How resource nationalism hinders development: the institutional roots of the economic recession in Venezuela

How do institutions allow governments to manage dramatic variations of oil rents, and how do these variations impact public institutions is the twofold problem addressed here. We contend that high dependence on oil combined with low political accountability increases the economic vulnerability to external shocks. We sustain our argument with the analysis of the fiscal policies implemented in Venezuela under the administration of Hugo Chávez (1999-2012). A process tracing methodology focuses on the policy design of fiscal policies through the selection of instruments embedded in the Public Finance Management system (PFM), using a typology of the state´s resources of information, authority, treasure and organization. During this period, the constitutionalization of the resource nationalism acted as a trigger to change fiscal policies through four major reforms including the creation of a highly centralized PFM, the takeover of the Central Bank, the reform of oil legal framework and the takeover of the national oil company, PDVSA. All of these reforms converged towards the elimination and/or manipulation of the instruments of political accountability, allowing discretional management of oil rents and hampering the government´s capacity to react to the oil price plunge, which ultimately led to the current economic recessionEste artigo analisa a forma como as instituições possibilitam aos governos enfrentarem grandes variações de receitas de petróleo e como esses fatores afetam as instituições públicas. Argumentamos que uma alta dependência do petróleo, combinada com baixa responsabilidade política resulta em maior vulnerabilidade a choques externos. Amparamos na análise da política fiscal implementada na administração de Hugo Chavez (1999-2012). O processo de monitoramento se concentra no desenho de políticas públicas para a selecção dos instrumentos que constituem o sistema de Gestão das Finanças Públicas (GFP) através de uma tipologia de recursos estatais de informação, autoridade e organização do tesouro. Durante este processo, a regulação constitucional do nacionalismo extractiva agiu como o gatilho para a mudança na política fiscal, através de quatro entidades que incluem a criação de um sistema de GFP altamente centralizado, o controle do Banco Central, a reforma do regulamento de petróleo, e controle da empresa petrolífera nacional PdVSA. Estas reformas convergiram para a eliminação ou a manipulação dos instrumentos de prestação de contas, o que levou a gestão discricionária das receitas do petróleo e afetou a capacidade do governo de reagir ao colapso dos preços do petróleo, culminando na atual recessão econômica.Revista do Serviço Público - RSP, v. 67, n. 4, p. 671-696Administração PúblicaISSN eletrônico: 2357-8017ISSN impresso: 0034-924

El diseño del legalismo autoritario en Venezuela

El profundo proceso de transformación política, social y económico que atravesó Venezuela a partir de 1999, conocido como la Revolución Bolivariana bajo la dirección de Hugo Chávez, se alineó marcadamente a una ideología nacionalista, particularmente de nacionalismo extractivo. El Estado adoptó un modelo de gobernanza jerárquico, intensificando la dirección de políticas de desarrollo, así como el control, la planificación y regulación de actividades productivas, a partir del dominio absoluto sobre la industria extractiva de petróleo y por consiguiente, sobre el manejo de las rentas petroleras. La transformación desencadenada por la Revolución Bolivariana favoreció la concentración de poder en el Ejecutivo, socavando los sistemas de control democrático y de rendición de cuentas. Este artículo examina el período de la administración de Chávez en Venezuela (1999-2013), con base en el marco analítico del diseño de políticas públicas y a partir del análisis de las herramientas disponibles para el gobierno, según Hood: información, autoridad, tesoro y organización. Así, se abordan las principales reformas generadas por el movimiento revolucionario de Chávez, para estudiar cómo la adopción de objetivos de políticas de nacionalismo extractivo afectaron negativamente los controles democráticos del país.   Abstract The profound process of political, social and economic transformation that Venezuela underwent as of 1999, known as the Bolivarian Revolution under the leadership of Hugo Chávez, was markedly aligned with an ideology of nationalism, and in particular of extractive nationalism. The State adopted a model of hierarchical governance in the direction of development policies, controlling, planning and regulating productive activities, based on the absolute control over the extractive industry of oil and consequently, over the management of oil rents. The transformation triggered by the Bolivarian Revolution favored the concentration of power in the Executive, undermining check and balance systems and public accountability. This essay aims to examine the administration of Chávez in Venezuela (1999-2013), based on the analytical framework of policy design and according to Hood’s categories of public policy tools available to the government: nodality, authority, treasure and organization. The main reforms generated by the revolutionary project of Chávez are addressed, to study how the adoption of policy aims aligned with extractive nationalism, negatively impacted democratic control systems and public accountability

De l’analyse des disparités d’implémentation fiscale au Venezuela : le modèle politique d’une nouvelle architecture "rentière’"(2000-2010)

