caracas daily. He noted that even though the deindustrialization did not begin during Hugo Chávez's government, "the trend has been clear" since he first took office in 1999.
By 1998, manufacturing in Venezuela accounted for 17.4 percent of the country's total economy. Since then, there have been negative results, including the 14.2 percent recorded in the first half of this year.
"The participation of the industry in the GDP has declined, as well as the exports (...) Production capacity has been seriously damaged; we are generating new jobs abroad while they are being shed at home," Guerra said.
And imports are increasingly fulfilling domestic demand. According to estimates, this year purchases will amount to $50-52 billion dollars, the country's highest record.
Privileged as it may be, the oil industry in Venezuela is also in a 15-year slump. Since Chávez took power in 1999, Venezuela’s oil output has dropped by 28 percent, or almost 1 million barrels per day, according to figures published this week by The Wall Street Journal. And this fact is helpful for other OPEC members, the paper adds, since smaller supply helps support the price of oil sold by other producers and gives them greater market share.
Chávez was elected last month to a fourth consecutive term and seems unlikely to change course on oil policy. According to J.P. Morgan Chase estimates, the country’s output is expected to drop another 3.9 percent over the next two years.