By JOSÉ ÁNGEL DE LA PAZ | EGADE BUSINESS SCHOOL
Venezuela faces a structural dilemma: it holds vast oil reserves but lacks the institutional conditions to transform those reserves into sustainable economic development.
In Territorio Negocios, Rolando Fuentes, professor in the Department of Finance and Business Economics at EGADE Business School, argued that rebuilding the country goes far beyond reactivating its energy industry and requires reconstructing the State itself, the rules of the game, and trust between governments and citizens.
These reflections were shared in episode 231 of the podcast, hosted by Eva Guerra, Associate Academic Dean of EGADE Business School, in a conversation focused on the limits of oil as a development engine and the challenges Venezuela faces in rebuilding its economy in a more competitive, uncertain global environment.
Fuentes emphasized that there is no universal formula for a country’s economic reconstruction.
“The problem is that there is no manual for reconstructing a country,” he stated, drawing a distinction between economic growth and institutional reconstruction.
While economics has developed robust theories on growth, he explained that reconstruction processes are isolated cases and not easily generalizable, as seen in the former Soviet Union, East Germany, Iraq, or Haiti.
THE RESOURCE CURSE
During the conversation, Fuentes referred to the concept of the resource curse to explain why countries rich in natural resources often perform worse economically than those without such endowments.
“Many times, the money that comes from oil is relatively easy money,” he said, which reduces incentives to build strong institutions, effective legal frameworks, and a diversified productive base. “What comes easy, goes easy,” he added.
Although he acknowledged exceptions—such as Norway—he stressed that economic evidence is clear: sustained growth depends on strong institutions, the rule of law, and social trust, not solely on natural resource wealth.
RESERVES ARE NOT PRODUCTION
Fuentes also explained the distinction between oil reserves and productive capacity. Although Venezuela holds some of the world's largest crude oil reserves, its crude oil is heavy and low-quality, which reduces refining yields.
This is compounded by a structural shift in the global oil market, which is now more competitive, characterized by moderate prices and a stronger emphasis on efficiency, legal certainty, and precise capital allocation.
In this context, he warned that oil no longer offers the extraordinary margins of the past and that investment incentives increasingly depend on institutional stability rather than on the sheer volume of available reserves.
OIL, ENERGY TRANSITION, AND GEOPOLITICS
The discussion also addressed the impact of the energy transition, which does not immediately replace oil but does reduce its relative weight compared to renewable sources. Added to this is a geopolitical dimension that introduces greater uncertainty.
In direct terms, Fuentes stated: “Venezuela is not investable in its current state,” referring to the lack of political and institutional conditions that would guarantee long-term investments.
Fuentes suggested that oil could serve as an initial incentive to generate resources needed to address urgent demands—such as medicines, food, and basic infrastructure—but warned that without solid institutions, there is a risk of reproducing rent-seeking structures and concentrations of power.
“My concern is the resource curse,” he said, recalling cases in which the appropriation of strategic assets ultimately weakened the State itself.
In summary, he argued that oil can be a useful short-term lever, but not a guarantee of development.
Venezuela’s economic reconstruction, he concluded, will depend on its ability to build a stable institutional framework, with clear rules and a long-term vision that goes beyond oil rents.
Territorio Negocios releases a new weekly episode every Tuesday on Spotify, Apple Podcasts, Amazon Music, and YouTube.
