A Venezuelan Paradox: The Prospects for Attracting (or Repatriating) Foreign Investment

Abstract

Venezuela’s handsome income from oil exports, a comparatively small population, and freedom from exchange controls have generated something of a paradox. Although it has amassed a huge foreign debt of $33 billion that will tend to absorb a significant share of future foreign exchange earnings, Venezuelan private holdings abroad are estimated to be $34 billion, thus exceeding the value of the nation’s foreign debt. Hence a key factor influencing the prospect for restoring Venezuelan economic growth in the mid-1980s is the extent to which foreign-based savings can be repatriated, and/or new investments can be attracted from abroad.