Sociología de la empresa

Economic crisis in Venezuela

Venezuela is a country located in Latin America, which for the most part of its
history has been wealthy in economic and cultural ways, to the point of having the
highest GDP of any Latin American country in the 60s, 70s and 80s. However, due
to the terrible resource management from the Venezuelan government, Venezuela
is currently going through deep economic crisis. Former president Hugo Chavez
and his successor Nicolas Maduro are the ones to blame for the current crisis.

Venezuelan crisis began several years ago, from the country’s political history
which includes several dictatorships and civil wars. However, the main reason for
the crisis is, ironically, Venezuela’s natural resources, especially the enormous
crude oil reserves, which were discovered in 1910. These large reserves led the
country to become one of the top exporters of oil in the world and helped pay the
external debt that the country had with the main powers of the time. Even though
oil brought very high income to the country, it did not help improve the quality of life
of Venezuelans, mainly because Venezuela turned into a heavily oil-based
economy, which led to extreme inequality and poverty. In the 60s and 70s high oil
prices allowed the government to nationalize iron and oil, making Venezuela’s
economic growth and GDP the highest in Latin America. This economic growth
only lasted until the late 80s, when oil prices dropped, leading to internal conflicts
and protests, causing many deaths all over the country and thus beginning the
crisis that lasts until nowadays. In 1992 commander Hugo Chavez led a failed coup
attempt, which he was imprisoned for. Later in the 90s Venezuela suffered on the
hands of corruption and bad administrative decisions, until Hugo Chavez created
his own party and ran for president in 1998 with a socialist government plan that
promised to distribute wealth among the lower classes and the creation of social
programs aimed to eradicate poverty. With him in the hearts of millions, he was
elected president again in 2002. One of the main policies of his government was
the democratization of the work in PDVS, the state-run company that extracts oil,
which led to the number of jobs to grow four times while producing the same
amount of oil barrels; in other words, the number of jobs was increased to show
that the policies were working, but they were not actually increasing the production
levels. Chavez’s government also implemented an assistance model which helped
build housing, increase pensions and access to primary attention. This model,
however, was possible thanks to the high oil prices, which financed all these
programs that reduced extreme poverty from 60% to 30%. Oil was so profitable
that Venezuela’s entire economy was based on it. This way Chavez earned the
love and trust of millions, legitimating his management as president, which lasted
until March 5 of 2013, when he died of stomach cancer, and new elections were
held. Nicolas Maduro, Chavez’s right hand was elected to continue with his legacy
and his government plan, even though he didn’t have enough qualifications to
assume the position. At this point, 95% of the country’s economy was supported by
oil exports, which allowed Maduro to continue doing what Chavez had started. This
could only continue until 2014, when oil prices dropped considerably, and thus
began all the problems Venezuela is currently going through. The government’s
main source of income was cut short, and with very little private investment from
companies there was not much collected from taxes. With this in front of him,
Maduro took the terrible decision of printing more money to generate liquidity for
government expending. The results were disastrous: Venezuelan bolivar devalued
and inflation rates became the highest in the globe. To make everything worse,
Maduro created a price control policy, which only achieved to make black market
stronger and bigger. Crisis has reached nearly uncontrollable levels, which led
millions of Venezuelans to emigrate to other Latin American countries, which could
also generate migration crises in these places, since they are not prepared to
receive this many people in such a short time. Over 500.000 companies have
closed due to all the problems the country is going through, which made the crisis
bigger, and since there’s not enough private investment there are no taxes to be
collected by the government, all while unemployment increases. While doing
business in Venezuela is not easy, since it takes around six months to start a
company, some foreign companies have managed to adapt to the country’s
economic landscape, such as the Colombian firms Mario Hernandez, Alpina and
Colsanitas. These problems do not have a short term solution, and will need the
intervention of the world powers to be solved in a way that brings back quality of
life for all Venezuelans.

In conclusion, all along history Venezuela has had many inconvenient, and even
though the country is rich in resources, the economy was mostly mismanaged
through concentrating most of the country’s income into one economic activity: oil
extraction and export, in a textbook example of Dutch Disease. When oil price
dropped, Venezuela faced the worst crisis in its history and in an attempt to solve it
the current government took a series of bad decisions which made everything
worse.

Bibliografía
CNN. (2016). 5 razones por las que Venezuela está en crisis económica | CNN, from
https://cnnespanol.cnn.com/2016/01/19/5-razones-por-las-que-venezuela-esta-en-crisis-
economica/

El Tiempo. (n.d.). Causas que llevaron a Venezuela a la crisis - Internacional - ELTIEMPO.COM. from
https://www.eltiempo.com/mundo/causas-que-llevaron-a-venezuela-a-la-crisis-84652

Dinero. (2018). Empresarios colombianos continúan en Venezuela pese a crisis. Retrieved

September 8, 2018, from https://www.dinero.com/edicion-
impresa/negocios/articulo/empresarios-colombianos-continuan-en-venezuela-pese-a-
crisis/256341

Semana.(2018);VENEZUELA ATRAVIESA LA PEOR CRISIS DE SU HISTORIA; from

https://www.semana.com/economia/articulo/venezuela-atraviesa-la-peor-crisis-de-su-
historia/24955-3
El Nacional. (2017). Consecomercio: 500.000 empresas han cerrado en Venezuela. from
http://www.el-nacional.com/noticias/economia/consecomercio-500000-empresas-han-cerrado-
venezuela_179572

Redacción Internacional. (2017). Así llegó Venezuela a la crisis de hoy | ELESPECTADOR.COM. from
https://www.elespectador.com/noticias/el-mundo/asi-llego-venezuela-la-crisis-de-hoy-articulo-
689861

LA CRISIS DE VENEZUELA- YouTube. Retrieved from

https://www.youtube.com/watch?v=72s1ZkHjzEA

VENEZUELA: razones de su colapso - YouTube. Retrieved from

https://www.youtube.com/watch?v=8sxXYuhWF1s