E7 Workshop Renmin University

Delegation of Venezuela

VENEZUELA - Historical Review

Toms Centeno
Ernesto Revello
Traduced by: Roxana Beroes
Ernesto Revello

1. Introduction
Geographically, Venezuela is located in South America, situated between Colombia
and Guyana. It is a coastal nation with plentiful ocean access to both the
Caribbean and North Atlantic. In the late 1500s, Venezuela was discovered by the
Spanish, who were searching for gold and other riches. Within a short span of time,
it became a land of plantations, in which slave labor from Africa was used to work
the cocoa, sugar, coffee, cotton, and tobacco fields.

Cocoa, coffee, and independence from Spain dominated the Venezuelan economy
in the eighteenth and nineteenth centuries. Cocoa eclipsed tobacco as the most
important crop in the 1700s; coffee surpassed cocoa in the 1800s. Although the
war of independence devastated the economy in the early nineteenth century, a
coffee boom in the 1830s made Venezuela the world's third largest exporter of
coffee. Fluctuations in the international coffee market, however, created wide
swings in the economy throughout the 1800s.

In the 19th century the country's creoles population initiated a drive for freedom.
Although independence is celebrated on the 5th of July (based on the 1811 charge
led by Simon Bolvar) it was not until 1821 that Bolvar became the leader of a
Venezuela that was independent of Spain. The remaining Spaniards were forced

out of Venezuela in 1823, after their defeat near Maracaibo. The next one hundred
years were fraught with numerous caudillos and the reign of various dictators.

This economy bases on agricultural activities was quickly put aside by the
discovered of oil. The first commercial drilling of oil in 1917 and the oil boom of the
1920s brought to a close the coffee era and eventually transformed the nation from
a relatively poor agrarian society into Latin America's wealthiest state. By 1928
Venezuela was the world's leading exporter of oil and second in total petroleum
production.

Venezuela remained the world's leading oil exporter until 1970, the year of its peak
oil production. As early as the 1930s, oil represented over 90% of total exports, and
national debate increasingly centered on better working conditions for oil workers
and increased taxation of the scores of multinational oil companies on the shores
of Maracaibo Lake. In 1936 the government embarked on its now-famous policy of
"sowing the oil". This policy entailed using oil revenues to stimulate agriculture, and
later, industry.

After years of negotiations, in 1943 the government achieved a landmark 50% tax
on the oil profits of the foreign oil companies. Although Venezuela reaped greater
benefits from its generous oil endowment after 1943, widespread corruption and
deceit by foreign companies and indifferent military dictators still flourished to the
detriment of economic development. Nevertheless, despite unenlightened policies,
economic growth in the 1950s was robust because of unprecedented world
economic growth and a firm demand for oil. As a result, physical infrastructure,
agriculture, and industry all expanded swiftly.

With the arrival of democracy in 1958, Venezuela's new leaders concentrated on

the oil industry as the main source of financing for their reformist economic and
social policies. Using oil revenues, the government intervened significantly in the
economy. In 1958 the new government founded a new noncabinet ministry, the

Central Office of Coordination and Planning (CORDIPLAN), in the Office of the

President. CORDIPLAN issued multiyear plans with broad economic development
objectives.

The government in 1960 embarked on a land reform program in response to

peasant land seizures. In 1960 policy makers also began to create regional
development corporations to encourage more decentralized planning in industry.
The first such regional organization was the Venezuelan Corporation of Guayana,
which eventually oversaw nearly all major mining ventures.

The year 1960 also marked the country's entrance as a founding member into the
Organization of Petroleum Exporting Countries (OPEC), which set the stage for the
economy's rapid expansion in the 1970s. Throughout the 1960s, the government
addressed general social reform by spending large sums of money on education,
health, electricity, potable water, and other basic projects. Rapid economic growth
accompanied these reformist policies, and from 1960 to 1973 the country's real per
capita output increased by 25%.

The quadrupling of crude oil prices in 1973 spawned and oil euphoria and a spree
of public and private consumption unprecedented in Venezuelan history. The
government spent more money (in absolute terms) from 1974 to 1979 than in its
entire independent history dating back to 1830. Increased public outlays
manifested themselves most prominently in the expansion of the bureaucracy.

During the 1970s, the government assumed the role of primary engine of economic
growth. In addition to establishing new enterprises in such areas as mining,
petrochemicals, and hydroelectricity, the government purchased previously private
ones. In 1975 the government nationalized the steel industry; nationalization of the
oil industry followed in 1976. Many private citizens also reaped great wealth from
the oil bonanza, and weekend shopping trips to Miami, Florida, typified uppermiddle-class life in this period.

A growing acknowledgment of the unsustainable pace of public and private

expansion became the focus of the 1978-79 electoral campaign. Because of
renewed surges in the price of oil from 1978 to 1982, however, the government of
Luis Herrera Campins (President, 1979-84) scrapped plans to downgrade
government activities, and the spiral of government spending resumed. In 1983,
however, the price of oil fell and soaring interest rates caused the national debt to
multiply. Oil revenues could no longer support the array of government subsidies,
price controls, exchange-rate losses, and the operations of more than 400 public
institutions. Widespread corruption and political patronage only exacerbated the
situation.

The government of Jaime Lusinchi (President, 1984-89) attempted to reverse the

1983 economic crisis through devaluations of the currency, a multi-tier exchangerate system, greater import protection, increased attention to agriculture and food
self-sufficiency, and generous use of producer and consumer subsidies. These
1983 reforms stimulated a recovery from the negative growth rates of 1980-81 and
the stagnation of 1982 with sustained modest growth from 1985 to 1988. By 1989,
however, the economy could no longer support the high rates of subsidies and the
increasing foreign debt burden, particularly in light of the nearly 50% reduction of
the price of oil during 1986.

In 1989 the second Prez administration launched profound policy reforms with the
support of structural adjustment loans from the International Monetary Fund (IMF)
and the World Bank. In February 1989, price increases directly related to these
reforms sparked several days of rioting and looting that left hundreds dead in the
country's worst violence since its return to democracy in 1958. Ironically, Prez,
who oversaw much of the government's expansion beginning in the 1970s,
spearheaded the structural reforms of 1989 with the goal of reducing the role of
government in the economy, orienting economic activities toward the free market,
and stimulating foreign investment.

The most fundamental of the 1989 adjustments, however, was the massive
devaluation of the Bolvar (national currency) from its highly overvalued rate to a
market rate. Other related policies sought to eliminate budget deficits by 1991
through the sale of scores of state-owned enterprises, to restructure the financial
sector and restore positive real interest rates, to liberalize trade through tariff
reduction and exchange-rate adjustment, and to abolish most subsidies and price
controls. The government also aggressively pursued debt reduction schemes with
its commercial creditors in an effort to lower its enervating foreign debt repayments.

Since Hugo Chvez was elected in 1998, the government has renationalized the
steel industry, the telecommunication sector, has gained more control over the oil
sector. Therefore, the public sector has assumed the role of primary engine of
economic growth. Also, the government created in 2005 the Venezuelan
Development Fund (FONDEN), responsible for allocating huge oil revenues to
social, national defense and infrastructure projects.

Since 1999, Venezuela has gained a reputation as a price hawk in OPEC, pushing
for stringent enforcement of production quotas and higher target oil prices. The
state income from oil revenue has increased rapidly; nonetheless its dependence
on oil is one of the main problems facing the Chvez government. The current
economic expansion began when the government got control over the national oil
company in the first quarter of 2003. Since then, real (inflation-adjusted) GDP has
nearly doubled, growing by 94.7% in 5.25 years, or 13.5% annually. For the year
2009-10, the Venezuelan economy shrank severely, but it is expected to growth
3.3% during 2011. According calculations, citing estimates from the Venezuelan
Central Bank, the Venezuelan government "controls" the same percentage of the
economy as when Chvez was elected in 1998, with the private sector still
controlling two-thirds of Venezuela's economy.

An OPEC member, Venezuela is the worlds sixth exporter and the ninth-largest
producer. The state owned petroleum sector dominates the economy. Oil revenue

accounts for roughly one third of the GDP and is the countrys main source of
wealth. 80% of Venezuelas export earnings stem from the exportation of oil and
the earnings provide for more than one half of the governments operating revenue.

In the late mid-nineties, when oil prices fell, so did the Venezuelan economy. This
crisis led to the eventual governmental reorganization. The economic recovery
from the 1999 recession was hampered due to a weak non-oil sector, capital flight,
and a continued fall in oil prices. However, a period of reduced price volatility was
achieved when Venezuela (in a coordinated move with OPEC) reduced the supply
of crude. Since then, the government has taken the lead to promote an oil
production strategy that would maintain prices between $90 and $100 per barrel.

In order to prevent future oil price induced recession, the government created the
National Development Fund (FONDEN). Portions of the petroleum revenue are
deposited into this fund. The idea was to create a fiscal safety net that can be
utilized when prices fall, and to be utilized as a social development funds, investing
in several social and infrastructure projects.

Chvezs Administration has also supported the creation of a series of Bolivarian

Missions aimed at providing public services to improve economic, cultural, and
social conditions. A 2010 Organization of American States report indicated
achievements in addressing illiteracy, healthcare and poverty, and economic and
social advances1. Most areas of spending have increased as a percentage of GDP,
such as: education, health, housing, sports, and infrastructure.

According to statistics from the United Nations, poverty in Venezuela stood at 28%
in 20082, down from 55.44% in 1998 before Chvez got into office. During the

1 Organization of American States (24 February 2010). "Press release N 20/10, IACHR publishes
report on Venezuela". Press release: http://www.cidh.oas.org/Comunicados/English/2010/20V10eng.htm.
2 Forero, Juan (19 April 2010). "Despite billions in U.S. aid, Colombia struggles to reduce poverty".
The Washington Post.
http://www.washingtonpost.com/wpdyn/content/article/2010/04/18/AR2010041803090.html

economic expansion, the poverty rate was cut by more than half, from 54% percent
of households in the first half of 2003 to 26% at the end of 2008. Extreme poverty
has fallen even more, by 72%3. These poverty rates measure only cash income,
and does take into account increased access to health care or education4.

