- 1 An early version of the empirical data in this article has been presented in the Fourth Annual Con (...)
1This article1 focuses on the causes of the international oil rent and its alternative account in national oil-exporting economies. There are two main objectives: (i) to understand the origin of the international oil rent and (ii) to propose a grounded alternative view (to the standard account) of the national oil-exporting economies. The article is divided into four parts. The second part briefly exposes the Economic Theory of Rent Capitalism. Part three presents a practical example in the accounting of national oil-exporting economies, with calculations of the International Oil Rent as a separate part of the national income, in order to understand the performance of national oil-exporting economies, with four indicators to measure the performance of such economies: Oil Sector Non-Rent GDP, Non-Oil Sector Non-Rent GDP, Non-Rent Total GDP and International Oil Rent. The fourth part briefly discusses oil rent capitalism’s specific limits and crises, all to conclude that oil rent is neither a disease nor a curse but rather an income that merits a particular treatment related to the oil-exporting economies’ GDP.
- 2 Baptista and Mommer have developed a comprehensive research agenda, with different topics ranging (...)
2What is at stake in national oil-exporting economies, such as Venezuela, is a peculiar model based on the oil rent as an external income that historically drives the constitution of the internal market. Bernard Mommer and Asdrúbal Baptista have used the “Rent Capitalism” term in order to explain the material conditions determining Venezuelan economic growth.2 Baptista (2010) explains Rent Capitalism as a historical model that started in a society with a barely incipient degree of capitalist maturity, whose territory provides oil at a particular moment of global capitalist development when global demand is increasing.
The process that arises then takes a double directionality. The first is defined by a rent remunerating the oil-bearing land. This remuneration, therefore, has an international character of its own; moreover, its size ends up being very significant over time compared to the other income produced by the national productive forces. As the owner of the oil land, the state appropriates the international rent. The state also represents the agent that will make it circulate in many different ways within the domestic economy. The second orientation is dominated by the need to build a national social development. In this second orientation, the oil rent plays a central role. This development model is intrinsically capitalistic. (Baptista, 2010: 125. Author’s translation)
3The Rent Capitalism model describes a specific system in which harvested international oil rents are articulated and integrated with capitalistic markets. Ground rents (as known before capitalism) is a historical category subordinated and minimised by the hegemony of capital over the property land at the beginning of the 20th Century. However, the case of Venezuela – and other oil-exporting economies – illustrates a process in which a growing international oil rent remunerating the property rights of the oil-bearing mines drives the creation of an internal market through a capitalistic division of labour. The Rent Capitalism model is part of the capitalistic system. Still, its development process has been historically differentiated by the role of the distribution of land rent in driving national productive activity.
4Thus, “Rent Capitalism” does not refer to “Rentier Capitalism” (Karl Marx), where the beneficiaries of incomes from natural resources rent are a property-owning social class that plays no productive role in the economy per se but monopolises access to physical or financial assets and technologies. The “rentier” in this perspective is still a different social category. Nor is referring to “Rent Capitalism” as the “Rentier State” (Mahdavy, 1970), which is a category used to describe the static and “undesirable” situation associated with socio-political stagnation and inertia. Rent Capitalism is the main category created by Mommer and Baptista in order to explain the dynamics of a national economic system with its own rules of distribution and growth using an international income (international oil rent). The difference with other categories lies in the State’s income distribution as the owner of the oil land, creating a pattern of capital accumulation and developing a labour market through indirect and direct oil rent transfers.
5Under Rent Capitalism, the State is generally both the owner of the natural resource and the distributor of the rent it generates – using instruments such as overvaluation of the national currency (i.e. selling cheap dollars in the internal market), a low level of taxation, and high level of public expenditure and investment. The process of capital accumulation and the remuneration of factors of production (capital and labour) are hence seen as determined by, on the one hand, exogenous factors associated with the global oil market and, on the other hand, by expansions in domestic demand, with a low level of non-oil exports hampered by an over-valuated exchange rate (Mommer, 1986).
- 3 The manufacturing sector observed its most significant growth rate in Venezuela between 1960 and 1 (...)
