ABSTRACT
In Venezuela and Ecuador, the question of resource dependence as ‘blessing or curse’ took shape early on in the context of economic and political regimes given to import substitution industrialization and, later, to regimes undertaking market liberalizations, Washington Consensus -style ‘adjustment and stabilization,’ and export promotion. This chapter analyzes each country’s experience with its era of market liberalizations and explores the alternative to the liberal market regime as it developed in the two countries. In Venezuela, macro ‘adjustment and stabilization,’ exchange rate and capital market reform, and trade liberalization would occur in near simultaneous fashion. The turmoil associated with the deregulation of Venezuela’s banking sector illustrated the ‘spillover’ problems that could affect investment and the ‘real’ economy and that emerged in an industry requiring particular attention be accorded to public supervision and oversight. Petroleum extraction required capital intensive technology involving economies of scale and utilized very little labor.