2. Early History and the Colonial Era

The Arawaks and the Caribs were the earliest inhabitants of Venezuela, along with
certain nomadic hunting and fishing tribes. Christopher Columbus first sighted
Venezuela during his third voyage to the New World, when he saw the Pennsula
de Paria from his ship at anchor off the coast of the island of Trinidad. Three days
later, on August 1, 1498, Columbus became the first European to set foot on the
South American mainland.

A second Spanish expedition, just one year later, was led by Alfonso de Ojeda and
the Florentine, Amerigo Vespucci. They sailed westward along the coast of Tierra
Firme (as South America was then known) as far as Lago de Maracaibo. There,
native huts built on piles above the lake reminded Vespucci of Venice, thus leading
him to name the discovery Venezuela, or Little Venice. Subsequent expeditions
along the north coast of South America were driven largely by a lust for adventure,
power, and, especially, wealth.

Pearls and rumors of precious metals were the initial attraction of Venezuela. By
the 1520s, however, the oyster beds between Cuman and the Isla de Margarita-at the western end of the Peninsula de Paria-had been played out. The next of
Venezuela's native riches to be extracted by the Spanish was its people. Slave
raiding, which began in the Peninsula de Paria and gradually moved inland, helped

3 Weisbrot, Mark, Ray, Rebecca, and Sandoval, Luis. "The Chvez Administration at 10 Years."
Center for Economic and Policy Research. 2009.
4 Mark Weisbrot; Luis Sandoval (2006). "Poverty Rates in Venezuela: Getting the Numbers Right".
Center for Economic and Policy Research. p. 2.
http://www.cepr.net/documents/venezuelan_poverty_rates_2006_05.pdf.

supply the vast labor needs in Panama and the Caribbean islands, where gold and
silver bullion from Mexico and Peru were transshipped. These slave raids
engendered intense hatred and resentment among Venezuela's native population,
emotions that fueled more than a century of continual low-intensity warfare. Partly
as a result of this warfare, the conquest of Venezuela took far longer than the rapid
subjugations of Mexico and Peru.

The prolonged nature of the conquest of Venezuela was also attributable to the
area's lack of precious metals and the absence of a unified native population.
Venezuela had low priority compared with regions of Spanish America containing
vast ore deposits. Moreover, the territory that comprises present-day Venezuela
contained no major political force, such as the Inca or Aztec leadership, whose
conquest would bring vast resources and populations under Spanish domain.
Rather, the conquerors found a large number of relatively small and unrelated
tribes of widely varying degrees of cultural sophistication.

After more than a decade of fierce fighting with the recalcitrant native population,
forces under Diego de Losada established the settlement of Santiago de Len de
Caracas in 1567. The value of Caracas lay not only in the fertile agricultural lands
in its vicinity, but also in its accessibility, through the coastal range, to the seaport
that would later become La Guaira.

The vast majority of what is today the territory of Venezuela was left untouched by
the Spanish conquistadors. Instead, tireless Franciscan and Capuchin missionaries
explored and Hispanicized the Ro Unare Basin to the east of Caracas, the Ro
Orinoco, during the seventeenth and eighteenth centuries. Much of the western
llanos and the south bank of the Orinoco remained unknown territory to the
Spanish even at the close of the colonial period.
Colonial authorities organized the local Indians into a system to grow tobacco,
cotton, indigo, and cocoa. The Spanish crown officially ended this system in 1687,
and enslaved Africans replaced most Indian labor. As a result, Venezuela's colonial

economic history, dominated by a plantation culture, often more closely resembled

that of a Caribbean island than a South American territory. Although the war of
independence devastated the economy in the early nineteenth century, a coffee
boom in the 1830s made Venezuela the world's third largest exporter of coffee.
Fluctuations in the international coffee market, however, created wide swings in the
economy throughout the 1800s.

3. Independence and Civil Strife

In 1795 there was an uprising against Spanish control, but it was only after
Napoleon had taken control of Spain that a real revolution began (1810) in
Venezuela, under Francisco de Miranda. Events in Europe were perhaps even
more crucial to the movement for Latin American independence than Miranda's
efforts. In 1808 French emperor Napoleon Bonaparte's troops invaded Spain
amidst a family dispute in which the Spanish king Charles IV had been forced to
abdicate the throne in favor of his son, Ferdinand VII. The fearful Bourbon royal
family soon became Napoleon's captives, and in 1810 the conquering French
emperor granted his brother, Joseph, the Spanish throne, precipitating a four-yearlong guerrilla war in Spain.

These events had important repercussions in the Caracass city council.

Composed of creoles elite whose allegiance to the crown had already been
stretched thin by the gross incompetence of Charles IV and his feud with his son,
the city council refused to recognize the French usurper. Meeting as an open city
council on April 19, 1810, the Caracass city council ousted Governor Vicente
Emparan and, shortly thereafter, declared itself to be a junta governing in the name
of the deposed Ferdinand VII. On July 5, 1811, a congress convoked by the junta
declared Venezuelan independence from Spain. Miranda assumed command of
the army and leadership of the junta.

A constitution, dated December 21, 1811, marked the official beginning of

Venezuela's First Republic. Known commonly by Venezuelan historians as the Silly
Republic, Venezuela's first experiment at independence suffered from myriad
difficulties from the outset.

Bolvar was born in 1783 into one of Caracas's most aristocratic creoles families.
Orphaned at age nine, he was educated in Europe, where he became intrigued by
the intellectual revolution called the Enlightenment and the political revolution in
France. As a young man, Bolvar pledged himself to see a united Latin America,
not simply his native Venezuela, liberated from Spanish rule. His brilliant career as
a field general began in 1813 with the famous cry of "war to the death" against
Venezuela's Spanish rulers that was followed by a lightning campaign through the
Andes to capture Caracas. There he was proclaimed "The Liberator" and, following
the establishment of the Second Republic, was given dictatorial powers. Once
again, however, Bolvar overlooked the aspirations of common, nonwhite
Venezuelans.

Finally, in June 1821, Bolvar's troops fought the decisive Battle of Carabobo that
liberated Caracas from Spanish rule. In August delegates from Venezuela and
Colombia met at the border town of Ccuta to formally sign the Constitution of the
Republic of Gran Colombia, with its capital in Bogot. Bolvar was named president
and Francisco de Paula Santander, a Colombian, was named vice president.
Bolvar, however, continued the fight for the liberation of Spanish America, leading
his forces against the royalist troops remaining in Ecuador, Bolivia, and Peru.

10

4. The Century of Caudillismo

Two decades of warfare had cost the lives of between one- fourth and one-third of
Venezuela's population, which by 1830 was estimated at about 800,000.
Furthermore, the cocoa-based export economy lay in ruins, a victim of physical
destruction, neglect, and the disruption of trade. As a result, it was relatively simple
for the young nation to shift its agricultural export activity to the production of
coffee, a commodity whose price was booming in the North Atlantic nations with
which Venezuela was now free to trade. The production of coffee for export would,
along with subsistence agriculture, dominate Venezuela's economic life until the
initiation of the petroleum boom well into the twentieth century. Venezuela's
century-long post-independence era of caudillismo is perhaps best understood as
a competition among various social and regional factions for the control of the
Caracas-based bureaucracy that served the trade with the North Atlantic nations.

The century of the caudillo started auspiciously, with sixteen relatively peaceful and
prosperous years under the authority of General Pez. Twice elected president
under the 1830 constitution, Pez, on the one hand, consolidated the young
republic by putting down a number of armed challenges by regional chieftains. On
the other hand, Pez usually respected the civil rights of his legitimate political
opponents. Using funds earned during the coffee-induced economic boom, he
oversaw the building of fledgling social and economic infrastructures. Generally
considered second only to Bolvar as a national hero, Pez ruled in conjunction
with the creoles elite, which maintained its unity as long as coffee prices remained
high.

After Paz the Monagas brothers became presidents in two consecutives elections,
until they were overthrown in 1858, and the civil war among caudillos became
chronic. A brief liberal regime under Juan Falcn created the decentralized United
States of Venezuela in 1864. From 1870 to 1888, Guzmn Blanco dominated
Venezuela. The four years that followed Guzmn's rules were marked by several

11

failed attempts to consolidate a civilian government. After Blancos administration,

Crespo became president, but he was killed in 1898. A year later, in 1899 General
Cipriano Castro, the first of four military rulers from the Andean state of Tchira,
marched on Caracas with a private army that became a strong national army and
assumed the vacant presidency. His nine years of despotic and dissolute rule are
best known for having provoked numerous foreign interventions, including
blockades and bombardments by British, German, and Italian naval units seeking
to collect external debts of the Venezuelan government.

In 1908 Castro traveled to Europe for medical treatment; his chief military aide and
fellow tachirense (native of the state of Tchira), Juan Vicente Gmez, took this
opportunity to overthrow the dictator and assume power.

The year 1908 marked the beginning of the rule of one of the longest-lasting of all
Latin American dictators, Juan Vicente Gmez, who stayed in power until his death
in 1935. His regime was one of total and absolute tyranny, although he did force
the state (with the help of foreign oil concessions) into national solvency and
material prosperity. His dead precipitated widespread looting, property destruction
and the slaughter of Gmez family members and collaborators by angry mobs in
Caracas and Maracaibo. Gmez's twenty-seven years in power brought to a close
Venezuela's century of caudillismo and, according to many historical accounts, his
demise marked the beginning of Venezuela's modern period.

