Cuba and Argentina are often regarded as the economic ‘horror stories’ of Latin America: both medium to upper income economies which stagnated over the last half of the twentieth century. Indeed, so disastrous has been Argentina’s twentieth century that Simon Kuznets, the Nobel-prize winning economist, famously said that there were only four types of economies in the world: ‘developed, developing, Japan, and Argentina’.
And yet, in many ways, Venezuela is the real tragedy. Its GDP per capita is still lower than where it stood in 1962, half a century ago, despite a long record of democratic stability. Even Cuba has managed to narrow the gap – its income per capita is now four-fifths that of Venezuela, up from one-third a generation ago.
Venezuela’s stagnant history may help explain the popular appeal of Hugo Chávez, who was re-elected today. Since his accession to power, income per capita has risen by a fifth, on the back of a soaring commodities boom.
