Master of Quality Management

Exam Part 1 - Chavez’s Venezuela

(Case Study): Dec 2023
Lecturer name: Dr. Ibrahim
Rostom
Course Name: Global competitiveness

Student name: Moataz

Radwan
Student ID: 22129180
 Exam Part 1 - Chavez’s Venezuela
( Case Study )

a) What is the political system used in Venezuela? Explain your

answer.
Venezuela underwent a transformation under Chavez, transitioning from a presidential democracy
to a more authoritarian system with socialist undertones. While maintaining the semblance of
elections, Chavez concentrated power by:

- Formulating a new constitution that fortified the presidency and permitted extended terms.

- Exerting control over the legislative and judicial branches through the dominance of his
supporters.

- Expanding government influence over media, curbing freedom of expression.

These actions indicate a move towards hybrid political systems or competitive authoritarianism,
wherein some democratic facets, like elections, persist, but authority is consolidated and dissent is
curtailed.

b) What is the economic system used in Venezuela? Explain your

answer.
Venezuela, during Chavez's tenure, shifted from a mixed economy towards a more command
economy with socialist characteristics, evident in key indicators such as:

- Nationalization of vital industries like oil and utilities.

- Growth of state-owned cooperatives and increased control over businesses.

- Government oversight in resource allocation and price determination.

- Augmented government expenditure on social programs.

These indicators signify a system heavily reliant on state control and intervention, diminishing the
role of free market mechanisms and private ownership.

c) From your opinion what is the reflection of these systems

(mentioned above) on international business? Explain your answer.
The political and economic transformations under Chavez had several implications for international
business:

- Amplified government intervention and regulatory control over industries and resources made it
challenging for foreign businesses to operate freely.

- Risks associated with nationalization and asset seizures raised concerns regarding property
rights and potential losses for foreign investors.

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 - Restrictions on currency movement posed difficulties for foreign businesses in repatriating
profits.

- Authoritarian tendencies and political instability fostered uncertainty, impeding long-term

investments.

Collectively, these factors generated an unfavorable environment for international business in

Venezuela, discouraging investments and constraining opportunities. Chavez's anti-American
stance and affiliations with left-wing governments strained relations with certain Western countries,
further influencing economic and political engagements. The volatile nature of an economy overly
dependent on a singular resource, exemplified by the boom and bust of oil revenue, underscored
the challenges of financing social programs through unsustainable spending.
Challenges:
1. Heavy reliance on oil exports made Venezuela vulnerable to global oil price
fluctuations, affecting the country's fiscal health.

2. Economic mismanagement and policies such as currency controls contributed to

hyperinflation, undermining macroeconomic stability.

3. Nationalization of key industries raised concerns about property rights and

deterred private sector investment.

4. While social programs aimed at poverty reduction were initiated, their sustainability
was questionable due to economic mismanagement.

5. Erosion of democratic institutions and concentration of power raised concerns

about political stability and the rule of law.

6. Tensions with the United States and an anti-U.S. foreign policy affected global
trade relations.

7. The migration crisis resulted in a significant brain drain, with skilled professionals
leaving the country.

Opportunities:
1. The need for economic diversification and the development of non-oil sectors to
enhance resilience and global competitiveness.

2. Emphasizing the importance of sound macroeconomic policies to attract foreign

investment and foster a stable business environment.

3. The importance of creating a business-friendly environment to encourage

entrepreneurship, innovation, and private sector development.

4. Recognizing the importance of social development and human capital in enhancing

a country's global competitiveness, with a focus on sustainable social policies.

5. Highlighting the critical role of political stability and transparent governance in

attracting foreign investment and fostering a competitive business environment.

6. Emphasizing the importance of diplomatic relations, trade agreements, and a

cooperative approach for fostering global economic integration.

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 7. Recognizing the importance of retaining skilled talent and creating conditions that
encourage professionals to stay and contribute to national competitiveness.

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