6Between the 1950s and 1982s, industrialisation in Venezuela is historically shaped by the Rent Capitalism model instead of deindustrialisation.3 However, the model is not challenged by the reason exposed in the “resource curse” perspective. Indeed, Rent Capitalism as a model is continuously challenged by the tension between the State as the owner of the oil land, collecting the rent, and the State as the rent distributor in the internal market. The first function is usually challenged by multinational companies associated with the international oil business. The second function is generally challenged by national private economic agents (capital and workers) struggling to influence the implementation of public policies that benefit their interests at stake.
- 4 Some attempts at “oil sector satellite accounts” have been developed in Ecuador (Carrillo, 2002) a (...)
7Thus, the theory of Rent Capitalism has made significant advances in designing specific accounting indicators, such as those in the work of Baptista (2002). However, the connections between this economic model’s accounting characteristics and the National Accounting System of each oil-producing country remain to be fixed4.
- 5 In Venezuela, a historical debate around the uses of rent has been developed since 1934. For a com (...)
8To better understand the role of oil rent in the income composition of national oil-exporting economies, it is necessary to distinguish between oil rent as an external source of income and oil rent as a part of the public expenditures in national oil-exporting economies (Baptista & Mommer, 1987). The first response to the exercise of property by the State derived from the ownership of oil-bearing land. The second responds to the uses (or destinations) that oil income takes in the national economy once the State has obtained it. This article is mainly framed in the origin of the oil rent with some references to its uses5.
- 6 This theoretical premise originates in the work of David Ricardo (1817).
9Some considerations must be kept in mind regarding oil production. Oil is a natural mining resource, which has different fertilities in the regions worldwide in which it is produced, and the natural fertility of these wells is not uniform. That difference in productivity directly affects the costs of extracting it. It is clear that, in a mature oil field, with many years of extraction, the cost of production will always be higher since it is necessary to use more intensive capital and labour to extract a barrel. In the same way, the cost of extraction in a high-fertility oil well implies less capital expenditure and fewer working hours per unit produced. In other words, costs of production in the oil industry do not simply depend on the amounts of capital and labour employed, on the correction applied by the market to reflect marginal cost, nor on the reductions in costs achieved by the deployment of new technology in oil production; but in nature and access to nature, which play a significant role6. Even in the presence of competition, there is a substantial and systematic divergence of prices from the average cost of production between countries due to the geological endowment (see Fig. 1 and 2).
Figure 1: OPEC, Venezuela, World, and the US Productivity (well/barrels/day) (1980-2019)
Figure 2: The US and Venezuela Oil Extraction Cost per Barrel, WTI and Venezuela Oil Basket Prices, Current USD Prices (1950-2012)
Source: The US Bureau of Economic Analysis (BEA) 2022; API Petroleum Facts and Figures 1950-1959; PEC ASB 1960-2019; PODE, Ministerio Petróleo Venezuela; Baptista, 2015. Author’s compilation, figure and calculation.
10Similarly, the presence of significant international differential productivities leads to the emergence of global oil rent, which, in turn, is ruled by different laws in a context where oil is an essential natural resource for the world economy. Indeed, the presence of relative (differential) fertilities of the oil wells per unit allows the landlords (whether they are nation-states or private owners only in the case of the United States) to participate in the oil business with greater or lesser production bargaining power (Mommer, 1986; Baptista, 2010; Bina, 1985). Thus, the differences originate in nature are framed in social legitimacy rights exerted by the landlord on the oil reservoirs. These landlords are represented mainly by nation-states and international organisations, e.g., OPEC (Organisation of the Petroleum Exporting Countries).
- 7 The drop in production in Venezuela since 2014 is mainly due to factors associated with a decapita (...)
11Figure 1 shows the oil productivity wells expressed in barrels per day in OPEC countries, Venezuela, the World average and the United States. Wells belonging to the OPEC group are highly productive, observing, for example, the productivity of 872.5 barrels per well/day in 2012 and 802.0 in 2019. Meanwhile, the global productivity averages in 2012 and 2019 were 74.1 and 71.2 barrels per well/day, respectively. As a middle-aged oil country with 120 years of less intense oil production than the US, Venezuela shows an average productivity rate closer to but above the world average, with 187.4 in 2012 and 55.4 in 2019 barrels per well/day. The US productivity rate is the lowest globally, always far below the world average, although the increase observed since 2014 with the shale oil, with 14.3 in 2012 and 27.2 in 2019 barrels per well/day. According to Figure 1, Venezuela is the OPEC country with the lowest productivity per well7, but close to and historically above the world average.