5. The Transition to Democracy

During the twenty-three years of transition to democratic rule, institutions as the
military transferred political power to civilians. However, the military was still very
dominant, and the death of Gmez left a leadership vacuum that could only be
filled by the old dictator's tachirense minister of war, General Eleazar Lpez
Contreras. After he finished Gmez's term of office in 1936, the Congress, which all
the members had been appointed by Gmez, selected Lpez to serve his own five12

year term in office.

Later in 1945 a military junta gained control of the government, which was then
headed by Rmulo Betancourt of the Democratic Action party. Two years later, a
new constitution was promulgated in 1947, which provided, for the first time in
Venezuelan history, presidential election by direct popular vote. The first president
elected under the new constitution was the eminent novelist Rmulo Gallegos. His
administration, however, was short-lived.

A military coup in November, 1948, overthrew the Gallegos government, and a

repressive military dictatorship was established. By 1952, Col. Marcos Prez
Jimnez had become dictator, and he made wide use of police state techniques. A
popular revolt, supported by liberal units of the armed forces, broke out early in
1958; and Prez Jimnez fled out of the country. Elections held that year restored
democratic rule to Venezuela. Rmulo Betancourt adopted a moderate program of
gradual economic reform and maintained friendly relations with the United States
despite the association of U.S. interests with Prez Jimnez. A new constitution
(1961) was adopted.

The country, long out of debt because of the oil revenues, reached a peak of
prosperity, but the new administration was nevertheless gravely challenged. Leftwing groups, particularly the Communists, bitterly opposed the administration, and
their activities, combined with the restiveness of the poorer classes and the
dissidence of leftist elements in the military, led to numerous uprisings. Extreme
right-wing elements also plotted against the Betancourt regime. Betancourt was
succeeded by popular elections in 1964 by Ral Leoni. In 1968 the Social Christian
party came to power when Rafael Caldera won a close presidential election.

The 1973 presidential election was won by Carlos Andrs Prez of the Democratic
Action party. That same year Venezuela joined the Andean Group (later the
Andean Community), an economic association of Latin American nations. In 1976,

13

Venezuela nationalized its foreign-owned oil and iron companies, and then in 1979
the oil industry was nationalized. Luis Herrera Campns replaced Prez in 1978. A
decrease in world oil prices during the early 1980s shocked the Venezuelan
economy and massively increased Venezuela's foreign debt.

Democratic Action candidate Jaime Lusinchi defeated Campns in 1983. He

renegotiated the national debt and introduced austerity budgets and cuts in social
services, but inflation and unemployment continued to plague the country. Prez
was returned to office in 1989 amid demonstrations and riots sparked by
deteriorating social conditions. In 1992 Prez survived two attempted military
coups, but the following year he was removed from office on corruption charges; he
was later convicted and sentenced to jail for misuse of a secret security fund. In
1994 Rafael Caldera again became president, this time under the banner of the
National Convergence party. He unveiled austerity measures in 1996 and
privatized some state-run companies, such as telecommunication, commercial
aviation, electricity and water supply.

Venezuela's economy sagged and its budget deficit grew as oil prices fell again in
the late 1990s. Relations with Colombia, long strained over control of offshore oil
reserves and the illegal movement of many Colombians into Venezuela to work,
deteriorated in the 1990s as Venezuela claimed that Colombian guerrillas were
trafficking drugs and arms across the border. In 1999, Hugo Chvez Fras, a former
army colonel who had participated in a failed coup attempt against Prez, became
president after running as an independent candidate. He called for a halt to
privatization of state assets and the Congress approved a law enabling him to rule
by decree in economic matters for six months. He also cut Venezuela's oil
production to force up prices, and pushed for other OPEC members to do the
same, promoting the cooperativeness among its member countries.

A referendum in April 1999 was called for a National Constituent Assembly to draft
a new constitution and it was declared a national emergency to strip the Congress

14

of its powers and create a National Assembly instead. By the end of the year it was
called for a general election to restore the new Congress, now called National
Assembly (unicameral). The new constitution established a president with a sixyear term in office and the ability to run for immediate reelection, and increased the
government's control of the economy. In the same month Venezuela experienced
its worst natural disaster of the century, as torrential rains caused huge,
devastating mudslides along the Caribbean coast; perhaps as many as 5,000
people were killed.

The disaster slowed plans for new elections, but in July, 2000, Chvez won
election to the presidency under the new constitution; his coalition, won 99 of the
165 seats in the assembly, short of the two-thirds majority needed to rule without
constraints.

In 2001, Chvez became more unpopular within the upper middle class people
with the increasingly polarized Venezuelan people, although he still retained
significant support among the lower classes. His attempts to assert more State
control over the national oil company led to strikes and demonstrations in early
2002, and in April he was briefly ousted in a coup attempt. Latin American nations
refused, however, to recognize a self-proclaimed interim government under
business executive Pedro Carmona Estanga, who extinguished the National
Assembly, Governors, High Supreme Court, and other Constitutional National
Powers

by

decree,

which

led

poorer

Venezuelans

mounted

counter-

demonstrations in his support. Chvez was restored to office and called for
reconciliation; a subsequent cabinet shakeup gave his government a less
ideological cast.

The ongoing political turmoil, which led to a prolonged, polarizing antigovernment

strike in the vital oil industry (December 2002 to February 2003), sent the country
into recession and reduced oil exports. Although Chvez outlasted his striking
opponents, the crisis further eroded public support for his government. An

15

agreement between the two sides, negotiated by the Organization of American

States in May, 2003, called for a referendum on Chvez's presidency later in the
year. An opposition petition calling for a referendum on Chvez was accepted,
which became the fist public referendum to end a presidency term in Venezuelan
history5. In the referendum, held in August, more than 60% voted to retain Chvez,
and despite opposition denunciations of the result, foreign observers strongly
endorsed it.

In January, 2005, the president signed a decree establishing a national land

commission that would begin the process of breaking up the country's large estates
and redistributing the land. National assembly elections in December, 2005,
resulted in a sweep for parties supporting the president, but only a quarter of the
electorate voted. Most opposition candidates withdrew from the contest before the
vote in protest against what they said were biases and flaws in the electoral
process, ceding complete control of the legislature to Chvez.

Chvez was reelected in December 2006, benefiting from an economic boom due
to high petroleum prices and from the social programs he had instituted for the
poor, with the poorer classes overwhelmingly favoring the president. In January,
2007, Chvez moved to renationalize all energy and power companies, the cement
and steel industry, and the country's largest telecommunications firm (all of them
were privatized during the Calderas Administration in 1996). He also moved to
consolidate some two dozen parties supporting him into a unified socialist party,
the United Socialist Party of Venezuela (PSUV). Chvez subsequently won
passage of constitutional amendments that would have ended presidential term
limits, and increased the length of the president's term. This political right was
approved by popular referendum in 2007, and was included in the Constitution,
and

applies

to

Mayors,

Governors,

Assemblymen

(deputies)

and

the

President/Head of Government.

5 It is worth mentioning, this kind of referendum was sponsored by Chavez himself during the new
constitution draft in 1999.

16

Most recently, a new national Assembly election took place in September 2010, to
elect 165 deputies (assemblymen). Venezuelan opposition parties, which had
boycotted the previous election, thus allowing the governing United Socialist Party
of Venezuela (PSUV) to gain a two-thirds supermajority, participated in the election
through the Coalition for Democratic Unity (MUD). PSUV won a majority of the
seats and consequently retained a substantial majority in the Assembly, although
falling short of the two-thirds majority mark. The next presidential elections, as well
of governors and mayor elections, will take place by the end of 2012.

6. The Governmental System

Venezuela is a Federal Republic with twenty-two states, one Metropolitan District,
and eleven federally controlled islands. There are an additional seventy-two islands
in the Caribbean Sea, known as federal dependencies. Governors hold executive
power at the state level and they are elected to five-year terms, and the right to run
for reelection indefinitely. The local government is composed of the Mayor, the
Municipal Council, and the Parishes. The current Chief of State and Head of
Government is Hugo Chavez, elected in December 1998. His government also
drafted and won approval from the electorate for a new constitution, which
subsequently appointed the National Constituent Assembly. President Chavez was
reelected in July 2000 for a six-year term.

The political system of Venezuela is divided into five political powers or branches:
Executive, Legislative, Judicial, Electoral, and Citizen. The executive branch of the
government is presided over by the President, who also looks into the appointment
of higher posts like the Vice-President, members of the Cabinet (Ministers) and
important other members of the National Assembly. He is also the decision maker
regarding the size and arrangement of the ministers in the cabinet. It's important to
note that the legislature of Venezuela is a unicameral legislative assembly, named
as the National Assembly having 165 seats.

17

The sitting members of the house are elected by a popular referendum for a period
of 5 year which can be extended indefinitely (this is a political right, included in the
current Constitution in 2007, approved by popular referendum, applied to Mayors,
Governors and the President/Head of Government). The seats of this legislative
assembly is divided and reserved according to the provisions of law.

The judicial system of Venezuela is headed by the Supreme Court, which in official
terms is regarded as the highest law court in the country. The magistrates of this
court are appointed for a period of 12 year term, though there are lower courts,
district courts and municipal courts located at every district.

The Electoral branch is headed by the National Electoral Council, is the institution
in charge of all electoral processes that take place in Venezuela. Its five principal
members are elected by a majority vote of the unicameral National Assembly and
all its rulings have to be agreed by a majority (three out of five) of these principal
members. Constitutionally assured elections, universal suffrage, and participation
in politics for over three decades have made Venezuela a unique and much
admired democratic model in Latin America.

