This article examines the mechanisms through which economic liberalization policies contributed to increasing political instability and declines in state capacity in Venezuela. Particular attention is paid to the role that increasing income inequality played in polarizing politics and the role that policy switches and party-neglecting strategies among reformers played in increasing political instability. The Venezuelan experience challenges the mainstream view of state capacity, which posits that reductions in the state’s discretionary control over resources will reduce corruption, and thereby increase the capacity of the state to govern more effectively. It also examines why Venezuela suffered greater destabilization than other Latin American economies undergoing neoliberal reform.
International Political Science Review (2005) 26 (1) 107-124 [doi:10.1177/0192512105047899]