There are many different approaches to the ongoing processes of the world economy. Authors such as Ohmae (1995) see in globalization the end of all relevance of the nation state and space for economic activity, as global production is becoming increasingly borderless. On the other hand sceptics like Hirst and Thompson (1999) use quantitative measures, such as world trade measured against total GNP, to argue that the world economy is no more internationalized than it was before the outbreak of the First World War, and thus by no means truly globalized. In between these currents there seems to exist a rather wide recognition that the way in which production is organized on a world scale is undergoing a qualitative change. The pivotal point of this shift, how production processes are knitted together on a global basis, is not captured by quantitative measures such as foreign trade and foreign direct investment. Hence, the argument goes, the interconnectedness of the world economy must be approached qualitatively in order to understand the ongoing processes (Dicken 1998, Gereffi & Korzeniewicz 1994). In much of the literature that treats the global organization of production transnational companies are seen as the principal actors. And as communications technology advances, permitting an increasing fragmentation of production, these companies maximize profits by internalizing high value-added production processes and shedding off those that are less profitable. While the same technological advances facilitate the surpassing of spatial barriers, the literature suggests, the power of governments to shape the economic activities carried out within their territories erodes. However, contrary to those that aroused by the power of transnational companies announce the end of nation states, others point to the fact that not only has the state survived the consequences of the increased global interconnectedness of economic activity, in order to secure the common interest of people, the state is actually more crucial than ever (Chang & Rowthorn 1995). Hence, the central issue is not if, but how the state shall relate to society to be able to spur development in such circumstances.
Since petroleum was discovered in Venezuela at the beginning of the 20th century the Venezuelan petroleum industry has been enmeshed in structures that cross national borders. However, the power relation between the state and the transnational petroleum companies has not been constant. An important feature of this relation is how the Venezuelan governments steadily increased their presence in the petroleum industry until the nationalization in 1975. The central idea behind this has been to assure political support through ploughing the riches derived from this non-renewable resource into the different economic and social spheres of society and this way turn Venezuela into a modern industrial society. However, after the nationalization the evolvement of the Venezuelan petroleum industry has taken the opposite direction as the state institutions gradually retired or were displaced by transnational actors. This tendency has coincided with a doubling of the country’s poverty rate, from 33% to 66% between 1975 and 1995 and a parallel increment in capital’s take of the GDP which implied that Venezuela surpassed the inequality rate of for example South Africa (Riutort 1999, Rodríguez 2000). The scarce contribution of the petroleum industry to the socioeconomic development of Venezuela in this period has been a source of a popular discontent, including various civil and military rebellions that culminated in the election of president Chávez on a radical reform program in 1998. The Chávez government has pointed out the position and power of the both the transnational petroleum companies and the existing state institutions of the Venezuelan petroleum industry as causes of country’s underdevelopment. President Chávez has also announced that the state must play a more active role in the petroleum industry and is currently engaged in the enforcement of such activist petroleum policy, something that has sparked resistance both within the industry and internationally.
The topic of this thesis is the global organization of production and the state’s role in the economy. And clearly, the Venezuelan case is a point of tangency between the theoretical approaches where the firms largely are seen as the principal movers of a changing economy, and the discussion about state institutions and economic development. The topic of the thesis, thus, is approached through a qualitative case study which seeks to map and explain the scope for turning the Venezuelan petroleum industry into a tool for development by asking the following question:-What are the implications of transnational intra and inter-firm relations for the Venezuelan participation in enhancement and capture of value in the petroleum industry, and to how can the Venezuelan government increase this participation?