Citizen empowerment has been provided by the Republican Moral Council, which
consists of the Peoples Defender, the Public Prosecutor, and the General
Accountant. Their job is to observe, prevent, investigate and penalize acts against
the public ethic and administrative moral and oversee the legality of the use of
public fund.

When Hugo Chavez was first elected as the President of Venezuela, he initiated a
reform so as to bring about a radical change which would enhance the social,
economic and political development of the country.

18

The Constitution of the Bolivarian Republic of Venezuela6 is the current and

twenty-sixth constitution of Venezuela. It was drafted in mid-1999 by a
constitutional assembly that had been created by popular referendum. Adopted in
December 1999, it replaced the 1961 Constitution - the longest serving in
Venezuelan history. It was primarily promoted by the current President of
Venezuela Hugo Chvez and thereafter received strong backing from diverse
sectors. This recent constitutional changes emphasize on human rights,
development of free education and upholding the inherent Venezuelan traditions,
cultures and beliefs.

The 1999 constitution provides for mandatory voting for all Venezuelan citizens
who are at least eighteen years old (including the National Army Forces) and who
are not convicts. More than 80% of those registered voted. Each political party had
its own ballot with a distinctive color and symbol, so that even illiterate citizens
could recognize their preferred party choice.

The Constitution of 1999 was the first constitution approved by popular referendum
in Venezuelan history, and summarily inaugurated the so-called "Fifth Republic" of
Venezuela due to the socioeconomic changes foretold in its pages. Major changes
were made to the structure of Venezuela's government and responsibilities, while a
much greater number of human rights are enshrined in the document as
guaranteed to all Venezuelans including free education up to tertiary level, free
quality health care, access to a clean environment, right of minorities (especially
indigenous peoples) to uphold their own traditional cultures, religions, and
languages, among others. The 1999 Constitution, with 350 articles, is among the
world's longest, most complicated, and most comprehensive constitutions.

6 Refers the 1999 document as the "Constitucin Bolivariana" (the "Bolivarian Constitution")
because they assert that it is ideologically descended from the thinking and political philosophy of
Simn Bolvar and Bolivarianism.

19

7. Evolution of the Venezuelan Economy

a) Initial Situation

During the first half of the 20th century, the Venezuelan economy was
characterized by its vulnerability with respect to external shocks, dependant as it
was in the beginning on agricultural activities and, afterwards, on oil, as its main
sources of revenue, a situation that still persists.

The economic activity has substantially evolved in Venezuela mainly due to

structural changes introduced by oil production, which displaced the weakened
agricultural activity, whose revenues, basically steaming from coffee and cocoa
exports, hindered the implementation of an investment policy supporting the
productive development of the country.

Before oil emerged, the colonial export structure was still in place in Venezuela. In
general terms, production of the working population was very low since such
workers were poorly trained and qualified, and the sector was not mechanised.
Employment levels were very low and workers were paid in tokens, particularly in
large estates. In the absence of an ownership and land distribution regime, the
prevalence of a land-ownership system based on large estates forced most of the
population to occupy small land lots to grow subsistence crops. Being the conuco
(indigenous word for very small farm) the production unit, the production system
was therefore underdeveloped.

Due to its low income, the population was not considered part of what can be
called a money-based economy. The industry was incipient and the few existing
industries operated in the sector of crude derivative production and leather tanning,
among others, and were rather very artisanal. From the beginning of the
Venezuelan history, a banking system (financial sector) that stored the countrys
gold as a guarantee to coin production and credit prevailed.

20

Venezuela had a very high percentage of rural population (almost 80%) living in
extreme poverty and unhealthy conditions, overwhelmed by pandemic diseases
with a high death toll, as were the cases of malaria, yellow fever, tuberculosis,
among others. Until 1930, approximately, life expectancy was 30 years, the
populations health was impaired by various diseases and illiteracy reached almost
75%. This showed that the social policy was rather precarious or almost inexistent.

With the emergence of oil, and subsequent oil production and export, the
Venezuelan economy started to change progressively, but the population living
conditions did not match such resource basis. In terms of the economic structure,
the share of all export items, composed basically by agricultural products and oil,
started to change, as in 1926, three years before the financial crack, the export of
agricultural products had already started to decrease because of the constant fall in
international prices, as well as to a reduction in production caused by the migration
of labor towards the new industry, and to low productivity in the traditional export
sector that lacked investments to introduce technology into the production process.

After 1930, Venezuela progressively became an oil-exporting country, being its

production managed by transnational companies. At the beginning of the 1930s,
agriculture was still the main source of employment and, until 1949, the GDP per
capita barely reached USD 147 annually (1970 exchange rate), thus showing the
state of poverty of the population.
At the height of the military government of Gen. Juan V. Gomez7, and with the
advent of oil transnational companies, the migration of rural labor started. These
workers did not have production means, were underemployed and frequently
subsisted in slavery conditions. They were seeking better paid jobs in oil fields and,
consequently, improved living conditions8.

This refers to the 27-year long dictatorship of Gen. Juan Vicente Gomez, from 1908 to 1935,
characterized by oil opening basically to North-American transnational capital, and persecution to
dissidents alleging the need to maintain the country calm.
8
As indicated in Toddaros model (1974), migration occurs for economic reasons, basically in the

21

Regarding the fiscal regime in force, there was a balanced budget, with fiscal
revenues coming basically from taxes on oil activities, while fiscal expenditure was
mainly limited to military expenses aimed at unifying the national army and keeping
the country calm. Remarkably, Venezuela paid its entire external debt in those
years, the management of public funds was deeply backwards due to lack of
planning and to the despotic administration by the president.

After Gen. Gomez died, in 1935, the new government of Gen. Lopez Contreras
implemented a three-year infrastructure build-up plan, particularly in the public
health sector, to assist the population living in precarious conditions, and in the
education and communications sectors, among others. A process to pass labourrelated laws began, as well as a process of greater political openness that allowed
for the legalization of trade unions and some political parties.

In the 1940s, the government of Gen. Medina Angarita continued the policy of
increasing social expense directed towards the most vulnerable sector, through
investment in road infrastructure to improve the scope in the health area. A process
to deepen the reforms is initiated, including the granting of land to rural population
so as to improve conditions in the agricultural sector and recover productivity. At
the same time, in the context of World War II, modernization of public fund
management was among the reforms carried out, including the reform on the
hydrocarbon law to obtain more resources out of Income Taxes and Royalties.

By the mid-1940s, the industrialization of the country and the reduction of

dependence on external markets became necessary to lessen the effects of wars
and crisis around the globe, a situation that led to the application of protectionist
measures in the national industry. The aim was to reduce vulnerability vis--vis
external shocks. Such measures focused on taxes on imported goods aimed at
fostering the local industry; price control on products using imported parts or
completely locally-made products, with the purpose of fighting usury; and the
search for better incomes.

22

implementation of a multiple exchange system to benefit companies with lower

costs of imported parts, as well as the availability of foreign currency to import.

Before the 1940s, Venezuela did not have industrial capacity or a qualified labour,
and there was a marked inequality in income distribution. The infusion of oil income
created the conditions for governments to engage in public expenditure and make
investments in the social sector and public works, not incurring in fiscal deficit,
while boosting the so-far impaired aggregated demand. It is from 1940 that the
countrys accelerated development process becomes evident and the State begins
to use oil wealth to raise the living standards of people.

In the 1950s, Venezuela initiates an industrialization process financed by resources

from oil revenue. At the same time, large investments in public works carry on,
many in support of fixed capital formation to foster the countrys development. The
country thus experienced rapid and elevated economic growth rates, along with a
rapid urban drift.

Also in the 1950s, during the military government of Gen. Marcos Prez Jimnez,
Venezuela took a big leap towards modernization. The impact of oil wealth was
reflected in a raise in wages and salaries for workers, and in a significant increase
of foreign currency income for government. Economic growth was about 10% yearto-year; public expenditure was very high, basically oriented to investment,
financed by oil incomes; fiscal pressure was relatively low since tax collection was
made in a direct manner to favor investments.

Although the fiscal policy was implemented through a balanced budget, helping
create a favorable investment climate, the low level of tax collection put pressure
on further indebtedness. By the end of the 1950s the drop in oil prices affected
public finances, thus generating lower investment rates. Price and exchange rate
stability were remarkable features of those years.

23

The structural change experienced by Venezuela alter moving from an economy

dependant on agricultural products to an economy dependant on oil exports did not
prevent vulnerability to world economic upheavals considering that oil prices are
very volatile and are exposed to external shocks, wars, oil embargos, among
others.

b) Economic Recovery and Growth (1960-1969)

In the 1960s, after the fall of Gen. Perez Jimenez in 1958, Venezuela enters a new
phase with the late beginning of export substitution, which was in place since
previous decades in a non-systematized manner as a commercial policy tool,
applying measures such as the establishment of tariffs and quotas on imports. The
cost of this was sanctions imposed by the U.S. to Venezuelan products in the U.S.
market.

During those years up until 1962, when Venezuela is ruled by its first democratic
government, an economic and political instability period begins. It is marked by the
inertia effect of indebtedness growth; fiscal resources exhaustion caused by both
the rapid growth of governmental expenses and low tax collection, worsened by the
drop in oil prices that restrict governmental functioning; and investment reduction
that triggers economy and employment contraction. In this context, income claims
are made due to the adoption of wage and salary cuts in the public sector and
higher unemployment.

For these reasons, regarding fiscal aspects and the balance of payments,
restrictions that limited the governments actions to distribute income arouse. On
the one hand, the growing deficit forced fiscal austerity measures, and on the other
hand, the drop in oil income forced an adjustment of the exchange rate and,
therefore, fiscal resources were sought from taxes on oil activities. The nominal
salary cut also helped to prevent bouts of inflation resulting from devaluation, as
well as the increase in unemployment, whose average rate in those years was

24

close to 14%. The crisis undergone in this period was highly regressive in nature.

