The Anarchy of Numbers: Understanding the Evidence on Venezuelan Economic Growth

Abstract

ABSTRACT This paper studies the causes of Venezuela's low economic growth from 1950 to 1998. We show that there exist wide divergences in many commonly used estimates of GDP growth, and discuss the sources of those differences. We show that the choice of base year and linking techniques is crucial for the diagnosis of economic growth, and argue that the aggregate GDP and Total Factor Productivity (TFP) growth numbers are distorted by cuts in oil production that came about as a result of the country adopting the OPEC strategy of exploiting market power during the 1970s. We argue that non-oil growth and TFP numbers represent more adequate measures of economic performance and that, while far from satisfactory, these do not deviate significantly from those of other Latin American countries.