Diversifying Economy Lifts Oil-Rich Venezuela

By Brooks, James | THE JOURNAL RECORD, May 27, 1994 | Go to article overview

Diversifying Economy Lifts Oil-Rich Venezuela


Brooks, James, THE JOURNAL RECORD


BARQUISIMETO, Venezuela _ In the oil boom of the 1980s, the Venezuelan state of Lara was a slighted stepsister. Lara had no oil wells, no refineries, not even a petrochemical plant.

Without oil, workaday Lara trudged along _ growing potatoes, picking coffee, bottling beer, forging steel, exporting onions and assembling vacuum cleaners.

But today, Venezuela's oil income, compared with population, has dwindled to the lowest level since the 1950s. Though the country sits on the largest known sea of oil in the Americas, prices have fallen almost 40 percent in the last five years.

Business is instead looking to Lara's thriving, diversified economy as a model for a Venezuela after the oil era.

"We are getting a reverse flow _ professionals and laborers are now moving here from Caracas," said Rafael Marcial Garmendia, a local rancher who is president of Proinlara, a private-investment promotion service. "We don't depend on oil. We don't depend on the state. Over the last 20 years, we have had the fastest rate of industrial growth."

Growth has meant a new baseball stadium and modern buildings sprouting along spacious boulevards. A state capital with a suburban atmosphere, Barquisimeto frequently ranks in polls as Venezuelans' second most-desired place to live _ after Puerto La Cruz, a Caribbean resort.

Last year, Barquisimeto, a metropolitan area of more than 800,000, won a status symbol coveted by every Venezuelan community _ a daily flight to Miami by Servivensa, a local airline.

Barquisimeto has a higher income than the national average. With increasing frequency, this crossroads of agriculture and industry is being called "Venezuela's Chicago."

For the rest of the nation, it remains hard to kick a decades-long dependency on oil. Venezuela, the largest supplier of oil to the United States after Saudi Arabia, was once described as a nation glued to an oil industry. The state oil company, Petroleos de Venezuela S.A., is Latin America's largest company.

As recently as five years ago, exports by Petroleos de Venezuela accounted for 82 percent of the national budget. This year, the government expects oil exports to contribute 47 percent.

Partly because of slipping oil revenue, the Venezuelan bolivar has lost about half its value in a month.

"For my generation, it will be the first time that we have seen oil fall below half of the national budget," said Treasury Minister Julio Sosa Rodriguez, 70, in an interview in Caracas. "The most foolish thing of the last 20 years was to not diversify the economy."

Selling more oil for less money, Venezuela is seeing its other exports gradually rise _ from 20 percent of total exports in 1990 to an anticipated 30 percent this year. …

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