Import substitution policies were a sign of this regressive nature of measures

implemented, as protectionist policies on the national industry, based on tariff and a
fixed exchange rate of free convertibility to guarantee the import of production
items, offered an advantage for the entrepreneurial and import sectors to increase
their profit rate and take a greater share from oil income.

Generally, from 1973 up until 1978, approximately, an increase of real salary rates
began. The social policy of the State permitted the increase of the so-called social
salary (through explicit and implicit transfers to workers in the areas of education,
health care, housing and leisure). In the following years, oil income started to
recover as a result of production rise by transnational companies and greater
participation of the State in oil income.

c) Oil Boom and Beginning of Instability (1970-1979)

After a decade of relatively economic stability, amid an average growth rate of

4.3% in the early 1970s, Venezuela continued the progressive implementation of its
investment plan, which was basically fostered by the private sector, with little
participation by the public sector. This prompted constant growth thanks to the
support given to non-oil activities. The economic activity rose at an average rate of
5.2%, while GDP per capita averaged a 1.7% increase. This was reflected on a
slight improvement of income distribution despite the relative reduction of workers`
remuneration with respect to the GDP.

In the International context, in the first half of the 1970s, a political and economic
turbulence era begins, characterized by the increase of financial volatility after the
U.S. dismantled, in 1971, the world gold standard monetary regime to place the
dollar as the reference currency for economic transactions. This paved the way to
subsequent exchange and financial crisis in the world caused by the constant

25

capital mobility in pursuit of higher returns. In the political ground, the struggle to
gain control of natural and energy resources started, with direct interventions,
mainly in Arab countries, by the U.S. and other G7 countries. The purpose was to
gain political control through local players aligned with the interest of the
transnational companies, thus triggering a wave of wars and military coups around
the world.

As a result of the 1973 Arab oil embargo, a significant increase of oil prices takes
place. Consequently, Venezuela engages in a public expenditure policy due to an
important improvement of public finances. This helps increase to a great extend the
investment rhythm in Venezuela. However, indebtedness is incurred since the large
amount of resources is insufficient to cover investments that would finance the
construction of the Great Venezuela. Along these lines, measures are taken in
1974 to face the oil price increase agreed by the OPEC at the end of the previous
year, i.e., the creation of the Investment Fund of Venezuela (FIV, by its Spanish
acronym), aimed at accumulating savings out of financial resources from oil
exports and thus avoiding a monetary growth that would impact the aggregated
demand and will put upward pressure on prices.

Also, the country participated in Development Funds, like the OPEC Fund, and
credits were extended to neighboring countries as a means to balance the
important inflow of resources. As part of the investment policy, the iron and oil
industries, operated until then by transnational companies, were nationalized,
although transnational companies continued operations. As a result of the rapid
economic growth, the GDP per capita rose at average rates of 2.3% annually
before 1978. This allowed an unemployment rate of almost 4.3% in that year. The
inflation rate also remained considerable low

Then, by the end of the 1970s, between 1978 and 1979, when oil prices started to
decline, high expenditure and investments, partly financed by debts incurred in that
period, created upward pressure on prices, provoking a double-digit inflation rate

26

increase. Afterwards, from 1979 and in the years that followed, an important reorientation of the economic policy begins, with the application of fiscal adjustments
devised to correct the important unbalances created, and this implied a recessive
re-structuring of the labor market.

d) Debt Crisis, Recession and Inflation (1980-1989)

Between 1978 and 1984, the Venezuelan economy remained completely

contracted as evidenced by a GDP that decreased all along those years.
Afterwards, between 1985 and 1988, after showing recovery signs, the economic
activity kept a faltering growing rhythm, unable to reach the levels of 1979. Those
years characterized by a disinvestment process that caused an important capital
outflow, unemployment raise, and an increasing inflation rate.

All through that decade, the Venezuelan economy continued applying protectionist
measures to the national industry within the already-known import substitution
model. Thus, the current account and capital remained protected with the purpose
of strengthening the national economy, avoiding external competition. Likewise,
until 1983, the fixed rate exchange policy, of free convertibility, remained effective,
and was modified due to the collapse of the international reserves.

From 1984, an adjustable exchange system was adopted, complemented since

1984 by a differential exchange system and price controls on some items. The high
rate of accumulated inflation was a consequence of restrictions on foreign currency
as a result of the 1986 drop in oil prices, which led the central government to
restrict the foreign currency market.

Plummeting investment caused a productivity fall in this period that was

accompanied by an increase of unemployment rates to 13.4% in 1984 from 5.7%
in 1980. Price increase produced a deterioration of exchange terms. This situation
had an impact on distribution indexes, thus evidencing a rapid and marked move

27

backwards with respect to the functional distribution of income9. At that time, the
average salary rate records a decrease of 5.8% yearly, at all levels of the economy,
and this is also linked to a visible reduction of labor productivity.

The high level of the debt put pressure on public finances and, between 1986 and
1987, an external debt refinancing process begins, worsening the situation of
Venezuela, since the public debt doubled as a percent of the GDP because the
government took on the private sector debt. It is at the end of the 1980s that a
structural reform and fiscal adjustment process starts, aimed at recovering
macroeconomic balance.

Then, in 1989, Venezuela was burdened with social and political conflicts caused
by the violent reaction of people to the implementation of neoliberal measures
dictated by the International Monetary Fund (IMF) as a condition to finance
economies in deficit. The Adjustment Plan was known as the 8th Plan of the Nation
and it targeted the reestablishment of sustained development through price
stabilization achieved by implementing a Public Investment Plan.

The measures taken did not succeed achieving the expected results. Initially, the
economic activity contracted 7.6% and the average inflation rate reached 84.5% as
a consequence of import liberalization; the national currency devaluated 83.3%,
while the unemployment rate increased 3.5% percent points, closing at 10.4 by
1989. Fiscal measures included the sale of State-owned assets and the increase of
price of utilities administered by the State.

The gap of the functional distribution of income widened, and in 1989 it was of 0.34 and 0.58 for
Remunerations of Employees and Workers (REW), and for the Exploitation Surplus (ES),
respectively.

28

e) Structural Adjustment Programmes (1990-1999)

In the 1990s, three (3) periods can be identified in Venezuela, differentiated by

both the policies that were applied and their effects on the economy. The first one,
before 1994, was characterized by political instability and the application of
restrictive measures on the aggregated demand with the liberalization of the
current account; a second one, between 1994 and 1995, represented a break with
the previous scheme due to the bankruptcy of the financial system, which forced
the adoption of price and exchange controls. Finally, there is a third period,
between 1996 and 1999, when (neoliberal) restrictive policies are more intensively
resumed within the framework of the so-called Venezuelan Agenda.

During the first period, the policies applied on the Venezuelan economy to reestablish fiscal balance and recover the path to growth, represented a radical
change of direction, because protectionist measures are left aside and a package
of structural adjustment measures are implemented; the current account of the
balance of payments was liberalized, and exchange, price and interest rate
controls were put to an end in pursuit of the economic and social development of
the country.

Such measures were drastic and were implemented abruptly, thus triggering a
popular reaction as the economy contracted with high-levels of inflation.

The

reduction in tariffs on imported products and in subsidies to the production of local

goods and services, meant to translate into an improvement of competitiveness for
our industrial sector, did not have the expected results.

The economic and social strategy was primarily focused on an indiscriminate

external openness, both commercial and financial; deregulation of the price
system; and the reduction of participation in the economy by the public sector to
seek fiscal balance, emphasizing the privatization of productive governmental
assets and, at the same time, placing the private industry as the pivot to propel up

29

the development process.

Later, between 1994 and 1995, the liberalization of the economy, in commercial
and financial terms, together with lack of control and monitoring in the financial
sector, triggered a crisis in the financial system (1994). The banks incurred in lack
of liquidity caused by unprofitability of transactions in their investment portfolio that
hindered fulfillment of obligations.

During this period, a financial rescue policy was implemented to avoid a general
crisis in the system. This resulted in excessive capital flight that compelled the
government to adopt an exchange control regime, with significant adjustments, to
avoid further outflow of financial resources and the subsequent reduction of
international reserves.

In terms of macroeconomic results, the inflation rate was over an average 40%
during those years, the economy decreased, the unemployment rate remained at
high levels, beyond an average 10%, and the fiscal deficit reached around 7% of
the GDP.

All of this put the Venezuelan economy in a difficult situation and imposed the need
to look for fresh resources to finance the high fiscal deficit. Therefore, between
1996 and 1998, the government started to apply a package of measures devised
within the Structural Adjustment Programme called the Venezuelan Agenda. Like
1989 measures, these were a series of policies that pursued fiscal balance,
economic growth and external competitiveness of tradable goods.

In this sense, from 1996, some State-owned companies begin to be privatized and
the Oil Opening is carried out. Such oil opening consisted in opening PDVSAs
capital to transnational investment. Also, a negotiation process to modify the
workers fringe benefit regime started. This was accomplished in 1997.

30

As part of the measures to liberalize the labor market, the minimum wage, already
significantly behind inflation rates, is raised. Benefits to be paid to workers upon
retirement are cut and some compensatory contractual benefits, such as food
tickets that are integrated to salary, are established.

Despite the huge oil-related incomes and availability of resources from debts
incurred with the International Monetary Fund, such policies proved unsuccessful
and did not improve the main macroeconomic indicators. The economic activity still
did not recover and was constantly fluctuating, while unemployment recorded a
minimum rate of 10% yearly. In turn, the inflation rate in 1996 was the highest
recorded in Venezuelan history (103.3%). The exchange control was dismantled
and replaced by a band regime.

