structural changes and planning of the economy in revolutionary venezuela eduardo torrealba iii...
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Structural Changes and Planning of the Economy in
Revolutionary Venezuela
Eduardo Torrealba IIIOctober 13th, 2010
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Authors
• Rémy Herrera– University of Paris, France– Researcher at CNRS (National Centre of
Scientific Research)
• Paulo Nakatani– Federal University of Espirito Santo, Brazil– Specializes in capitalism, contemporary
socialism, economic policy, monetary policy, external sector and fiscal policy
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Background
•Location
•Population
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Oil Economy
9th largest oil producer in the world
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Oil Economy
Oil prices and GDP not directly linked
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Hugo Chavez
• Served in the military since age of 17• Attempted coup in 1992• Elected President in 1998• Founder of the Bolivarian movement• Term limits abolished in 2009
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Redistribution of Wealth
• Gini Index of .5 in 1997– Top 5% owned 75% of land
• 1997-2006– Oil production GDP% change• 18.7% to 13.8%• Public spending increased
– Oil revenue of state • Increase in oil price• 5.8% to 16.1%
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Redistribution of Wealth
• Implementation of social programsHealthcare servicesEnrolment in education servicesIlliteracyInfant mortality
• Impacts over 17 million Venezuelans • Financed by PDVSA– 7.3% of GDP
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Policy Reforms
• Moving toward socialism • Fixed exchange rate in 2003– 2002-2003 Crisis
• Increases in public spending• Decreased autonomy of central bank– Currently aimed at fighting inflation• Failure
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Capital Problems
• Capital flights– Legal • $2.3 Billion
– Illegal• $2.86 Billion
• Exchange rate– Officially 2,147:1– Illegal 5,350:1
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Successes
• Lowest inflation since 1970s– 19.6 % since election vs. 49.4% before
• High GDP growth – 13% since 2003
• Increase in foreign reserves – $14.9 billion to $37.4 billion – Capable of paying off all external debt
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Transition to Socialism
• No expropriation of private property• Continuing presence of “dominate”
class• State controls strategic sectors– Oil– Electricity– Telephone
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Decentralized Planning
• Founded on 2001 Organic Law of Planning
• Councils – Local Councils of Public Planning– District Councils • 420,000 people
– Council of Workers– Council of Peasants
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Authors’ Conclusions
• Transition to full socialism not complete
• First time oil rent has been used to help poor
• Rethink strategy since 2007 defeat • Needs support of all progressive
nations
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My Conclusions
• Pros– Increased public services– Lower inflation and high GDP growth
• Cons– Slow erosion of rights – Cult of personality • Frontline episode “The Hugo Chavez Show”
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Questions?