Of Venezuelan Petroleum 28 Effects on Non-Oil Activities 32 Income Distribution 37 the Urbanization 39
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Weine Karlsson MANUFACTURING IN VENEZUELA Studies on Development and Location Akademisk avhandling som for avlaggande av ekonomie doktorsexamen yid Handelshogskolan i Stockholm framlagges till of- fentlig granskning mandagen den 29 september 1975 kl. 10.15 i sal 205 a hogskolan, Sveavagen 65. Stockholm 1975 MANUFACTURING IN VENEZUELA INSTITUTE OF LATIN AMERICAN STUDIES, STOCKHOLM, SWEDEN PUBLICATIONS SERIES A MONOGRAPHS NO. 2 MANUFACTURING IN VENEZUELA STUDIES ON DEVELOPMENT AND LOCATION by WEINE KARLSSON ALMQVIST & WIKSELL INTERNATIONAL STOCKHOLM 1975 Skrifter utgivna av Latlnamerika-Instltutet i Stockholm Serie A. Monografier 2 © Copyright by Weine Karlsson, Riinninge Girds vag 3, Riinninge, Sweden, and Latinamerika-institutet i Stockholm Ek e n a s 1975 Ekenas Tryckeri Aktiebolag To Gunilla Contents Tables 10 Figures 13 Acknowledgements 15 Introduction 17 1 Overall Survey of Twentieth-Century Economic Structure and Development 21 The Economic Structure of Pre-Petroleum Venezuela 21 Structural Changes in the Economy of Petroleum Venezuela: the 1920's onwards 27 The proceeds of Venezuelan petroleum 28 Effects on non-oil activities 32 Income distribution 37 The Urbanization 39 2 The Rise and Spread of the Manufacturing Industry 43 The Evolution of Manufacturing in Latin America outside Venezuela 44 General observations 44 Hypotheses on locational developments 48 The Evolution in Venezuela 59 The first two decades of this century 59 The interwar period 63 The postwar period 68 7 Contents 3 The Petroleum Refining Industry 71 The Development of Petroleum Exploitation 71 The rise of Venezuela as the world's leading low-cost oil producer 71 The 1943-1957 expansion 77 The post-1957 stagnation 79 The Development of Petroleum Refining 81 Refining for the Venezuelan home market: the 1917-1938 period 83 Refining for export I: the Netherlands Antilles 86 Location and expansion 86 Structure and stagnation 93 Refining for export II: the mainland 96 The 1938-1941 expansion 96 The postwar expansion 99 Plant Structure and Location 102 The Paraguana Peninsula 102 Lake Maracaibo 106 Central area 107 Eastern area 109 Significance for the National and Local Economy. Some Obser- vations 110 Employment and national income effects 110 Linkage effects 112 Local and regional impact 114 4 The Cotton Textile Industry, 1858-1958 117 Development 117 Craft industry in colonial times 117 The beginnings of factory industry 118 The establishing period, 1908-1914 120 A decade and a half of continued expansion, 1915-1930 124 The 1930's - a decade of decline 130 World War II and its aftermath - a growth which faded out 134 The 1950's - looming and elusive growth 136 The Venezuelan Development Pattern Reconsidered in the Latin American Context 137 8 Contents Foreign Financing and Ownership 141 Locational Developments. A Summary 142 5 The Food Industries. Three Cases 145 The Meat Slaughtering and Processing Industry 145 Development 145 Location 147 Cattle-breeding areas 147 Meat-slaughtering plants 148 Meat-processing plants 149 The Milk Processing Industry 150 Development 150 Structure 155 Location patterns 157 The Malt Beverage Industry 161 Development 161 Structure 163 Location 165 6 Location Patterns of the Manufacturing Industries in the Mid-1960's 169 The Location Patterns of Different Activities 170 Cartographic techniques 170 Locational grouping 170 The Overall Location Pattern of the Manufacturing Industry 171 Final Remarks 175 Appendix A Statistical Note on the Manufacturing Industries in Venezuela, 1913-1953 193 Pre-World War I period 193 The 1920's 198 The situation in 1936 203 A.bbreviations 221 References Cited 223 Index 237 9 Tables 1.1 Per Capita Income Estimates 1830-1970 for Venezuela Compared with Other Latin American Countries 24 1.2 Composition of Venezuela's Gross Domestic Product by Industries, 1950-1973 (per cent) 30 1.3 Distribution of Economically Active Population by Industries, 1920 -1971 (thousands) 32 1.4 Percentage Distribution of Active Population by Industries, 1920 -1971 34 1.5 Estimated Productivity Differential by Industries. Venezuela Com- pared with Latin America 37 1.6 Urban and Rural Population, 1926-1971 40 2.1 Evolution of Value Added Per Capita in Manufacturing, 1930- 1970. Estimates for Eight Latin American Countries 46 2.2 Selected Indicators of Manufacturing Activity in Major Latin American Countries, 1970 58 2.3 Composition of Output by Selected Industries 1948, 1958 and 1986, and Manufacturing Employment, 1966 68 2.4 Value Added by Manufacturing in Leading states, 1953 and 1963 (per cent) 69 3.1 Venezuelan Crude Oil Extracted, At-Source-Refined and Exported. Selected Years, 1919-19'74 (million tons) 78 3.2 Refining Capacity and Exports of Derivatives from Aruba and Curacao. Selected Years, 1930-1970 92 3.3 Refining Capacity Expansion in Venezuela, 1938-1974 101 3.4 Venezuelan Oil Refineries in 