Then, in 1998, the economic activity strongly slowed down due to excessive oil
supply in world markets steaming from OPEC quota violation by Venezuela, which
led to oil prices plummeting to 7 US$/bl. The inflation rate remained at expected
levels, but the fiscal deficit worsened, reaching 4.3% of the GDP.

By 1999, a transition process begins in Venezuela. The economy was still affected
by the persistent downward trend in oil prices and capital withdrawal in emerging
markets. Political incertitude was also present in view of changes in public powers
and of the new policies to be implemented. All of these were elements that
conditioned the performance of economic variables that year.

The fiscal policy endeavored the reduction of the deficit in a context of reduced
ordinary incomes at the beginning of the year, caused by low oil prices and little
economic activity in general. At year end, the governmental financial administration
resulted in a deficit of 3.1% of the GDP, below figures recorded in 1998.

31

In 1999, the economic activity showed a 6.0% reduction against the previous year,
as a consequence of the contraction endured by the oil sector. In turn, the average
inflation rate was 23.6%, reflecting a sustained downward trend. Regarding the
labor market, the unemployment rate experienced a slight reduction, as it moved to
10.6% in 1999 from 11.0% in 1998, while the real salary contracted again by 1.5%,
as compared with the previous year.

f) Change of Policies, Growth and Instability (2000-2010)

Since 1999, a new phase of Venezuelas political and social life begins. With the
arrival of President Hugo Chavez to government in that year, the implementation of
the economic policy undergoes significant changes, now with and important social
connotation. In 2000, the new Constitution of the Republic, passed in 1999, enters
into force. This Constitution introduces important political changes defining the
legal and institutional structure, as well as the foundations and principles of the
economic system that were proposed in the National Constituent Assembly.

From 2000 to 2010, four periods may be identified, marked by changes in

tendencies introduced by macroeconomic results, though the social component
remained unchanged and continued progressing. In this sense, the first period,
which runs from 2000 to 2001, is characterized by moderate growth and economic
recovery, with low inflation levels, and the defense of oil prices with the objective of
improving foreign currency income that would be destined to development. During
this period, the exchange rate bands, under a free convertibility regime, which was
adopted in 1996, remained in place.

The basic economic policy guidelines of these first years are summarized in the
active role of public expenditure to propel economy and, more specifically,
demand, as well as an anti-inflation policy supported by a nominal anchor to peg
the exchange rate to its levels of balance, according to the established band
regime. These guidelines remained in place the following years, particularly the

32

one related to governmental expenditure.

It is in this first years of this decade that, by implementing an oil price stabilization
policy based on the defense of crude oil prices, financial resources can be
accumulated in an anti-cyclical saving fund aimed at diminishing the impact of
International volatility, as well as devoting financial resources to national
development, including food campaigns to directly assist the most vulnerable
population.

Also, in this period, public expenditure increase policies were aimed at promoting
investment, both public and private. The economy was rather instable because the
monetary balance had its own Achilles heel: free convertibility, considering that
international reserves were insufficient to offset possible attacks to the exchange
system.

The next period goes from 2002 and 2003, when the recovery of the economy is
abruptly interrupted due to political actions with destabilization purposes that
entailed big losses to the national treasure, thus causing a significant fall of
production and investment, an important rise of unemployment rates, as well as a
noticeable increase in inflation rates. In this period, due to the continued attacks to
the exchange system that caused important capital outflows that impaired the
international reserves, the floating exchange system is abandoned and a free
fluctuation scheme was adopted, with a moderate foreign currency supply by the
Central Bank of Venezuela (BCV, by its Spanish acronym). This policy was rapidly
modified after international reserves decreased due to lack of foreign currency
incomes caused by reduction of the oil industry operations to minimal levels due to
the oil sabotage.

It is in February 2003, when international reserves reached their lowest levels as

compared to the previous three (3) years, that the exchange and price control
regime is adopted. The aim was to curb speculation bouts and minimize the impact

33

of the exchange adjustment applied and the impact of financial/exchange

speculation practiced by the end of 2002, beginning of 2003.

Later, between 2004 and 2008, another period of relative stability is identified, i.e.,
there is high growth, inflation is controlled, international reserves are accumulated
and the unemployment rate is considerable reduced; monetary and credit liquidity
increases. All of this was the result of exchange controls and of the subsequent
downward adjustment to interest rates. Until 2005, a policy of adjustment to the
exchange rate was maintained with the purpose of taking the foreign currency price
to its equilibrium value, considering both its inner equilibrium and the equilibrium of
trade with commercial partners.

With the high increase in oil prices, which meant important economic incomes and
the accumulation of international reserves, the exchange rate adjustment policy is
abandoned in a controlled regime. Public expenditure is increased to important
levels, beyond budgetary planned expenditure, and a debt policy is intensely
implemented by government through loans from State-owned companies or by the
issuing of financial instruments, either in primary placement or derivatives.

At the same time, the government pursues financial resources to finance

expenditure and investment by means of changes in the law ruling the BCV and
starts to use international reserves to create a National Socio-Economic
Development Fund (FONDEN, by its Spanish acronym), whose purpose is to
maintain the pace of investments in capital goods, infrastructure and social
development.

This period was characterized by high growth levels until 2007, which slowed down
in the years that followed, an inflation rate adjusted to the goal planned to 2006,
which increased significantly later on due to restrictions in the foreign currency
market and provoked a slow adjustment in the supply of goods and services vis-vis the demand increase. There was also a gap between controlled prices and

34

production costs, which generated, on the one hand, shortage of those items
whose production had been stopped and, on the other hand, speculation regarding
those items used as political flag to campaign against the government and its
policy to fight inflation.

The unemployment rate succeeded to be reduced and kept at low levels in this
period, despite a GDP slowdown and a reduction of investment rates. However, in
2007, price controls started to wear off, while imports increased. This compelled
the Foreign Currency Administration Commission (CADIVI, by its Spanish acronym)
to further restrict resources allocation. The effects of the financial-monetary policy
on the baking system were even more evident, as excessive financial investment
by the Banks limited credit and liquidity and increased interest rates, while the loss
of value of Venezuelan financial instruments put in risk patrimony position of the
Venezuelan baking system.

It is in 2008, after the world financial crack erupted, that a low-intensity financial
crisis broke out within the national banking system, with the collapse of a number
of small financial institutions, a situation that lasted until 2009. This difficult situation
was corrected thanks to resources from past privatizations, that were under the
custody of the Economic Development Bank (Bandes, by its Spanish acronym),
previously known as the Venezuelan Investment Fund (FIV).

Finally, a fourth period can be identified, from 2009 to 2010, when the effects of the
world financial crisis were felt. The Venezuelan economy decreased by an average
3% yearly, while the inflation rate remained uncontrolled, keeping beyond 25%.
However, despite public investment fall due to lack of fiscal resources resulting
from the drop in oil prices, the employment rate was pegged at 7% yearly; debts
with other countries were contracted, i.e., the creation of Joint Development Funds,
as is the case of long-term financing from China to Venezuela; and an important
adjustment of the exchange rate was made so as to balance the foreign currency
demand.

35

In this period, high financial speculation compelled the government to provisionally

close all brokerage firms to conduct audits and monitoring, allowing a better control
on the activity, considering that these firms were used as platforms for saving and
other surplus resources outflow, taking advantage of uncontrolled gaps of the
exchange-financial policy10.

8. Geopolitical Relevance of Venezuela

Energy is so fundamental for the survival of the contemporary civilization,
globalized through the capitalist system, as gold and precious stones in the feudal
mercantilist system. Energy sources to which nations resort to meet their
subsistence needs are varied but, there is no doubt that oil is the most important
among them and, according to all forecasts, it will continue to be so for at least the
next 50 years.

And, just as in times of the modern Renaissance world geopolitics moved around
dominion on territories with the largest proven wealth, in post-industrial
contemporary times, the world geopolitics moves around control (indirect dominion)
of territories with the largest proven oil reserves. In some cases, such as in the
Middle East and Central Asia, such control has even had episodes of dominion
through direct military intervention (Gulf War, invasion to Afghanistan, intervention
in Libya). In this context, Fazio (2002) affirms:

Venezuela is a key piece in George W. Bush administrations

global petro-politics. The coup dtat of 11 April was monitored
by oil interests. Some of the objectives of this conspiracy was to
privatize Petrleos de Venezuela S.A. (PDVSA) to the benefit of
a U.S. company linked to the Bush clan and to the Spanish
10

The combined term exchange-financial policy refers to the public sector financing policy,
through the issuing of double-currency denomination and realization instruments aimed at
preventing the fall of international reserves and obtaining foreign credit to finance imports. This
would impact the exchange system because the instrument market value serves as a benchmark to
quote the swap exchange rate.

36

State-own firm Repsol, to sell the U.S. affiliate of PDVSA, Citgo

International, to magnate Gustavo Cisneros and his partners in
the U.S., and to wipe out the Venezuela State reserve over
underground resources to give it to transnational capitals (p.1).

In order to secure an adequate energy supply, at the lowest cost possible, the U.S.
(Arriola, 2000; Benjamn, 2001; Fazio, 2002):

a) Puts pressure on various countries for them to adopt oil opening policies,
b) Fosters capital investment by North-American or British companies in the
oil industries of countries that are strategic in terms of energy,
c) Penetrates in various ways the oil industry of strategic countries and
controls their decision-making levels (management),
d) Keeps strategic oil reserves,
e) Promotes and intervenes in various ways in internal conflicts in oilproducing countries,
f) Puts pressure on OPEC to lower prices,
g) Adopts fuel rationing measures.