This study examines fiscal policy designs by focusing on one particular case: Venezuela during the period 2000-2010. The selection of this particular case of study allows to integrate two prominent aspects known to have important effects on rentier performance: a striking oil boom from 2004-2008 and the introduction of a new political regime. During the first decade of the 21st century, the political regime of Venezuela was substantially transformed modifying the overarching governance modes of the country and more specifically, those of the oil sector, the most important sector of the country’s economy. The fiscal institution of Venezuela considerably changed in the 2000s with a new conception over the management of oil rents. The ‘sowing the oil’ paradigm was displaced by a model of direct distribution of oil rents through a centralized spending system. With a newly elected government and the enactment of a new Constitution in 1999, a series of substantial changes were begun, introducing institutional makeovers and new dynamics across political, economic and social spheres. These multiple institutional rearrangements drew a dividing line from previous time periods, progressively developing a discernible preference for centralizing policy-making decisions, circumventing institutional structures and restructuring policy arrangements to make them compatible with the newly established governance modes. In this sense, the assessment of Public Financial Management (PFM) system adjustments in the light of controlling expanding resource rents can potentially contribute to the study of fiscal implementation distortions in naturally endowed economies in particular.Cette étude examine les élaborations de politique fiscale en se concentrant sur un cas particulier: celui du Venezuela sur la période 2000-2010. La sélection de ce cas particulier permet d’intégrer deux aspects marquants, connus pour avoir des effets importants sur la performance rentière: un saisissant choc pétrolier de 2004 à 2008 et l’introduction d’un nouveau régime politique de type semi-autoritaire. Au cours de la première décennie du 21ème siècle, le régime politique du Venezuela a substantiellement été transformé. Les modes de gouvernance du pays et précisément ceux du secteur pétrolier ont connu une profonde mutation. L’institution fiscale du Venezuela changea considérablement dans les années 2000 avec une nouvelle conception du management des ressources politiques. Le paradigme ‘semer le pétrole’ fut remplacé par un modèle de distribution directe et centralisé des rentes pétrolières. Grâce à un gouvernement récemment élu et l’adoption d’une nouvelle constitution en 1999, une série de changements substantiels débuta, amorçant de véritables métamorphoses institutionnelles et de nouvelles dynamiques au sein des sphères politiques, économiques et sociales. Plusieurs réformes légales ont été progressivement introduites pour modifier les normes du système de Management des Finances Publiques (PFM) ainsi que les normes budgétaires, générant ainsi de nouvelles dynamiques dans l’aménagement des dépenses publiques, dans les modèles d’allocation de rente, et dans l’ensemble de la gestion des ressources. Ces mesures créant de nouvelles élaborations fiscales, et plus important encore, une nouvelle architecture de finances publiques

Analyzing fiscal implementation gaps in Venezuela:The policy design of a new ‘rentier’ architecture (2000-2010)

This study examines fiscal policy designs by focusing on one particular case: Venezuela during the period 2000-2010. The selection of this particular case of study allows to integrate two prominent aspects known to have important effects on rentier performance: a striking oil boom from 2004-2008 and the introduction of a new political regime. During the first decade of the 21st century, the political regime of Venezuela was substantially transformed modifying the overarching governance modes of the country and more specifically, those of the oil sector, the most important sector of the country’s economy. The fiscal institution of Venezuela considerably changed in the 2000s with a new conception over the management of oil rents. The ‘sowing the oil’ paradigm was displaced by a model of direct distribution of oil rents through a centralized spending system. With a newly elected government and the enactment of a new Constitution in 1999, a series of substantial changes were begun, introducing institutional makeovers and new dynamics across political, economic and social spheres. These multiple institutional rearrangements drew a dividing line from previous time periods, progressively developing a discernible preference for centralizing policy-making decisions, circumventing institutional structures and restructuring policy arrangements to make them compatible with the newly established governance modes. In this sense, the assessment of Public Financial Management (PFM) system adjustments in the light of controlling expanding resource rents can potentially contribute to the study of fiscal implementation distortions in naturally endowed economies in particular.Cette étude examine les élaborations de politique fiscale en se concentrant sur un cas particulier: celui du Venezuela sur la période 2000-2010. La sélection de ce cas particulier permet d’intégrer deux aspects marquants, connus pour avoir des effets importants sur la performance rentière: un saisissant choc pétrolier de 2004 à 2008 et l’introduction d’un nouveau régime politique de type semi-autoritaire. Au cours de la dernière décennie du 21ème siècle, le régime politique du Venezuela a substantiellement été transformé. Les modes de gouvernance du pays et précisément ceux du secteur pétrolier ont connu une profonde mutation. L’institution fiscale du Venezuela changea considérablement dans les années 2000 avec une nouvelle conception du management des ressources politiques. Le paradigme ‘semer le pétrole’ fut remplacé par un modèle de distribution directe et centralisé des rentes pétrolières. Grâce à un gouvernement récemment élu et l’adoption d’une nouvelle constitution en 1999, une série de changements substantiels débuta, amorçant de véritables métamorphoses institutionnelles et de nouvelles dynamiques au sein des sphères politiques, économiques et sociales. Plusieurs réformes légales ont été progressivement introduites pour modifier les normes du système de Management des Finances Publiques (PFM) ainsi que les normes budgétaires, générant ainsi de nouvelles dynamiques dans l’aménagement des dépenses publiques, dans les modèles d’allocation de rente, et dans l’ensemble de la gestion des ressources. Ces mesures créant de nouvelles élaborations fiscales, et plus important encore, une nouvelle architecture de finances publiques.Programme doctoral en Science politiqu