Venezuela

Venezuelan migrants cross the Simon Bolivar Bridge that connects Venezuela and Colombia. [Medium]

                  Despite being the world’s most oil rich country, Venezuela has been faced with economic collapse, hyperinflation, and skyrocketing crime rates in recent decades. According to the Council on Foreign Relations, Venezuela is a petrostate. A petrostate is a country that is nearly completely reliant on fossil fuel production, power is concentrated to a small minority, and corruption is widespread. Fossil fuels comprise 95% of Venezuela’s exports, 25% of its GDP, and 58% of the government’s budget, making the country’s economy and government heavily reliant on commodity prices. Therefore, when oil prices dropped from over $100 a barrel in 2014 to under $30 in 2016, Venezuela’s economy took a massive hit. Before the 2014 price drop, however, Venezuela’s economy had already been weakened by the country’s previous president, Hugo Chávez. Chávez made multiple moves that hurt the country’s oil production and profitability including firing thousands of experienced workers from PDVSA, Venezuela’s state-owned fossil fuel company, and providing subsidized oil to nearby countries such as Cuba. Additionally, Chávez took steps towards consolidating power such as ending term limits and nationalizing businesses and assets, moving the country further toward authoritarianism and inviting heavy U.S. sanctions in 2006. Between the weakened work force, exporting subsidized oil, and U.S. sanctions, oil production had weakened to a point that the country was unable to absorb the 2014-2016 price shock and recover.

 

Venezuelan crude oil production (barrels per day)

Source: Council on Foreign Relations

                  Unable to recover from the dip in oil prices, Venezuela’s GDP shrunk roughly 75% between 2014 and 2021. Throughout this same period, Venezuela suffered hyperinflation reaching over 130,000% in 2018. The collapsing economy led to the shortage of basic goods, opened the door for increased crime and gang violence, and began a mass migration from the country. The murder rate was the highest in the world, peaking at 92 per 100,000 inhabitants in 2016 before beginning to slowly decline as even the gangs joined the mass migration. In total, 7.7 million Venezuelans have fled their home country, with 84% of the refugees living in Latin America and the Caribbeans. The number of external displacements from Venezuela is the highest in the world, numbering more than Sudan, Ukraine, and even Syria.

Sources: Council on Foreign Relations, UN Refugee Agency, Reuters, Center for Strategic and International Studies