Energy consumption requirements of the U.S. and of the developed world in

general show a sustained growth, while proven oil reserves grow at a lower pace.
In this sense, it is evident that demand exceeds supply, particularly when
considered in the long term. This is a very simple fact: in a world with limited
resources, consumption cannot grow unlimitedly, unless only part of the population
consumes such resources. Said otherwise, resources are insufficient for all. Heinke
(1999), very lucidly indicates so:

Three quarters of the world population currently living in the

least developed regions expect to achieve the same life
standards of the other quarter living in the most developed
regions. For this to happen, energy consumption would have to
see

approximately

tenfold

increase.

However,

when

37

considering the current energy reserves and their value, it

becomes clear that this is impossible ..Furthermore, a
tenfold increase in energy consumption may entail the same
increase in pollution, which will be difficult or (more likely)
impossible to be assimilated by the environment. Ultimately, life
standards in rich countries would have to lower to allow for the
increase of life standards in the poorest countries. May this
happen through pacific means? (p. 45).

There is no doubt that important world events are marked by energy geopolitics,
specifically oil-related geopolitics, and as energy consumption requirements grow
and the development of alternative energy sources moves slowly, many of these
events marked by oil-related geopolitics, led mainly by the U.S., first world power in
the globalization era, and by Europe in a second term, will persist.

In this context, Latin America is one region of the world that will be on the eye of
power centers, both for its geographic proximity and for its energy reserves. The
current success of Venezuela in making its heavy crude-oil deposits commercially
profitable suggests that it will substantially contribute to the diverse global energy
supply both in the medium and long term.
Being Venezuela a crucial oil supplier for the U.S.11, with the largest conventional
crude-oil reserves worldwide (over Saudi Arabia)12, with a government that
compromises North-American interests in Latin America, leading a change process
of continental scope, the country is unquestionably destined to play a leading role
in the world energy and oil geopolitics. In fact, Venezuela has already been playing
such role since long ago, with the foundation of the OPEC first, an initiative of
Venezuelas Juan Pablo Perez Alfonzo; then, having a leading role during the oil
shock of the 1970s; and now with the re-launching of OPEC (promoted by
President Chavez) and the elimination of control over PDVSA by the U.S. through
11
12

Department of Energy (DOE) (2011). Energy National Plan.

OPEC Annual Statistical Bulletin 2011.

38

its managers (control over corporate decision-making).

Venezuela has wisely managed the growing importance of oil as evidenced by a

clear policy of reliable and safe supply to the U.S., even accepting participation of
transnational capitals in the hydrocarbon industry, although partnership is now
more diverse and there are clear-cut rules that grant more participation and bring
more benefits to the State for the exploitation of its natural resources.

Nevertheless, Venezuela has also been able to prop up a fair-price policy, with a
determined participation in the international scenario as a relevant OPEC member.
Similarly, despite what may be thought, Venezuela has not lost significant
production capacity and has demonstrated to the world that it has enough
resources to guarantee operations of its oil industry, even in the most adverse
circumstances, as was the case of the oil strike-sabotage of December 2002 and
January 2003.

It becomes clear then that Venezuela has opted for a balanced policy regarding the
geopolitical interests of power centers in Venezuelan oil and gas. On the one hand,
it remains as the largest hydrocarbon supplier to the U.S. in the Western
Hemisphere, a reliable and safe supplier; also, transnational capitals invested in
the country are respected and are allowed in at an even faster rhythm than before
President Chavez took office. But, on the other hand, it plays a decisive leading
role within OPEC, even incorporating non-OPEC oil producing countries, such as
Mexico, in quota system agreements, to regulate oil prices.

a) Geopolitical Implications of Reserve Increase

The importance of the Venezuelan oil reserve certification as the largest oil
reserves worldwide places the country at the world energy centre. This makes the
country vulnerable with respect to economic interests of major oil companies and
world powers that have a high-level of energy consumption and low crude-oil

39

reserves and production, since the principal zones supporting the economic
activities of the U.S. and the interests of capitalism are those zones in possession
of high reserves of energy resources.

This is why the OPEC announcement certifying Venezuela as the country with the
largest crude-oil reserves in the world marks out the path towards further ratifying
and deepening international cooperation with ally countries to develop not only
production activities, but all subsequent refining and petrochemical activities, so
that the full-sovereignty policy also be a pluripolar policy.

In the current world financial crisis, Venezuelan crude-oil reserves are a guarantee
of present and future stability for the countrys economy and, therefore, for the
Bolivarian Revolution that promotes world economic equilibrium as the basis for a
fair and humanitarian society.

40

9. Bibliography
Arriola, Joaqun (2000). Geopoltica del petrleo. La Insignia. Ciudad de Mxico,
Mxico.

Banco Mundial (1995). Anuario Estadstico. Nueva York, EEE.UU.

Benjamn, Csar (2001). Geopoltica de la venganza. Foreign Policy in Focus.

Ro de Janeiro, Brasil.

Castro Soto, Gustavo E. (2002). La verdad sobre el conflicto con Irak. Petrleo,
Gas, Bancos, Narcotrfico, Bioeconoma y Militarizacin. Ecoportal.

Department of Energy (DOE) (2011). National Energy Plan. EE.UU.

Fazio, Carlos (2002). El golpe a Chvez, con olor a petrleo. Peridico La

Jornada. Ciudad de Mxico, Mxico.

Grupo Intergubernamental de Expertos sobre el Cambio Climtico (1997).

Impactos regionales del cambio climtico: evaluacin de la vulnerabilidad.
Resumen para responsables de polticas. OMM/PNUMA.

Heinke, Gary W. (1999). Crecimiento poblacional y econmico. Prentice Hall.

Mxico.

Klare, Michael T. (2000). Detrs del petrleo colombiano: intenciones ocultas.

Servicio Informativo "alai-amlatina".

La Insignia (2002). El petrleo venezolano, clave en la geopoltica de Estados

Unidos. Mxico.

41

Organization of American States (2010). "Press release N 20/10, IACHR publishes

report on Venezuela". http://www.cidh.oas.org/Comunicados/English/2010/20V10eng.htm.

Forero, Juan (2010). "Despite billions in U.S. aid, Colombia struggles to reduce
poverty".

The

Washington

Post.

http://www.washingtonpost.com/wp

dyn/content/article/2010/04/18/AR2010041803090.html

Weisbrot, Mark; Ray, Rebecca; and Sandoval, Luis. (2009). "The Chvez
Administration at 10 Years." Center for Economic and Policy Research. EE.UU.

Weisbrot, Mark; and Sandoval, Luis (2006). "Poverty Rates in Venezuela: Getting
the

Numbers

Right".

Center

for

Economic

and

Policy

Research.

http://www.cepr.net/documents/venezuelan_poverty_rates_2006_05.pdf.

Baptista, Asdrbal (1997). Bases cuantitativas de la economa venezolana 18301995. Fundacin POLAR. 2da Edicin. Caracas, Venezuela.

Baptista, Asdrubal; and Mommer, Bernard (1999). El petrleo en el pensamiento

econmico venezolano. Ediciones IESA. 2da Edicin. Caracas, Venezuela.

Furtado, Celso (2008). Ensaios sobre a Venezuela. Subdesenvolvimento com

abundncia de divisas. Arquivos Celso Furtado, Caderno N 1. Centro
Internacional de Polticas para o Desenvolvimento. Rio de Janeiro, Brasil.

Guerra, Jos (2004). La poltica econmica en Venezuela 1999-2003.

Universidad

Central

de

Venezuela,

Consejo

de

Desarrollo

Cientfico

Humanstico. Caracas, Venezuela.

Hausmann, Ricardo (1992). Shocks externos y ajuste macroeconmico.

Ediciones IESA. Caracas, Venezuela.

42

Mrquez, Gustavo (Compilador); and Mukherjee, J. (1993) Distribucin del

ingreso y pobreza en Venezuela. El Gasto Pblico y Distribucin del Ingreso en
Venezuela y El Gasto Pblico en Educacin. Ediciones IESA. Caracas,
Venezuela.

Mata, Lus (2006). Los lmites de la Revolucin. Petrleo y gobernabilidad.

Universidad Central de Venezuela. Ediciones FACES-UCV. Caracas, Venezuela.

Mata,

Lus

(2006).

Venezuela,

Macrodinmica

Poltica.

Petrleo

gobernabilidad. Universidad Central de Venezuela. Comisin de Estudios de

Postgrado. Fondo Editorial Tropykos. Caracas, Venezuela.

Mieres, Francisco (2010). El Petrleo y la problemtica estructural venezolana.

Banco Central de Venezuela. Ediciones BCV, Gerencia de Comunicaciones
Institucionales. Caracas, Venezuela.

Ross, Jaime (1993). La edad de plomo del desarrollo latinoamericano. Fondo de

Cultura Econmica. Ciudad de Mxico, Mxico.

Valecillos Toro, Hctor (1992). Mercado de Trabajo y Redistribucin del Ingreso.

Revista BCV, Vol. 7, N2. Caracas, Venezuela.

Valecillos Toro, Hctor (2007). Crecimiento econmico, mercado de trabajo y

pobreza. La experiencia venezolana del siglo XX. Ediciones Quinto Patio.
Caracas, Venezuela.

43

Annexes
Venezuelas Macroeconomic
Indicators
GDP

E7 Workshop Renmin University

Delegation of Venezuela

%
40

36,1

30

20

15,7
12,0

12,0

10

7,6

5,6

5,4

3,6

7,8

9,1

13,1

8,0

7,2

7,2

9,0

8,7

3,8

2,7

3,5

4,9

0,5

0
-3,5

-5,9

-4,3

-1,9

-5,5

-2,6
-4,6

-4,4
-6,5

-10

-8,7

-8,9

Coup d'tat &

Oil Industry Sabotage

-20

-5,8

-5,2

-15,8

-26,7

-30

1998I
II
III
IV
1999I
II
III
IV
2000I
II
III
IV
2001I
II
III
IV
2002I
II
III
IV
2003I
II
III
IV
2004I
II
III
IV
2005I
II
III
IV
2006I
II
III
IV
2007I
II
III
IV
2008I
II
III
IV
2009I
II
III
IV
(*) 2010 I
II

10.

