‘The Devil’s Excrement’
“Ten years from now, 20 years from now, you will see,” former Venezuelan Oil Minister and OPEC co-founder Juan Pablo Perez Alfonzo predicted in the 1970s, “oil will bring us ruin.” … Perez Alfonzo had a different name for oil: “the devil’s excrement.”
Today he seems a prophet. When it hit the jackpot, Venezuela had a functioning democracy and the highest per-capita income on the continent. Now it has a state of near-civil war and a per-capita income lower than its 1960 level.
Far from an anomaly, Venezuela is a classic example of what economists call the “natural resource curse.” A 1995 analysis of developing countries by Jeffrey Sachs and Andrew Warner found that the more an economy relied on mineral wealth, the lower its growth rate. Venezuela isn’t poor despite its oil riches–it’s poor because of them. “