12Figure 2 shows the difference in production costs between the US and Venezuela, in contrast to the WTI (West Texas Intermediate-Cushing) oil price marker and the Venezuela basket oil price.
- 8 The reference to the US as the most inefficient oil producer is related to the “average production (...)
13One can assert that two significant factors explain the long-term oil price trend and the substantial differential rents in the oil business: on the one hand, the US production costs; and, on the other hand, the structural way that the prices have been set. The US oil production costs represent the primary driver of crude oil price trends (mainly the WTI), influencing the primary markers, as shown in Figure 28.
- 9 It is important to remind that the four well-known crude oil markers (West Texas Intermediate-Cush (...)
14Figure 2 also shows a crucial detail in the theory of the crude oil price and oil rents: the selling price of Venezuelan oil follows an almost identical trajectory to the WTI trend, although its magnitudes are lower due to the prevalent systematic discounts in the world crude oil market and the types of crude oil (based on viscosity, among other characteristics). The Venezuela oil price trajectory confirms that the WTI represents the world oil market reference. In the case of Venezuela, the difference between the costs and the market price represents the so-called differential rents. It could be asserted that the Venezuela sale price coincides with the WTI because the US represents the Venezuelan’s primary and historical buyer. However, several authors agree (Fattouh, 2011; Mabro, 1991; Mommer, 2002; Bina, 2013) that the four primary markers serve exceptionally as a benchmark for all crude oil markets9.
- 10 The US oil industry is still left below the average world productivity, although the high expenses (...)
15It seems evident that the US is the most mature, most exploited and explored oil economy globally, with nearly 500,000 active wells exploited since 1859, with a consumption of 20% of the world’s oil production in 2021. As already referred, the US oil industry represents the less productive and efficient oil industry worldwide, i.e. the highest production costs of the global oil industry10. Thus, Figure 2 confirms the inevitable presence of the oil rent. The high historical cost prevailing of the US oil industry provides a competitive rate for the oil-producing countries in the global market. The worldwide oil sector competition involves the productivity of wells associated with their natural fertility (oil extraction capacity), combined with the greater or lesser degree of constantly introducing technologies to find oil extraction processes that lower costs.
16Diagram 1 summarizes the alternative explanation of the oil price trend determinants split into the national and international domains. The national domain corresponds to the sphere where crude production is developed, causing monetary costs. The international domain is where the conditions of sale are negotiated based on the benchmark pricing system and geopolitical conditions.
Diagram 1: Alternative Theory in Oil Price Trend Causes: Production Costs and Institutional Structure
Source: Diagram based on Regnault, 2022. Alternative oil price trends and fluctuations explanation.
- 11 One can refer to the emblematic switch from vertical to horizontal drilling in the US oil industry (...)
17The national sphere is the first link that determines the oil price trend because it is there where the production occurs. It is also the domain where national oil-exporting economies compete based on the productivity of their wells. The well is the basic economic unit whose productivity depends on the natural geological endowments and the capital and labour required to extract the oil. Additionally, technological innovation can improve extraction conditions and, in the medium term, has effects on the productivity of wells11. The productivity of the wells at a national level defines the material bases of the competition. Each producing country displays different average production costs, with different qualities and viscosities. Thus, competition reflects fundamental differences in the geological endowment and capital expenditures in each oil-producing country, always within an institutional framework that ensures the reproduction price of factors in the national oil-exporting economies (capital, labour and oil-bearing lands).
18According to the observed productivity and extraction costs (see Fig. 1), one can split these countries into two groups reflecting three types of producers: producers with high average extraction costs, represented by national economies with more mature wells, which also entail high capital expenditure in proportion to production. This group is made up of wells located in the US and the UK. The producers with medium and low average extraction costs are oil-producing countries, generally net exporters. The medium and low extraction cost is a category made up of more than 20 national economies that export crude oil, whose maturity ranges between 50 and 70 years of production, allowing productivity of 120 thousand to 5 million barrels per day. In this category, one can find OPEC and non-OPEC countries.
19In the international arena, two dimensions can be observed: the price system and geopolitical constraints. Prices work based on a benchmarking system published by producers based on their decisions, sales contracts and referent prices. In the diagram, these marker prices are expressed as the high-cost markers (HCM) represented by WTI and Brent, and the medium and low-cost markers (MLCM) represented by more than 20 markers (non-OPEC countries), 15 components of the OPEC and the value of its average basket. The markers are used to sell each national crude oil on the international market. From the empirical verifications presented above, one can assert that the WTI as HCM provides a reproduction “price floor” to the US oil industry and, in turn, represents a “ceiling price” for the international oil industry, from which it can be discounted.
20Thus, the less efficient oil industry is accompanied by agreements that benefit national oil-exporting economies with high oil rents. The differential costs per unit allow oil companies (oil majors, oil independents or national oil companies) and owner states (OPEC and non-OPEC, national states or provinces, e.g., Alberta in Canada) to obtain differential rents due to higher natural productivity compared to the costs of extracting oil from the US. For the landlords, the ownership of the oil-bearing lands is a way to participate in the oil business with greater or lesser production bargaining power; the governance model gives landlords greater or lesser oil differential rents in their favour depending on different laws that govern it in national contexts (Mommer, 1986; Baptista, 2010; Bina, 1985).
- 12 Since the collapse of the Bretton Woods system in August 1971, the US dollar became the dominant c (...)
- 13 In addition, the role of the US in the war between Russia and Ukraine, started in February 2022, i (...)
21In geopolitical terms, the answer is associated with the dominant role of the US as the world’s leading economy. Indeed, it happens that the least efficient oil industry in the world is located in the most powerful economy of the last 80 years. Oil is a strategic commodity for the US national industries, with a high military strategic value, which guarantees its hegemony. The institutional structure in international trading reinforces the dominant role of the US in the global market. In addition, the dollar, as a historical main international trading currency since 1971, has had a central influence on the US trading domination with a direct effect on the global oil market and on the absolute oil prices in US dollar terms (Bina, 2013)12. Maintaining this dominance happens, among other things, by making tacit and explicit agreements. These institutional agreements crystallize in the price system. Furthermore, at the time of this writing, for already 20 years, there has been a strong tendency for capitalism to leave the borders of US domination to undertake new hegemonic forms. China, India and Russia have a central role in these new hegemonic forms13.
22For now, it is essential to reflect on what the large numbers of crude oil production say; the global oil price trend follows the marker belonging to the most expensive producer. The pricing system is the core that gives legitimacy to those less efficient in determining the trend and to more productive lands to get oil rents. These factors represent the key drivers that determine international oil rent. Consequently, the oil rent is widely accepted by all the economic agents involved in the oil business as an inevitable and specific remuneration. Historically, national oil companies, major oil companies, national states and private owners have struggled to control oil rents. Whether in Texas, Alaska, Alberta, Saudi Arabia, Kuwait, Norway, the UK, Nigeria or Venezuela, the property rights regime represents the primary legal tool used to keep their part of the rent.
- 14 Pineda & Rodríguez, 2010; Vanoli, 2005; El Serafy & Lutz, 1989); Baptista, 2002; Mommer, 1986; Bap (...)
23The use of the System of National Accounts (UN-SNA, 1993, 2008) in the description of oil economies is a vast terrain to explore. Indeed, accounting for the impact of income arising from the exploitation of a natural resource requires specific indicators to capture the performance of such economies. The problems which resource-rich economies face in accounting for rents from non-renewable resources have been extensively commented upon by a series of authors.14 Many of them propose alternative methodologies in order to fill the gap left by conventional indicators: to improve the description of both the performance of resource-rich economies and the complex relationship between mineral rent derived from their exports and the behaviour of their factors of production in the growth process.
24However, the international standard obliged national accounts statisticians to include the exceptional income generated by oil rent in the “economic surpluses” of the sector. In other words, the oil sector has been treated as just another industrial activity despite the rent component of income from natural resources. The result of this treatment is a distortion of the macroeconomic impact of the oil sector in comparison with other industrial sectors, both national and international, an effect that has also been registered in the global indicators used to measure the performance of oil-rich economies.
