Palma, Pedro A. (1989) Commodity price contractions, debt and economic growth in developing economies: The Venezuelan case. In Klein, L. R. and Márquez, J. (Eds.) Economics in Theory and Practice: An Eclectic Approach. Boston – London: Kluwer Academic Publishers. Chapter V. Pp. 101-127.
One of the consequences of the emergence of the Latin American foreign debt crisis in 1982 has been a growing attention to the problem of the incompatibility between internal economic growth and the honoring of external commitments by heavily indebted countries suffering the effects of a strong deterioration of their terms of trade. The latter problem, in turn, is the result of the collapse of the prices for their main export products, usually a limited gamut of primary commodities, which are particularly subject to extreme price fluctuations.
Venezuela affords a classic case to illustrate this situation. In 1987, hydrocarbon exports (crude oil, refined petroleum products, natural gas, etc.) accounted for 80% of the country’s exports of goods and services and nearly 87% of its merchandise exports. This near-total dependence on a single export product makes the country dangerously vulnerable to fluctuations in world prices.