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Economic development is a multifaceted phenomenon that entails the restructuring of institutions. These institutions will be inclusive of the social, political and economic institutions. A country would be declared economically developed if the institutions support the improved living standards of the populace. Venezuela has indeed achieved much and lost some bit geared towards achieving this status. Nevertheless, the overall analysis shows that the Venezuelan economy is on the right track.
This paper takes an in-depth look at the diverse economic indicators that show that the economy has developed. According to the United Nations Development Program, Venezuela was ranked in the 58th position out of the 182 nations that were ranked. At the release of this statistical information, the life expectancy at birth, the enrolment rates at the school and the overall literacy rates were cited as key contributors to this robust economic performance.
According to the UNDP, the population of Venezuelan who were living on less than two dollars was 10.2% in 2007. The rate of life expectancy stood at 73.6 years, the literacy levels hit the 95.2 mark and the enrolment ratio for the school going children was at 85.9%. Ideally, these conditions place Venezuela in the best condition to attain its economic development goals, in particular, human development.
The unfortunate trend to note formatively is the fact that economic inequality in Venezuela is very high. According to the UNDP, the poorest 10% Venezuelans receive a paltry 1.75 of the Venezuelan GDP. This presents a sorry state. With a per capita income of $12,156 this presents such a sad irony. Venezuela is ranked 7th in Latin America economically. The other gainers in Latin America are Chile, Uruguay, Cuba, Argentina, Costa Rico and Mexico.
Since the 1970, the government policy has directed the economic development of Venezuela. The nationalization of iron and the petroleum industries and the electricity industry saw the government control these strategic resources. Through the control of these resources, the government managed to control the prices of consumer commodities and therefore cushioned the consumer from any imminent exploitation. This translated into increased savings for the citizens and triggered domestic investment to skyrocket. Besides, the government went a step further to control the rent. The membership of the Andean Pact forced the government to maintain their foreign trade and investment policy. This impeded on the government’s quest to adopt policies that would see the local industry grow.
Since the 1950s the Venezuelan government had maintained an import substitution policy. Industrialization and foreign direct investment was largely emphasized by the government. The development of the sixth national development plan saw the elimination of protectionist policies and the total removal of the price controls that had been installed by the government. The dawn of the free trade and market precipitated competition that acted as impetus to economic development.
Presumably, the Venezuelan government had much dependence on the oil industry. However, in the years of 1981 through to 1985, the Venezuelan government sought to diversify its economic muscle and reverted to agriculture as a supplementary sector to the oil industry. The government devoted additional resources to development of social facilities housing, public services, health and education. The policy had picked up until 1988 when the policy was partially abandoned for a policy that had been newly developed by the government. The new approach was to see the government inject more funds into the economy through infrastructural development. This was aimed at easing inflation and reducing the level of the imports. In deed the economy was stimulated and saw a growth rate of a record 6%. This unraveled the potential of the small Latin American country.
The Venezuelan society is an amalgam of three races, though numerically the country was believed to be primarily Mestizo. Since colonial times the ethnic settings were a key criterion used to establish status. After considerable genetic mixing, this has become a less considerable criterion for status. It is quite difficult today to distinguish the different races. With time, ethnic grouping later regarded as a continuum and not as distinct categories, the physical appearance and skin color become major criteria for the determination of status in Venezuela. It is appreciable that none of the national census of Venezuela has classified the population along any ethnic lines since the year 1926. The censuses of Venezuela characterize the ethnic fragmentation as mere estimates.
During the Venezuelan census of 1990, an average of 1.5% was Indians, about 67% were Mestizos and the remaining percentage was representative of the mixtures of other ethnic groupings. The mixture was mainly composed of the Caucasian. The different tribes with different cultures occupied different territories indiscriminately and the cohesion in the entire Venezuela was cordial. The groups were ruled by chiefs and these chiefs were supported in their administration by priesthoods in serving the temple. However, the tribes that were still ‘primitive’ were semi nomadic farmers. Disease reduced the population and the harsh conditions of slavery made their lives even harder, hence making them succumb so easily.
The fragile ethnic situation made it quite hard for a free and just society. The society was largely organized along racial and class lines. Those who were believed to be less pure blooded were given the least ranking in the administration of the affairs of Venezuela. Those who occupied the higher ranks did so by the shear fact that they were landlords. The entire system stressed the importance of the extended family. The roles of men and women were quite distinct. Formally, the rural areas were made of the lower class while the urban areas were comprised of the upper class. Those people from the rural areas were mainly peasant comprising a mixture of blacks and Indians. There was a small middle class mainly made up of less successful whites and Mestizos who mainly lived in cities and towns.
The wars that were experienced in Venezuela in the late 19th century acted as a leveler to bring the society closer in terms of their class fragmentation. Because of the relative fluidity of the Venezuelan society, the isolation among the groups has been dully reduced. The Venezuelan society is very cohesive today. The interaction is not based largely on the race nor are they based on the class.
There is large gender disparity between men and women in Venezuela. These imbalances have led to the increased poverty level in the rural areas. The building of women’s capacities is therefore central in the attainment of the developmental objectives of the Venezuelan economy. Women have been treated as key players in the attainment of food security targets and nutritional goals of the Venezuelan society. Gender mainstreaming has therefore been largely embraced by the government as a key initiative and policy. According to IFAD, the role of women in Venezuelan economic development and growth are tidal and inevitable.
The IFAD argues that the empowerment of women is inevitable if the economy has to tow the line towards the achievement of the Millennium Development Goals. As at 2009, the government was embarking on a gender equality program that was to see at least 31% of the employment opportunities reserved for women. Besides, the girl child education in Venezuela has been stepped up to ultimately support this course. The enrolment of the girl child has gone up by an average 12% over the last 6 years.
Venezuela is among the least densely populated in the western hemisphere. However, the low population density has not been coupled with even distribution of the population. In the census of the 1990’s the population stood at 19,698,104. This population was largely concentrated at the coast and in the Andean region. In the east, only a population of 4% was recorded despite the fact that this region had the bulk of the land.
Despite the government’s efforts to relocate the population to the eastern region through numerous incentives, the efforts have not paid much dividends. A lot of industries have been relocated to this region but most of the Venezuelan prefers staying away from this region. It is estimated that for every five Venezuelans, one resided from Caracas. There were only three revered inland centers in the urban centers: Ciudad Guayana, Valencia and Barquisimeto. These inlands are relatively densely populated.
The population growth of Venezuela stands at 2.5%, one of the highest in the world. This has been largely precipitated by the inverse relationship between the birthrate and the death rate. While the birth rate is relatively high, the death rate is quite low. The low death rate has been realized because of the improved health services and good sanitary conditions. However, this rate of growth surprises because the country has recorded an increase in the use of contraceptives. In addition, it is expected that the high literacy level in any country should contribute to the country’s decrease in the population growth. Further, the high standards of living are a social indicator that should correlate with low rates of the natural increase in the population.
The Venezuelan statistics department projects that its population may substantively increase in the 21st century. It is estimated that the population may go to the 3.5% mark that was witnessed in the 1980’s. However, analysts take this projection as a positive trend to support the human capital initiative for its development. The population has a large segment (40%) being the young; below the age of fifteen years. While 21% comprises of the aged population above 58 year of age. It is equally to note that the population is largely constituted by the natives, who take about 94% of the population while the immigrants take the paltry share of 6% of the Venezuelan population.
The literacy level in any state does play a very cardinal and central role in the prospects of any country. During the Venezuelan colonial era, education was a preserve of a few landowners. Besides, the education was only being offered by the Roman Catholic Church that would only serve a few learners. However, the notion of education being a preserve of the affluent in society has waned over time. The peculiarity of manual labor made the pursuit for education very high and many people wanted to have their children educated to have them access artistic labor. Overall, this relentless yearning for better employment opportunities drove the entire educational system.
The Venezuelans attached much prestige on education and those who had schooled were referred generally to as men of letters. Those who had not had sufficient education were referred to as men who worked with hands. The Venezuelans diverted their energies towards university education and ignored the impending vocational needs that were so inherent then.
The free public and compulsory education has been a core policy in the development agenda of Venezuela. This objective was conceived at independent in 1811. However, the ideals of the policy seemed forgotten over some time until the mid 1870’s. The implementation of the free primary education was vested in the national, state and local governments. Hitherto, there was no ministry that was charged with this responsibility; however, this move saw the establishment of the ministry of public education. This led to the establishment of a college to train teachers for primary schools. A university was later established in 1891; university of Zulia. Since then, Venezuela has seen the establishment of numerous pedagogic institutions. These institutions have been established across the entire Venezuela.
In 1980 Venezuela introduced free preschool education which has largely bolstered the enrolment rates into the school system. This was achieved through the passing of the Organic Law of education. The government has over time tried to emphasize the need for vocational education, however, students prefer professional education. Nonetheless, the education system of Venezuela is among the best in the Latin America. Overall, UNESCO asserts that the education organization and standards in Venezuela are among the best in the world.
Venezuela has seen an astounding growth of its urban centers. There has been a shift from rural settlement to urban centers. This has been occasioned by the sudden development of petroleum industries. In 1941, census showed that 66% of the Venezuelan population was rural based. However, as has been observed, the 1982 census showed a dramatic shift with 85% of Venezuelans residing in urban centers. The overall effect was that cities started to experience numerous challenges because of the unexpected population growth.
In additions to the Venezuelan natural population growth, Venezuela has received a surmountable number of foreigners. This was precipitated through the passing of the law in 1936 that allowed for the permission of skilled labor to be given leeway to register as Venezuelan nationals. However, the immigrants of Venezuela came from a small number of countries. 30% of the Venezuelan immigrants came from Colombia. Spaniards, Italians and Portuguese accounted for about 25%, 15% and 15% respectively. Some of the immigrants came to Venezuela as political or economic refugees. Most of the immigrants sought employment in the construction and petroleum industries.
Over the years, Venezuela was dogged by illegal immigration, in the 1980s to date; Venezuela has tried to contain the illegal immigration. The restriction became more stringent with the setting in of the economic depression that made jobs in Venezuela very scarce. This was undertaken to cushion the Venezuelans from unemployment. The forced the Venezuelans to engage largely in disguised unemployment; handling jobs they had initially taken as below their dignity. The restrictions also saw most of the immigrants travel to America, particularly those of Colombian origin.
Venezuela has the best road networks in the world. Its road network is distinctive in the entire Latin American region. Venezuelan road network boasts of 60% of its roads as paved highways. The southern region of Venezuela depends largely on the air travel or river travel. The transportation of goods is largely done through the road network, estimated at 98% of the goods that are transported in Venezuela. The railway network of Venezuela is the least used, with paltry 584 kilometers coverage.
Venezuela has 11 international airports beside the 36 domestic airports. The international airport in Caracas accounts for 90% of the flights of Venezuela. Unfortunately, most of the Venezuelan airports are not high quality. Besides, Venezuela utilizes the ports and harbors in the Caribbean Sea. This mode of transport handles 80% of the Venezuelan cargo, particularly the La Guaira, Maracaibo and Puerto ports. Regrettably, the La Guaira airport facilities were damaged significantly during the 1999 mudslides. This has done a blow on the overall airport transport in Venezuela.
The Venezuelan economy has not been spared from the economic downturn either. Though the president had vowed to protect the economy from any adverse effects with expended zeal, the protection did not last long. The tumbling of the oil prices in the international market dealt a blow on the exports of Venezuela. The Venezuelan economy contracted to 2.95% and its inflation shot up to 25%; among the highest in the world. By January 2010, the Venezuelan currency was highly devalued. Nevertheless, the economy remains quite robust amid the tide. However, the economy still largely depends on oil revenues.
Oils accounts for 90% of the export earnings, and an estimated 50% of the economy’s budgets revenue. Besides, 30% of the Venezuelan GDP comes from the sales of oil products. The high government spending coupled with the hike in the minimum wage and the ease of accessibility of credit translated into a consumption boom that largely swept the domestic market. This consumption boom is largely to blame for increased inflation rates that hit Venezuela.
Venezuela, from available statistics, has the high international reserve, standing at $1300 per capita. This translates into $34 billions. Despite this high international reserve per capita, Venezuela is yet to reap the benefit; may be until international oil prices shoot up. When the finance minister presented the 2010 budget, expended attention was placed on social spending. Despite this injection and in retrospect, the International Monetary Fund (IMF) projects the Venezuelan economy is to grow by -0.4%.
The IMF projects the Venezuelan inflation at 40%, this rate is not only dizzying but also, a large challenge for the Venezuelan administration. The poor economy has also been characterized by incessant power cuts and blackouts. This energy crisis is projected to equally eat into the national economy. According to the financial times, the crisis in the energy sector may further eat into the national GDP of Venezuela in 2010. Nevertheless, the economy of Venezuela has all the potential except for cushioning from the international economic downturn.
History records that over the years, corruption has been very high in Venezuela. Presumably, the middle class and a substantive upper class are so because of corruption. When Chavez took over power, the mandating platform was zero tolerance to corruption. Despite this mandate, he has achieved the least towards this end. Rather, this has been wished away as a shear propaganda machine. Apparently, corruption in Venezuela is worse than it was six years ago. There is the least evidence that corruption would leave Venezuela any soon.
Venezuela has the highest levels of drug and substance abuse in Latin America. In the El Espectador 2009, it was reported that 14000 death were recorded that were related to drug and substance abuse in Venezuela. Caracas is seen as the most risky city on the planet. In addition, the sale of drugs is done in a wanton manner, jeopardizing the lives of many. The overall crime rates in Venezuela are very high.
Conclusion
In conclusion, the Venezuelan economy has what it can take for any economy to develop and grow. However, there are number of determinant factors that need to be reviewed with expended zeal and cautiousness. Inherently, the population growth rate should be checked, through programs that would see the rate remain below 2%.
In addition, the government should put in place policies that would see the level of corruption reduce or diminish altogether. This will promote foreign investment and reduce the levels of unemployment. In addition, reduced corruption will increase the overall service delivery to the public. The Venezuelan administration should ensure reduced crime levels; this would equally encourage foreign investment because of their security confidence in the country.