Venezuela under Hugo Chavez (2016)

Apunte Inglés
Universidad Universidad Rey Juan Carlos (URJC)
Grado International Relations - 2º curso
Asignatura MULTINATIONAL COMPANIES AND INTERNATIONAL BUSINESS
Año del apunte 2016
Páginas 2
Fecha de subida 15/04/2016
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ANDREA LARA ROMERO Venezuela under Hugo Chavez This case study can be identified with the first section of the Topic 2 “l02-1 Understand how the political systems of countries differ” and the influence of the political system in a nation´s economy, more precisely Collectivism and Socialism (Democratic ideals and market economics replaced socialism and communism in many states. Since 2005, there have been some signs of a swing back toward left-leaning socialist ideas in several countries, including several Latin America nations such as Venezuela, Bolivia, and Paraguay, along with Russia).
Venezuela is considered to have its own economic system which includes features of the different major economic models. It is socialist to the extent that the government decided to increase its role as regulator of the economic activity and as the owner of the means of production (nationalization of the enterprises) Moreover, regarding the section l02-2 Understand how the economic systems of countries differ, we must say that since political ideology and economic models are usually related, in countries where collective goals are given preeminence, the state may have taken control over many enterprises; markets in such countries are likely to be restricted rather than free. As we said previously, we can identify the case of Venezuela with these characteristics.
In regard of section l02-3 Understand how the legal systems of countries differ, the case of Venezuela is identified with civil law. And finally, the case is also found in section l02-4 Explain the implications for management practice of national differences in political economy, regarding corruption: “other things being equal, a nation with democratic political institutions, market-based economic system , and strong legal system that protects property rights and limits corruption is clearly more attractive as a place in which to do business than a nation that lacks democratic institutions, where economic activity is heavily regulated by the state, and where corruption is rampant and the rule of law is not respected (as Venezuela)” .
ANDREA LARA ROMERO SUMMARY: Venezuela under Hugo Chavez (1999-2013) The case is about how Hugo Chavez ruled Venezuela under a self-styled democratic socialism.
Chavez won the presidential elections by campaigning against corruption, economic mismanagement, and the harsh realities of global capitalism.
The bad economic situation of the country in this time coincided with the collapse in the price of oil (the main source of national wealth), which left Venezuela into a deep recession.
Due to the high unemployment (17%) and poverty rate, Venezuela introduced some protectionist measures such as the nationalization of enterprises in order to make the national economy rise, and he also took over large rural farms and ranches claiming that they were not productive and turned them into state-owned cooperatives.
According to the World Bank, by 2003, Venezuela was one of the most regulated (controlled) economies in the world. In this way Venezuela give the opportunity to the public officials to enrich themselves.
Although Chavez’s political campaign was based on the fight against corruption, in the 2012, Transparency International has noted that corruption has increased under Chavez (ranking Venezuela 165 out of 174 nations).
In mid-2000 oil prices increased and Venezuela, as the fifth-largest producer, saw its economy rapidily grow; oil revenues were allocated on social programs. Due to this decision, Chavez´s popularity increased and was reelected as president in 2006 and acquired the power to legislate by decree.
State-owned enterprises helped Chavez to achieve the following goals: reduce poverty from 50 to 28% and bring down unemploynment from 14.5 to 7.6%. On the other hand, oil production fell by a thir between 2000 and 2012 (foreign companies logically exited the country) and inflation surged runnin at around 28% per year between 2008 and 2012 (on of the highest rates in the world); budget deficit expanded to 17% of GDP in 2012.
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