County Differences: Chavez’s Venezuela The kind of economic system that is being put into place in Venezuela, under Chavez’s leadership is a command economic system. This has to do with Chavez’s hold over the government and wanting the government to distribute resources for the country. This has also helped Chavez have a hold over the court systems and how they operate. Another reason Venezuela is seen as command economic system under Chavez is because he controls the media. The independence that the Venezuelans have is seen as being gradually reduced.
Another example is the fact that the economy is being ruled by the Venezuelan Government. The Venezuela economy wasn’t great because of the high numbers in unemployment in the country and the shrinking of the economy. By Venezuela businesses being regulated there is plenty room for city bureaucrats to improve themselves by demanding kickbacks in return for authorization to help increase businesses. I would characterize Venezuela’s political system as being a part of socialism. Reason being is because Chavez’s himself considers Venezuela being reformed to be “Socialism of the 21st Century”, I think that this saying speaks for itself. Hill, 2009, p. 41) Socialism can be defined as, “a political philosophy advocating substantial public involvement, through government ownership, in the means of production and distribution. ” (Hill, 2009, p. 713) Socialism is the political system of Venezuela because of the inequality with the majority of the income in the country. I think that Chavez’s unilateral changes to contracts with foreign oil companies will impact upon future investment by foreigners in Venezuela because it might hurt his chances of getting more business.
Reason being is with the “Bolivian Revolution” as a model for other countries to follow. (Hill, 2009, p. 41) Chavez has already become panicked and decided to broaden the government power over foreign oil manufacturers that does business in Venezuela. Another thing is that with raised government fees on oil it has Chavez distancing himself by cutting out the foreign companies’ chances in the oil developments. The high level of public corruption in Venezuela will impact future growth rates because it will become reduced.
The corrupted politicians in Venezuela are drawing off profits and not caring what happens in the process. Another issue that’s happening is that because of the drawing off profits it’s causing a reduction with the returns to business investments. For this very reason it’s also reducing the reason of both the domestic and overseas businesses to invest in that country. Corruption in Venezuela will always exist as long as Chavez is in office. Also, Venezuela is seen as a perk of office and many people are turning the other way because no know one wants to stop it instead they are glorifying corruption.
I came across an article called The Corruption of Democracy in Venezuela, which goes into details about the long history that the people of Venezuela have seen even before Chavez came into office. For example, while Chavez has been in office there have been three areas of corruption that has stood out the most. Coronel stated that, “bureaucratic corruption, at the level of the government bureaucracy; and systemic corruption, taking place at the interface between the government and the private sector”. (Coronel, 2008, p. ) I think that in the Venezuelan economy will soon be in ruins. This country is run by a socialist and there aren’t any plans on changing it any time soon. One has to wonder, if the corruption in this country will ever stop. At this point, it’s hard to tell. Even though Venezuela seems to be benefiting from a boom in the oil prices, I see a lot of consequences if the oil prices retreat from their current high level. If this were to happen Venezuela would see weak essentials for this country. It would cause Venezuela’s oil inventory to remain overfilled.
This would mean that the supply for oil would outweigh the demand for oil. Another consequence if the oil prices retreated that would mean a loss of income for Venezuela because that’s majority of the income that helps keep the government afloat. There was an article that I read called, Stocks Rebound As Oil Prices Retreat, there was information in there that related to oil retreating situations. It mentioned how the stock market would be affected and how the economy would attempt to recover from this if it were to happen.
My prediction for Venezuela is that this is a country on the verge of collapse. I think that if Hugo Chavez is continues to run the country then the poverty level will increase. There doesn’t seem to be a clear plan on helping the country to run smoothly. Just with the corruption alone, it makes me think about how Chavez is only looking out for himself and his inner circle. The Venezuelan economy is supposed to be helping the people instead it seems that they will continue to take from the people which will result in very high rate of unemployment and lack of health care.
Venezuela isn’t a county that’s attractive to international businesses just for the simple fact with Chavez ruining things and taking basically total control of the government’s profits that it makes from oil transactions. Another reason this country isn’t attractive when it comes to international businesses is because Hugo Chavez went ahead and started increasing the government tax rate to 50% which is a huge amount. (Hill, 2009, p. 41) References Bureau of Western Hemisphere Affairs. (2010, February). Retrieved July 5, 2010 from http://www. state. ov/r/pa/ei/bgn/35766. htm Coronel, G. (2008). THE CORRUPTION OF DEMOCRACY IN VENEZUELA. USA Today Magazine, 136(2754), 66-69. Retrieved from Academic Search Premier database. Hill, C. W. (2009). International business: 2009 custom edition (7th ed. ). New York: McGraw-Hill/Irwin Matt, K. (n. d). Stocks rebound as oil prices retreat. USA Today, Retrieved from Academic Search Premier database. socialism. (n. d. ). Dictionary. com Unabridged. Retrieved July 08, 2010, from Dictionary. com website: http://dictionary. reference. com/browse/socialism