Pre-Chavez Economy

History of Venezuela

Colonial Economy:

• Spanish expenditionaries arrived in what is present-day Venezuela in 1498, but generally neglated the area because of its apparent lack of mineral wealth
• Encomienda is a system where the Spanish crown granted rights over Indian labor and tribute to individual colonists, who in turn undertook to maintain order and to propogate Christianity among the Indians
• The Spanish crown officially ended the encomienda system in 1687, and enslaved Africans replaced the majority of Indian labor
• This time was dominated by a plantation culture, more closely resembling the systems of the Carribbean Islands than that of a South American territory
• Colonial authorities organized the local Indians into an encomienda system to grow tobacco, cotten, indigo, and cocoa

Post Independence:

• Cocoa eclipsed tobacco as the most important crop in the 1700's
• Coffee surpassed cocoa in the 1800's. A coffee boom in the 1830's made Venezuela the world's third largest exporter of coffee
• Fluctuations in the international coffee market created large swings in the economy throughout the 19th century

Early 20th Century:

• The first commercial drilling of oil occured in 1917 and the oil boom of the 1920's brought to an end the coffee era in Venezuela economic history
• The oil boom transformed Venezuela from a relatively poor agrarian society into Latin America's wealthiest state
• By 1928 Venezuela was the world's leading exporter of oil and second in total petroleum production
• Venezuela remained the world's leading oil exporter until 1970
• Oil represented over 90 percent of Venezuela's total exports begining in the 1930's
• The newfound oil let to widespread corruption and deceit by foreign companies and indifferent military dictators flourished which hindered economic developement

Arrival of Democracy: