Until the 1950s Venezuela had little industrial capacity apart from food
processing and petroleum extraction. Huge oil revenues, combined with low
tariffs, permitted an array of items to be imported. Manufacturing has been
transformed since that time, especially following the government’s increased
efforts to diversify the economy in the 1960s. Among the factors contributing to
the industrial base are an abundant supply of fossil fuels and hydroelectric
power, a variety of raw materials, considerable available capital; and a
relatively high purchasing power per capita. The consumer-goods and metalworking
industries were established with the help of protective tariffs and import
quotas. With the 1973–74 rise in world oil prices, revenues expanded, and the
government directed its investment strategy toward large-scale resource-based
projects such as iron and steel manufacturing, aluminum smelting, and the
production of transport equipment and petrochemicals. Industrial growth slowed,
however, when oil prices declined several years later.
