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In the early 1970s, Venezuela was an exemplar of democracy and Latin America’s richest economy. Fast forward to today, and the country finds itself in a state of economic free fall, with an annual hyperinflation rate of one million percent. 89% of Venezuela’s population lack enough to eat. Public services, including health care and schools, are near collapse. Violence is rampant and drug trafficking has become a main source of income for the governing elite that used to preside over a flourishing oil sector. What caused Venezuela’s spectacular collapse? Two Latin American scholars provide answers in a concise historical analysis for Foreign Affairs.


In the 1970s, Venezuela’s economy began to stagnate following five decades of continuous growth. Hugo Chávez skillfully exploited Venezuelans’ increasing resentment about rising economic inequality and rampant corruption to win the 1998 presidential election. Once in office, the charismatic leader worked to move Venezuela toward Cuban-style communism. He implemented sweeping land reforms, expropriated foreign oil companies, took over the country’s mining and metal production sectors, and nationalized utilities. Such measures brought many of these operations to a near standstill. But high oil...

About the Authors

Moisés Naím is a Distinguished Fellow at the Carnegie Endowment for International Peace. Francisco Toro is Chief Content Officer at the Group of Fifty. 

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