Ma. Theresa A.

Aclan February 13, 2021

45022 IBT (2:00-3:00 MWF)

CRITICAL THINKING AND DISCUSSION

1. Free market economies stimulate greater economic growth, whereas state-directed economies stifle growth.
Discuss.

It is said that free market economies produce more growth because their economies are directed by the forces of
demand and supply. These market is minimally controlled by the government which is an advantage. The market is moving
freely which leads to prosperity. Unlike state-directed economies, they are experiencing slow growth since they are
controlled by its own government in which even their revenues and resources are systematized by the state.

2. A democratic political system is an essential condition for sustained economic progress. Discuss.

Nothing will prosper or undergo progress if it will still be controlled by anyone. It is said that economic freedom
leads to economic growth. Therefore, a political system that is operating democratically, performing for the best interest
of the nation, not in contravene of public policy will sure result to a sustained and outstanding economic progress.

3.
a. Under Chavez's leadership, what kind of economic system is being put in place in Venezuela? How would you
characterize the political system?

The economic turn out in its lowest stage. Under his administration, the democratic socialist system has been implemented.
The political system has been overpowered. Chavez took advantage of the power and support that he has to control the
economy.

b. How do you think that Chavez's unilateral changes to contracts with foreign oil companies will affect future
investment by foreigners in Venezuela?

When it comes to the oil that Venezuela has, Chavez decided to stop the exportation and sell the oil domestically.
This move will result to country’s shortage of resources. Investing on oil in Venezuela will become a bad decision which
will provide disadvantages only for the country.

c. How will the high level of public corruption in Venezuela affect future growth rates?

Any act that involves corruption in a nation will obviously turn out into something unpleasant that will surely affect
the economy. Investment is one important factor that contributes to the growth of a nation’s economy. Any investor would
disagree in investing in Venezuela since they are aware of the corruption happening. Future growth rates for the country
would be difficult to achieve.

d. In your estimation, what is the long-run prognosis for the Venezuelan economy? Is this a country that is attractive
to international business?

Based on the article presented, I think of Venezuela as a country to avoid if I will enter any international business.
It will took them a lot of time to regain the trust and achieve the growth that is enough for a country to be considered a good
investment in the international field. Chavez’s administration has truly leave an impression for Venezuela as an unappealing
country.