The economy of venezuela

Hospitals are overcrowded with sick children while doctors don't have enough medicine or X-ray machines. About the only thing Venezuela has in abundance is chaos.

The economy of venezuela

Venezuela Table of Contents Spanish expeditionaries arrived in what is present-day Venezuela inbut generally neglected the area because of its apparent lack of mineral wealth.

Colonial authorities organized the local Indians into an encomienda system to grow tobacco, cotton, indigo, and cocoa. The Spanish crown officially ended the encomienda system inand enslaved Africans replaced most Indian labor.

As a result, Venezuela's colonial economic history, dominated by a plantation culture, often more closely resembled that of a Caribbean island than a South American territory. Cocoa, coffee, and independence from Spain dominated the Venezuelan economy in the eighteenth and nineteenth centuries.

Cocoa eclipsed tobacco as the most important crop in the s; coffee surpassed cocoa in the s. Although the war of independence devastated the economy in the early nineteenth century, a coffee boom in the s made Venezuela the world's third largest exporter of coffee.

Fluctuations in the international coffee market, however, created wide swings in the economy throughout the s. The first commercial drilling of oil in and the oil boom of the s brought to a close the coffee era and eventually transformed the nation from a relatively poor agrarian society into Latin America's wealthiest state.

By Venezuela was the world's leading exporter of oil and its second in total petroleum production. Venezuela remained the world's leading oil exporter untilthe year of its peak oil production. As early as the s, oil represented over 90 percent of total exports, and national debate increasingly centered on better working conditions for oil workers and increased taxation of the scores of multinational oil companies on the shores of Lago de Maracaibo.

After years of negotiations, in the government achieved a landmark 50 percent tax on the oil profits of the foreign oil companies. Although Venezuela reaped greater benefits from its generous oil endowment afterwidespread corruption and deceit by foreign companies and indifferent military dictators still flourished to the detriment of economic development.

Nevertheless, despite unenlightened policies, economic growth in the s was robust because of unprecedented world economic growth and a firm demand for oil. As a result, physical infrastructure, agriculture, and industry all expanded swiftly. With the arrival of democracy inVenezuela's new leaders concentrated on the oil industry as the main source of financing for their reformist economic and social policies.

Using oil revenues, the government intervened significantly in the economy. Cordiplan issued multiyear plans with broad economic development objectives. The government in embarked on a land reform program in response to peasant land seizures.

The economy of venezuela

In policy makers also began to create regional development corporations to encourage more decentralized planning in industry. The year also marked the country's entrance as a founding member into the Organization of Petroleum Exporting Countries OPECwhich set the stage for the economy's rapid expansion in the s.

Throughout the s, the government addressed general social reform by spending large sums of money on education, health, electricity, potable water, and other basic projects. Rapid economic growth accompanied these reformist policies, and from to the country's real per capita output increased by 25 percent.

The quadrupling of crude oil prices in spawned an oil euphoria and a spree of public and private consumption unprecedented in Venezuelan history. The government spent more money in absolute terms from to than in its entire independent history dating back to Increased public outlays manifested themselves most prominently in the expansion of the bureaucracy.

During the s, the government established hundreds of new state-owned enterprises and decentralized agencies as the public sector assumed the role of primary engine of economic growth. The Venezuelan Investment Fund Fondo de Inversiones de Venezuela--FIVresponsible for allocating huge oil revenues to other government entities, served as the hub of these institutions.

In addition to establishing new enterprises in such areas as mining, petrochemicals, and hydroelectricity, the government purchased previously private ones. In the government nationalized the steel industry; nationalization of the oil industry followed in Many private citizens also reaped great wealth from the oil bonanza, and weekend shopping trips to Miami typified upper-middle-class life in this period.

A growing acknowledgment of the unsustainable pace of public and private expansion became the focus of the electoral campaign.

The economy of venezuela

Because of renewed surges in the price of oil from tohowever, the government of Luis Herrera Campins president, scrapped plans to downgrade government activities, and the spiral of government spending resumed. Inhowever, the price of oil fell and soaring interest rates caused the national debt to multiply.

Oil revenues could no longer support the array of government subsidies, price controls, exchange-rate losses, and the operations of more than public institutions.

Widespread corruption and political patronage only exacerbated the situation. The government of Jaime Lusinchi president, attempted to reverse the economic crisis through devaluations of the currency, a multi-tier exchange-rate system, greater import protection, increased attention to agriculture and food self-sufficiency, and generous use of producer and consumer subsidies.

These reforms stimulated a recovery from the negative growth rates of and the stagnation of with sustained modest growth from to Venezuela - The economy: The Venezuelan economy is based primarily on the production and exploitation of petroleum. From the late s to the country was the world’s largest petroleum exporter; it remains one of the principal exporters of oil to the United States.

Venezuela’s economy has relied on earnings from the petroleum . The economy of Venezuela is largely based on the petroleum sector and manufacturing. In , total trade amounted to % of the country's arteensevilla.coms accounted for % of GDP and petroleum products accounted for about 95% of those exports.

Venezuela is the sixth largest member of OPEC by oil production. Since the s, Venezuela has been a rentier state, offering oil as its main export. Venezuela - Towards an Economy of Resistance.

By Peter Koenig. June 29, "Information Clearing House" - The Government of Venezuela called an international Presidential Economic Advisory Commission, June, – to debate the current foreign injected economic disturbances and seeking solutions to overcome them. He used Venezuela's rapidly growing oil wealth to set up social programmes, known as the Misiones, with the aim of eradicating poverty and reducing inequality.

Mar 22,  · Opinions expressed by Forbes Contributors are their own.


Nathaniel Parish Flannery: Venezuela's economy has been struggling for years. Do you think the problems there need to be recognized as a. Today Venezuela rolls out its new currency – the “sovereign bolivar.” It’s one of several steps the country is taking to curb runaway inflation, which is .

Venezuela Economy, Politics and GDP Growth Summary - The Economist Intelligence Unit