Anarchy, State, and Dystopia: Venezuelan Economic Institutions before the Advent of Oil Francisco Rodríguez Adam J. Gomolin1 Abstract: This paper studies the evolution of Venezuelan economic institutions before the emergence of oil exploitation in 1920. We argue that by 1920 Venezuela had developed a highly centralized state and a professionalized military. These two institutions ensured that growing oil revenues would strengthen the state structure and protected Venezuela from the resource-conflict trap into which many oil-abundant countries have fallen. We also argue that the failure to develop institutions that could mediate between sectoral demands and the state, the subordination of property rights to political imperatives and the political dominance of the commercial-financial elite conditioned the nation’s response to the post-1920 influx of oil revenues. 1 Rodríguez (Corresponding author): Assistant Professor, Department of Economics and Latin American Studies Program, Wesleyan University, 238 Church Street, Middletown CT 06457. E-mail:
[email protected]. Gomolin: Master of Public Policy Candidate, Richard & Rhoda Goldman School of Public Policy University of California, Berkeley, 2607 Hearst Avenue, Berkeley, CA 94720-7320. E-mail:
[email protected]. We are grateful to María Eugenia Boza, Manuel Caballero, Yoston Ferrigni, Ricardo Hausmann, Elías Pino Iturrieta, Scott Mainwaring, Francisco Monaldi, James McGuire, Richard Obuchi, Daniel Ortega, Jaime Ros, Alberto Unanue, Eduardo Zambrano and participants at seminars at Banco Central de Venezuela and the University of Notre Dame for comments and suggestions, as well as to Homero Gutiérrez and Mónica García for first-rate research assistance. The research for this work was conducted in part while Rodríguez was a Visiting Fellow at the Kellogg Institute for International Studies of the University of Notre Dame and a Professor at the Instituto de Estudios Superiores de Administración.