25In contrast, the System of National Account 2008 (SNA 2008) does include methodological tools to address accounting for rent derived from non-renewable natural resources, such as oil (in Chapter 7, Section E, Paragraphs 5 and § 7.107 to § 7.160). These allow us to progress in developing the concepts and theoretical distinctions that should be taken into account in constructing a methodology for identifying the exact contribution of natural resources to production in these economies.
26Using the example of Venezuela between 1997 and 2014 and the opportunity offered by SNA, this section proposes a correction, perhaps just “an alternative”, in the accounting methodology for including oil rent in GDP. The application of this correction reveals the oil sector’s performance to be quite different from that which a conventional national accounting approach, based on standardized practices, portrays. Exploring the implications of this outcome, I propose a method for calculating national and international oil rent. Moreover, this contribution engages with the theoretical debate about the modes of development of oil-exporting economies. The latter highlights the importance of calculating “Non-Rent GDP”, a measure proposed by Baptista (2002, 2010) and Mommer (2002, 2022) for arriving at an accurate representation of the economic performance of oil-exporting economies.
- 15 In this study the use of the “term” rent refers to the remuneration of the ownership of a non-prod (...)
- 16 Mommer has demonstrated the historical importance of Ricardian rent in the United States – which c (...)
27In the majority of important oil-producing countries (exporter or not), National Accounts statisticians make a distinction between “Oil and Mining GDP” and “GDP of the Rest of the Economy”. This distinction is made in order to isolate the distortions that oil (or other minerals) price formation causes for the interpretation of economic performance. It also implicitly recognises the existence of significant rents in these economies. Different countries assign different names to this separation but the separation itself is common practice in oil-producing countries such as the UK, the USA, Mexico, Norway, Venezuela, Ecuador, Nigeria, Libya and Saudi Arabia. Nevertheless, this kind of accounting separation is insufficient (Vanoli, 2005) because it only separates out the oil and/or mining sectors from the rest of the economy – but it does not deal with the importance of rents15 in the isolated sector, and even less with its specific consequences on the rest of the economy. It is a device which isolates the problem. Still, it does not resolve it in accounting terms: oil income originates both from conditions of nature, as indicated above, and from inputs of capital and labour, in a combination which cannot be ignored. In industrial economies, the significance of rent income from natural resources has been in secular decline, transforming it into “a statistical expression without wider significance and of little prevalence” (Baptista, 2011). This is to say that, in the majority of industrial economies, rents derived from mining, agriculture or other natural resources-based industries could be considered insignificant enough not to deserve special treatment in the standardized practice of the System of National Accounts. However, the lengthy discussion on accounting for non-renewable natural resources which took place throughout the twentieth century (Vanoli, 2005), and as has also been demonstrated by Mommer (2002)16, the production of oil is a very special case in which international differences in costs of production and therefore rents are exceptional (Vanoli, 2005; Baptista, 2011) - such that it merits special accounting treatment (Mommer, 1988).
28It is necessary to show how much of the national income corresponds to capital and labour performance and how much is due to oil rent. Following Baptista’s (2015) and Mommer’s (1986) methodologies, this section proposes specific performance indicators for oil-exporting economies related to the Gross Domestic Product (GDP).
- 17 In Oil Exporting economies such as the UK, Norway or OPEC countries, the System of National Accoun (...)
29The “socio-logics” behind the oil rents in Venezuela’s national income oblige to compute a specific GDP with the discount of the oil rent from the oil activities, namely, Non-rent GDP, applying adjustments in both the oil sector and non-oil sector. Hence, Venezuela’s GDP is composed by:
- The Non-Rent Non-Oil Sector GDP (composed of conventional factors, i.e., taxes, labour and capital remunerations).
- Non-rent Oil Sector GDP comprises two conventional factors’ remunerations and two economic sub-sectors18 (discounting the land remuneration). The two production factors are Labour and Capital, which generate two types of income (profits and wages) in the national economy. Together they constitute value added in the process of industrial oil production.