Historic trend: 22 consecutives quarters of GDP growth between IQ 2004 IQ 2009.

IMF expects a GDP growth of 3.3% for 2011.
Source: Central Bank of Venezuela

Venezuelas Macroeconomic
Indicators
Human Development Index

E7 Workshop Renmin University

Delegation of Venezuela

0,90

0,88

Carlos Andrs Prez

II
1993:

2008:
0.8448

1998:
0.7793

0.7730

0,86

Hugo Chvez

Rafael Caldera II

High Range
> 0.80
0,8448

0,84
0,8263
0,8201
0,82
0,8080
0,7996

0,7973

0,80

0,7941
0,7813
0,7747

0,78

0,7730

0,7667
0,7712

0,7792

0,7705

0,7721

0,7880
0,7822

0,7793

0,7766

Coup d'tat &

Oil Industry Sabotage

0,76
0,7456
0,74

Middle Range

0,7417

> 0.50 y < 0.80

0,72

0,70
1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Statistic National Institute of Venezuela

44

Venezuelas Macroeconomic
Indicators
% People on Poverty Condition

E7 Workshop Renmin University

Delegation of Venezuela

%
80,0

75,5
71,6

Coup d'tat &

Oil Industry Sabotage

70,0

62,1

65,7
60,0

55,1

55,8

58,2
55,4

55,9

53,9
50,5

49,5

48,7

50,0

46,3

43,7
45,4

40,0

30,0

Carlos Andrs
Prez II
1993
58.2

36,3

Rafael Caldera II

Hugo Chvez

1998
50.5

2008
29.0

33,6 32,6

29,0

20,0

The Millennium Goal was achieved in 2009, standing at 29%.

Source: Statistic National Institute of Venezuela

Venezuelas Macroeconomic
Indicators
Unemployment Rate

Percentage

E7 Workshop Renmin University

Delegation of Venezuela

Coup d'tat &

Oil Industry Sabotage

Source: Statistic National Institute of Venezuela

45

Venezuelas Macroeconomic
Indicators
Inflation Rate (Annualized)

E7 Workshop Renmin University

Delegation of Venezuela

100

Carlos Andrs Prez II

1989-1993
Average
45.3%

103,2

Rafael Caldera II
1994-1998
Average
59.6%

81,0

80

70,8

Hugo
Chvez
1999-2010
Average
22,6%

Coup d'tat &

Oil Industry Sabotage

60
45,9
56,6

37,6

40

20

27,1
20,0

31,0

30,9

31,2

29,9

35,5

19,2

12,3

25,1

22,5

27,9

17,0

13,4
*2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

More efforts must be done in this regard, but the indicator show s an
important improvement from a historical perspective
Source: Central Bank of Venezuela

Venezuelas Macroeconomic
Indicators
Welfare Expenditure as % Total Expenditure

E7 Workshop Renmin University

Delegation of Venezuela

%
65,0
61,4

60,7

60,0
57,7

55,4

58,2

55,0
52,1

50,0

52,8

49,1

48,3

50,5

46,8
44,4

45,0

47,7

47,9

53,3

54,9

Coup d'tat &

Oil Industry Sabotage

43,4
39,5
40,0

35,0

43,2

Carlos Andrs
Prez II
1993
48.3

Rafael Caldera II

Hugo Chvez

1998
47.9

2008:
58.2

30,0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

The Government has put emphasis on the welfare expenditure, having a

positively impact on social indicators
Source: Ministry of Planning & Finance of Venezuela

46

Venezuelas Macroeconomic
Indicators
Gini Coefficient

E7 Workshop Renmin University

Delegation of Venezuela

Coup d'tat &

Oil Industry Sabotage

1998
0.4865

2009
0.3928
More equal income distribution among
households

Source: Statistic National Institute of Venezuela

E7 Workshop Renmin University

Delegation of Venezuela

Venezuelas Macroeconomic
Indicators
% People on Extreme Poverty Condition

42,5

45,0

39,0

40,0

35,0

Coup d'tat &

29,8 Oil Industry Sabotage

30,0

31,9
24,0

23,8

23,4

25,0

20,3

24,0
20,0

22,5

25,0

20,1
18,0

17,8

19,7
16,9

15,0

10,0

5,0

Carlos Andrs
Prez II
1993
24.0

Rafael Caldera II
1998
20.3

11,1

Hugo Chvez

9,6 9,2

7,4

2008
7.4

0,0

The Millennium Goal was achieved in 2007, standing at 11.1%.

Source: Statistic National Institute of Venezuela

47

Oil Income as % Total National

Income
1985-2010

E7 Workshop Renmin University

Delegation of Venezuela

68,8

75

70,1

75,4

46,5

48,7

48,9
39,0

42,8

44,1

41,0

38,5

41,5

48,4

46,6

25

24,7

22,6

35

25,1

31,7

36,2

37,0

45

40,4

44,3

51,1

52,1

52,6

55

57,9

65

2010 d

2009 c

2008 b

2007 a

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

15

Fuente:ONAPRE.
a Cifras realizadas de enero a septiembre, provisionales de octubre a diciembre.
b Cifras provisionales de enero a diciembre.
c Cifras provisionales enero a agosto, estimadas septiembre a diciembre
d Proyecto de Ley de Presupuesto.
Clculos propios

Source: National Budget Office

Interest Rates Six Major Banks

1998-2010

E7 Workshop Renmin University

Delegation of Venezuela

%
61,78

65

53,89

55

Perodo Presidencial
Hugo R. Chavez F.

45,21
42,46

45
34,06 35,12

40,24
38,02

37,22

38,98

35
30,20

25

37,08

31,89

35,00

28,29

26,85

31,27

23,91

17,06

18,90
15
5

12,69

14,13

20,61

16,77 16,55

17,58
14,80

14,62

22,77

24,05

24,79

16,69

16,35
12,93

8,95

11,74

14,60

10,89

Tasa Activa

2010*

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

-5

Tasa Pasiva

Fuente: Banco Central de Venezuela.

(*) Tasas correspondientes al 01/10/2010.
La tasa Activa y Pasiva corresponden a la tasa promedio de los seis pricinpales bancos del pas.
La tasa pasiva promedio equivale a la pagada por los depsitos a 90 das.

Source: Central Bank of Venezuela

48

Government Expenditure as % GDP

1980-2009

E7 Workshop Renmin University

Delegation of Venezuela

28,8
27,6

24,5

25,4

29,5

28,4

2005

31,0
28,4

29,4

2004

21

22,6

23,1
21,2

20,9

21,9

22,5

23

23,7

25,1

26,2

26,1

1986

26,4

26,1

23,6

25

1985

25,4

27

26,5

27,7

29

27,3

29,3

31

29,6

31,6

33

32,6

%
35

19
17

2008

2009a

2007

2006

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1984

1983

1982

1981

1980

15

Fuente: Oficina Nacional de Presupuesto-Banco Central de Venezuela-Clculos prpios.

Nota:El PIB 2009 son estimaciones del BCV.
a

Cifra estimada al 31/12/2009

Source: Central Bank of Venezuela

Primary Fiscal Deficit/Surplus

1998-2009

E7 Workshop Renmin University

Delegation of Venezuela

SUPERVIT O DFICIT PRIMARIO

SUPERVIT O DFICIT FINANCIERO

6,2

4,09
0,6

0,17

0,74

2,47

3,7

4,0

4,45

5,4

7,1

7,5

10

-2,7

-1,2

-1,0

-6,7

-4,59

-8,2

-8

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

-10

2009

-6

-4,49

-4

-2,67

-1,49

-1,48

-1,4

-2

-1,2

Fuente: Ministerio del Poder Popular de Planificacin y Finanzas

Sector Pblico Restringido conformado por: Gob Central Presupuestario, PDVSA, muestra de Emp. Pblicas No Financieras, IVSS,FOGADE. Se incluye la
EDC y CANTV dentro de la muestra de Emp. Pblicas No Financieras y operaciones relacionadas con el proceso de compra de Empre sas por parte de Gob.
Central Presupuestario y PDVSA.
Nota: Supervit-Dficit Primario No incluye obligaciones por deuda - Supervit-Dficit Financiero es Ingresos Totales menos Gastos Tota les y Concesin Neta

Source: Central Bank of Venezuela

49

Venezuela's Population
1950-2050

E7 Workshop Renmin University

Delegation of Venezuela

Hombres

Mujeres

Hombres

Mujeres

Hombres

Mujeres

Source:
Statistical
National
Institute
Fuente:
Instituto
Nacional
de Estadstica,
INEof Venezuela

Venezuela's Population
Millions
1950-2050

E7 Workshop Renmin University

Delegation of Venezuela

41,0

33,0

19,7

10,7

Fuente: Instituto
Nacional
de Estadstica,
Source:
Statistical
National
InstituteINE
of Venezuela

50

E7 Workshop Renmin University

Delegation of Venezuela

Life Expectancy by Gender

1988-2010

Mujeres

Hombres

Fuente:
Nacional
de Estadstica,
INE
Source:Instituto
Statistical
National
Institute
of Venezuela
E7 Workshop Renmin University
Delegation of Venezuela

Birth & Mortality Rate

1891-2006

Birth
Rate

Mortality
Rate

Source: Statistical National Institute of Venezuela

51

E7 Workshop Renmin University

Delegation of Venezuela

Potable Water Access

% People
1990-2009

Fuente: Ministerio
del Poder
PopularInstitute
para el Ambiente
Source:
Statistical
National
of Venezuela

52