The construction industry followed a pattern similar to that of other Venezuelan industries, flourishing during the 1970s as the result of huge government expenditure on physical infrastructure, but contracting severely during the 1980s as the economy waned. Construction employed about 8 percent of the labor force in 1988 and contributed about 5 percent of GDP. After reaching a low in both output and employment by 1985, the construction industry rebounded somewhat by 1987 as a result of new government investments, increased foreign investment, and liberalization of some rent-control policies. The country produced a wide range of inputs--such as wood, cement, basic metals, and industrial minerals--for construction activity. Venezuelan construction firms displayed high levels of technical capability and erected many of the nation's complex, heavy industry structures.

Although many private construction firms ranked among the country's largest companies, the government played an increasingly more prominent role in the sector by the 1980s. The public sector accounted for 77 percent of construction in 1988, compared with 32 percent in 1978. State-owned enterprises fulfilled a substantial portion of the government's construction activity. Most public-sector construction responded to the needs of PDVSA, various power companies, and the corporations providing sanitation services.

After a frenzy of building in the 1970s, the country still faced an enormous deficit in urban housing in the 1980s. Accelerated urban migration forced millions of Caracas residents to live in ranchos (see Glossary), or squatter settlements, made from scrap materials, largely because of the lack of formal housing. As new home starts fell from 35,000 to 15,000 between 1982 and 1983, the Ministry of Urban Development (Ministerio de Desarrollo Urbano--Mindur) and the National Housing Institute (Instituto Nacional de la Vivienda--Inavi) became increasingly involved in residential construction. In 1985 public-sector housing construction exceeded that of the private sector for the first time private firms, however, produced five times as many single-family homes. One obstacle to more rapid growth in housing was restrictive interest rate policies, which threatened to dry up future mortgage financing.

Data as of December 1990