- The International Oil Rent, coming from the Oil Sector, remunerates the Oil-bearing Land. The oil rent is linked to the price of a natural resource – as an undistinguished part of the market price once extracted – either as the outcome of official policy concerning the domestic market or of the behaviour of the international oil market19.
30Oil economy accounting statistics require specific tools to reveal the purchasing power transferred to them in the form of international oil rent. Furthermore, and as is quite evident, they should consider changes in the relative prices of national production over the years. In subtracting Oil Rent from the calculation of Oil GDP, the latter’s scope is limited to the productive activity of the sector, thereby isolating it from the fluctuations caused by the behaviour of oil prices in the international marketplace. It thereby allows an interpretation that is homogeneous from statistical and accounting perspectives.
31Figure 3 shows the conventional and adjusted (non-rent) Oil GDP as a percentage of the total GDP (at current prices) between 1997 and 2014. There is a sharp contrast between the two series: while the contribution of the conventionally measured Oil GDP varies between 10 and 31% of GDP on the one hand, on the other, the adjusted (non-rent) oil GDP exhibits both a lower and more stable contribution to GDP (non-rent), fluctuating between 8.6% in 2004 and 2.9% in 2014. The extreme variations in the case of the conventional GDP have their origin in international oil prices, which also cause variations in the size of the International Oil Rent accruing to the Venezuelan economy. In the case of the latter, in contrast, when the oil sector is treated as a service activity – based on the standard ‘cost’ of such services – Non-Rent Oil GDP shows much less dramatic variation, its evolution relatively stable, thus corroborating and empirically verifying the performance of the sector.
Figure 3: Oil GDP as a Percentage of the National GDP (Conventional and Non-Rent GDP) (1997-2014)
Source: Central Bank of Venezuela. Figure calculated by the author.
Figure 4: The Percentage Contribution of Adjusted and Non-Adjusted Oil GDP to the Venezuelan GDP (1997-2014) (Real Prices 1997)
Source: Central Bank of Venezuela. Figure calculated by the author.
Figure 5: Venezuela, Conventional Oil GDP and Non-Rent GDP (thousand million - 109- 1997 bolivars)
Source: Central Bank of Venezuela. Author’s figure and calculations.
Figure 6: Venezuela’s Real Adjusted Oil, Non-Oil and Total GDP Related to International Oil Rent (1997-2014) (thousand million - 109- 1997 bolivars)
Source: Central Bank of Venezuela. Figure calculated by the author.
- 20 Given the large variety in the inputs used by the oil sector, the first approximation of deflated (...)
32The variations in the contribution of Oil GDP to Venezuela’s total GDP measured conventionally and in real terms (in 1997 local currency bolivars) can be seen from Figure 4 (broken line) to be strongly influenced by the behaviour of international oil prices only in the base year; after that, it simply reflects the evolution in the production by volumes produced20. The contribution of the conventional Oil GDP to the conventional GDP was in decline between 1997 and 2014, reflecting the reduction in production. In contrast, the contribution of adjusted Oil GDP (continuous line) to adjusted GDP varies between 6.3% and 8.6% of GDP. It grows somewhat timidly from 2009 to 2011, as a direct result of the impact of the global recession and reactivation between 2009-2010.
33Figure 5 shows the performance of both adjusted and non-adjusted Oil GDP at constant prices (1997 local currency bolivars). The conventional, non-adjusted calculation (discontinuous line) reveals a declining trend. In contrast, the adjusted estimate (continuous line) shows that Non-Rent Oil GDP grew throughout the period. However, both series show a decline in Oil GDP between 2002 and 2003, followed by a recovery in 2003 and 2004. It is obvious that the general trends in the two series are quite different, even though the Non-Rent Oil GDP behaves more consistently with the performance of Venezuelan oil productive activity.
34The Non-Rent GDP does not reflect these variations in International Rent because its contribution to GDP does not vary with international oil prices. It would obviously take a detailed technical study to allow the Non-Rent Oil GDP trend to be adjusted to reflect the sector’s specificities. Still, it would probably result in variations similar to those presented here.
- 21 Baptista (2002) has undertaken a sophisticated statistical exercise to construct a synthetic price (...)
