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Structural Changes and Planning of the Economy in Revolutionary Venezuela

Structural Changes and Planning of the Economy in Revolutionary Venezuela. Eduardo Torrealba III October 13 th , 2010. Authors. Rémy Herrera University of Paris, France Researcher at CNRS (National Centre of Scientific Research) Paulo Nakatani

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Structural Changes and Planning of the Economy in Revolutionary Venezuela

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  1. Structural Changes and Planning of the Economy in Revolutionary Venezuela Eduardo Torrealba III October 13th, 2010

  2. Authors • Rémy Herrera • University of Paris, France • Researcher at CNRS (National Centre of Scientific Research) • Paulo Nakatani • Federal University of EspiritoSanto, Brazil • Specializes in capitalism, contemporary socialism, economic policy, monetary policy, external sector and fiscal policy

  3. Background • Location • Population

  4. Oil Economy 9th largest oil producer in the world

  5. Oil Economy Oil prices and GDP not directly linked

  6. 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

  7. 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%

  8. Redistribution of Wealth • Implementation of social programs Healthcare services Enrolment in education services Illiteracy Infant mortality • Impacts over 17 million Venezuelans • Financed by PDVSA • 7.3% of GDP

  9. 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

  10. Capital Problems • Capital flights • Legal • $2.3 Billion • Illegal • $2.86 Billion • Exchange rate • Officially 2,147:1 • Illegal 5,350:1

  11. 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

  12. Transition to Socialism • No expropriation of private property • Continuing presence of “dominate” class • State controls strategic sectors • Oil • Electricity • Telephone

  13. 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

  14. 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

  15. 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”

  16. Questions?

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