Transcript Structural Changes and Planning of the Economy in

Structural Changes and
Planning of the Economy in
Revolutionary Venezuela
Eduardo Torrealba III
October 13th, 2010
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
Background
•Location
•Population
Oil Economy
9th largest oil
producer in
the world
Oil Economy
Oil prices and GDP not directly linked
Hugo Chavez
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•
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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
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%
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
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
Capital Problems
• Capital flights
– Legal
• $2.3 Billion
– Illegal
• $2.86 Billion
• Exchange rate
– Officially 2,147:1
– Illegal 5,350:1
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
Transition to Socialism
• No expropriation of private property
• Continuing presence of “dominate”
class
• State controls strategic sectors
– Oil
– Electricity
– Telephone
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
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
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”
Questions?