35Figure 6 shows different aspects of the performance of Venezuela’s oil economy: Total non-rent GDP21 (dotted line), non-rent non-oil GDP (broken line with a single dot), non-rent oil GDP (continuous yellow line) and international oil rent (broken red line).
Figure 7: Venezuela: Total Non-Rent GDP and International Oil Rent (1997-2014), Growth Rate Comparison Conventional-Adjusted (thousand million - 109- 1997 bolivars)
Source: Central Bank of Venezuela. Author’s figure and calculations.
36Finally, Figure 7 summarises the two key performance indicators for Venezuela’s oil economy: non-rent GDP (broken line) and international oil rent (continuous line). It is essential to point out that the total non-rent GDP is an independent variable produced by the national economy. At the same time, the international oil rent is a transfer via the international oil market, i.e. it is not produced by the conventional factors in the national economy. Once corrected for international oil rent, non-rent GDP measured a rate of growth of 3.1% between 1999 and 2013, almost one percentage point above the rate of growth reported by a conventionally measured GDP (4.7%). This demonstrates the importance of calculating non-rent GDP to correct habitually measured GDP and its associated growth rate.
37The crisis of the rent capitalism model derives, from our standpoint, from two conditions, which can be inclusive, namely:
- The crisis occurs when the entire economy bases its plans and policies (both in the oil and non-oil sectors) on oil rents under the supposition that these resources were stable and, if you will, an inexhaustible part of national income. Allowing any economic policy to count solely on oil rents (as the most fluctuating income in Figure 7) clearly indicates that the oil rents are not recognised in their theoretical and political dimensions.
- Crisis also occurs in an oil rent-dependent economy when oil prices fall below the commitments made in the national budget. If the government and private sectors did not set funds aside in the form of savings as protection against episodes of decreases in oil prices, and if the economic system is not prepared for such fluctuations in oil rents, the crisis will always have the size of the commitment acquired.
38However, the current Venezuelan crisis has three additional characteristics:
- The national oil industry has suffered a significant deterioration in its productive capacity due to both internal mismanagement of the oil industry and external sanctions.
- The non-oil sector, also dependent on oil rents, has suffered very serious damage to its productive capacity; and
- The inefficiency in internal fiscal accounts and unsustainable exchange rate parity create profound distortions throughout the economy (non-official estimates indicate that inflation was near 2,616 per cent in 2017).
39Although Venezuela started to export crude oil in 1912, and this natural resource historically provided recurrent income for Venezuela, oil rent remains absent in the accounting for the national GDP. This invisibility is perhaps one of the main reasons for the historical mismanagement of oil rents. The absence of a specific account for this income makes government accountability inexistent, as it is impossible for rent and expenditures to be controlled by citizens and policymakers. The problem becomes more prominent when the entire economy bases its plans and policies (both in the oil and non-oil sectors) on oil rents as if these resources were a stable and seemingly inexhaustible part of national income. The ambiguous conception of oil rents in the conventional GDP has prevented a consensus on the uses of oil rents, leading to debt and mismanagement of this income.
40The international oil rent per se is an exceptional income for national states, representing a considerable proportion of the revenues received for their ownership of oil-bearing lands. Qualifying the oil rent as a “disease”, a “curse”, or even a “blessing”, lacks solid anchored in the analysis of the oil-exporting economies’ initial material conditions. In that sense, this article attempts to record the performance of oil-exporting economies, based on the conventional factors of production (Labour and Capital, represented by the Non-rent GDP) and an additional source of income related to the Oil-bearing Land, represented in Non-Rent GDP and in both National and International Oil Rent. The historical development of these indicators is the concrete expression of the model of development referred to as “Rent Capitalism”, the performance of which is tightly linked to the availability of international oil rent and the use made of it by the social actors in these economies. The proposed accounting framework is able to represent such a model of development, also creating a point of departure for novel interpretations of the particular characteristics assumed by the distribution of income and the economic and social development of an oil country. The proposed accounting framework is possible through the methodological tools provided by the System of National Account. This alternative perspective to the standard uses of the System of National Account allows the construction of specific indicators, places oil rent as a recurrent and is paramount, because allows historical international income derived from natural resources and accurately registers the scale of oil rent in GDP in general and in the oil sector, in particular.
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