Caracas is a city with a population over three million, crammed into a valley in northern Venezuela. Over 2000-2010, Venezuela's oil revenues did not compensate for mismanagement of the city. The city's infrastructure deteriorated and Caracas residents are increasingly entrenched in slum areas. As of 2011, there was still no clear plan regarding how crime, poverty and severe traffic problems could be eradicated from the city.

The city of Caracas receives preferential treatment in Venezuela's economy, as Venezuela's oil-generated revenues are used to subsidise the city's development. Caracas' population growth is driven entirely by natural increase, as the city is too packed to accommodate further immigration. Housing in Caracas accounts for a relatively small share of the household budget but for damaging reasons. The majority of dwellings in the city are located in the slum areas, which are cheap.