1974: Types, Capacity, Throughput and Employment (1966) 103 10 Tables 3.5 Production Inputs and Outputs of the Venezuelan Refining In- dustry in 19-63 113 4.1 The Venezuelan Cotton Textile Industry, 1910~1970: Some Re- ported Estimates and Data 122 4.2 Census Data and Estimates for Spinning and Weaving Mills, 1936 127 4.3 Imports of Textile Manufactures in Relation to Total Imports, 1935 (per cent) 130 4.4 Tariff Duties on Cotton Manufactures in Some Latin American Countries, 1929 and 1936 (pence per lb.) 133 4.5 The Evolution of Cotton Spindles in Principal Latin American Countries (thousands) 138 4.6 The Evolution of Cotton Power Looms in Selected Latin American Countries (hundreds) 140 6.1 Locational Grouping of the Manufacturing Activities in the Mid-1960's 171 6.2 Factory Industry Employment in Major Urban Agglomerations, 1966 172 A 1 Industrial Enterprises in 1913 by Industries and Major States 194 A 2 Industrial Enterprises in 1913 by States 196 A 3 Industrial Enterprises in 1913 by Size Groups 198 A 4 Major Establishments and Expansions in the War-Years and the Early Twenties 199 A 5 Estimated Capital Increase in Principal Manufacturing Industries, c. 1913-c. 1923 (Bs million) 200 A 6 Capital/Labor Ratios for Some Manufacturing Enterprises in the Early Twenties 201 A 7 Estimates of Manufacturing Capital and Employment in the Early Twenties 201 A 8 Manufacturing Plants by 1929/1930 as per US Official Estimates 202 A 9 Manufacturing in 1936 by States. Official Census Results 205 A 10 Manufacturing in 1936 by Industries. Official Census Results 206 A 11 Manufacturing Industries in 1936 by ISIC Classification 207 A 12 Seasonally Active Brown-Sugar Mills in 1936 by States 209 A 13 Manufacturing Industries with More than Twenty Employees per Enterprise, 1936 (state averages) 210 11 Tables A 14 Manufacturing Industries in 1936 by Types and Size Groups 211 A 15 Manufacturing Industries in the Federal District, 1936 212 A 16 Factory Industry in 1936 by States. Some Estimates 214 A 17 Estimated Factory Industry Employment and Capital, 1913-1936 215 A 18 Manufacturing Industries in Caracas. Establishments and Employment by Size Groups 216 A 19 Manufacturing Industries in 1953 217 A 20 Venezuela's Manufacturing Industry, 1909t-1966. Some Data Series and Estimates 218 A 21 Estimates of the Gross Domestic Product Composition by Indu- stries, 1925 and 1936 (per cent) 220 12 Figures (Figures 9, 10 and 12-34 show the number of persons engaged in 1966 in various manufacturing industries). 1 Relief Map and Natural Regions of Venezuela. 49 2 Urban Population in 1961 in Venezuela. 50 3 Manufacturing Employment in 1966 in Venezuelan Urban Places. 51 4 Number of Persons Engaged in Manufacturing in 1963 by States and Establishment Size. 52 5 Number of Employees in Manufacturing by States, 1953 and 1963. 53 6 Petroleum Industry in Venezuela, Aruba, Curacao and Trinidad. Oilfields, Pipelines, Terminals and Refineries. 54 7 Crude Oil Production and Refining and Government Oil Income, 1924-1974. 55 8 The Guayana Region. 56 9 Meat and Fish Processing (2011 and 204). 177 10 Dairy Industries (202). 177 11 The Development of the Dairy Industry, 1940-1970. 178 12 Fruit and Confectionary Industries (203 and 208). 179 13 Grain Mills (205). 179 14 Sugar Industry (207). 180 15 Other Food Processing (209). 180 16 Beverage Industries (21). 181 17 Tobacco Industries (22). 181 18 Cotton Textile and Cordage Industries (part of 23). 182 1 Refers to the 1958 ISle code. 13 Figures 19 Knitting Mills, etc. (part of 23). 182 20 Apparel Manufacturing (24). 183 21 Wood and Furniture (25 and 26). 183 22 Paper Industries (27). 184 23 Printing and Publishing (28). 184 24 Leather and Rubber Industries (29 and 30). 185 25 Chemical Industries (part of 31). 186 26 Personal Care Industry (part of 31). 186 27 Construction Materials (part of 33). 187 28 Glass, Pottery, etc (part of 33). 187 29 Petroleum Refining (32). 188 30 Primary Metals (34). 188 31 Metal Products (35). 189 32 Machinery and Electrical Goods (36 and 37). 190 33 Automobile Industry (383). 191 34 Plastic and Other Industries (39). 192 14 Acknowledgements This book presents a series of studies in the geography of manufacturing developments in Venezuela. It is the product of an interest in the econo mic and social development of this Latin American country that goes back more than ten years. It was originally conceived during a visit I paid to Venezuela as a young student in 1964. The help given to me by numerous individuals and institutions has made it possible for me to complete this work. To the Department of Geography at the Stockholm School of Economics and to the Institute of Latin American Studies in Stockholm the book owes its inception and its principal support. I am particularly indebted to Gunnar Alexandersson, Professor in the Department, and to Magnus Morner, Director of the In stitute. Gunnar Alexandersson, my adviser, has indefatigably and pa tiently sustained me with counsel and criticism throughout the preparation of the work.