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October 08, 2012

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NKR

Comparing Venezuela and Brazil's economy isn't necessarily the best way to measure Venezuela's economic performance. Venezuela has a nice trade surplus and relatively low levels of public debt and debt service. Few are projecting a long-term decline in oil prices so Venezuela’s economic growth could continue for years. They're sitting on what's probably the world’s largest oil reserves, about 500 billion barrels, and is currently using about one billion barrels per year. Inflation has been falling even as growth has accelerated. I wouldn't say any of this fits in the category of under-performance.

It's also worth noting that since the Chavez government got control of Venezuela’s national oil industry, poverty has declined by half and extreme poverty by 70 percent. Access to health care and education have been increased substantially, with college enrollment doubling. Eligibility for public pensions has quadrupled, and in 2011 the government started a major housing program that has already seen 250,000 new homes built. Not too shabby for the working man.

A little more on Venezuela's economic performance:
http://www.cepr.net/documents/publications/venezuela-2012-09.pdf

Mark Byron

The poverty-fighting numbers are impressive, and GDP has risen nicely in the last few years thanks to spiking oil prices. However, the oil industry has become relatively inefficient, seeing a decline in barrels produced; Chavez ran off a lot of foreign investment and managers both foreign and native who weren't part of his party.

That loss of human capital has hindered the oil industry, which drives the Venezuelan economy. They have little national debt compared to a lot of other developing countries, so Chavez has the luxury of being a bit sloppy with the oil wealth.

Giving the oil producers a longer leash might make things more productive without giving up the efforts to lift up the poor; let the oil people make the money, then Chavez can spend it on the needy, if he's looking out for the country's best interest rather than his party's best interest. However, Chavez seems to think that the two are one and the same.

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