In many extractive economies natural resource has the potential to be detrimental to development through the disabling of the countries’ economies, and could be an incentive for mismanagement...Show moreIn many extractive economies natural resource has the potential to be detrimental to development through the disabling of the countries’ economies, and could be an incentive for mismanagement compared to countries without substantial natural resources (Holden 870). This phenomenon is known as the resource curse (Badeeb et al. 123). This study is a critical assessment of the resource curse theory with regards to the management of Venezuela’s state-owned oil company (PDVSA). It investigates the arguments of the resource curse theory that the resource abundance curses institutions through poor governance and promotes high government spending and corruption (Tornell and Lane 34). To achieve the aim of the research, this study reviews the rent-seeking model and the institutional model of the resource curse theory, and examines their applications to Venezuela’s state-owned company. Since the resource curse theory does not give sufficient explanation hence, institutionalism as a different school of thought has been used to complement the theory. The empirical findings and discussion indicates evidence of the rent-seeking model and institutional model in addition to the rationality of institutionalism. This in other words means that the resource curse theory cannot entirely explain the case of Venezuela’s state-owned oil company, PDVSA.Show less
Venezuela has one of the largest oil resource in the world and the oil sector is one of the most prone sectors to corruption. As the Corruption Perception Index shows is the level of corruption in...Show moreVenezuela has one of the largest oil resource in the world and the oil sector is one of the most prone sectors to corruption. As the Corruption Perception Index shows is the level of corruption in Venezuela also one of the highest of Latin America. In this thesis the level of influence of corruption on the resource curse will be assessed, specifically looking at the case study of Venezuela during the Bolivarian Revolution of Hugo Chávez. First, a theoretical framework is created in order to understand the relation between corruption and the resource curse. Second, a contextualization is provided through analyzing the Punto Fijo Pact which preceded the Hugo Chávez government. In this chapter increasing dissatisfaction of the Venezuelan population is shown, which together with the Caracazo massacre, created a platform for Hugo Chávez to gain power and popularity. In the third chapter, the theoretical framework will be applied to Chávez’s Venezuela and its consequences. Whereas the theoretical framework suggests that the resource curse is strengthened by corruption and thus will prevent a country with an abundant resource from developing, the case of Venezuela appears to be have proved the contrary. After analyzing the resource curse in Venezuela it shows that even though an abundant resource is present and corruption is still increasing, the oil revenues have allowed Hugo Chávez to fund several new socioeconomic programs which largely have benefitted the Venezuelan development.Show less
