The Economic Determinants of Venezuela’s Hunger Crisis

Abstract

This paper argues that Venezuela’s hunger crisis was caused by the collapse of the country’s import capacity. Evidence is presented to support the hypothesis that the key driver of the decrease in caloric intake was the decline of more than nine-tenths in oil revenues, which sparked an economic contraction and forced the economy to undertake massive cuts in imports of food and agricultural inputs. Declining oil prices and a collapse in production, in part driven by economic sanctions, are the primary drivers of the collapse in import capacity. Econometric estimates using cross-national panel data show that Venezuela’s performance in health and nutrition indicators is in line with, and in many cases significantly better, than what we should expect given the magnitude of its contraction in per capita incomes over the past two decades.