THE EFFECT OF DECLINING OIL PRICES ON POLITICAL CORRUPTION IN VENEZUELA
Hepp, Simon J.
Looney, Robert E.
Darnton, Christopher N.
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Mired in turmoil, the current state of Venezuelan politics is rife with political corruption and abuses of power. This thesis uses resource curse theory and governance datasets to analytically study changes in Venezuela over time to identify how the 2014 petroleum market crash affected the instances of political corruption. The argument shows that, when petroleum rents plummeted, financial and political incentives caused the focus of the Venezuelan government’s corruption behaviors to change from controlling the economy’s profits to regime survival. The governance data used reveals that in the period surrounding the 2014 petroleum market price decline, incentives behind political corruption shifted from cashing in on oil profits to consolidating political power, which affected the types of corruption actions used by government officials. The findings in this thesis demonstrate that governments without institutional constraints are likely to use different kinds of politically corrupt activities to stay in power during periods of decreased petroleum rent than they do when experiencing windfall incomes. The lack of institutional constraint in Venezuela caused by the willful abuse of power, as well as insufficient government capacity, signals that hurried efforts to rebuild Venezuela must emphasize the quality of governance and the policing of corruption before focusing on repairing the economy.
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