The Economic Systems of Venezuela - Research Paper Example

Abstract

The evaluation of the comparative analysis of the economic systems of Venezuela incorporates the comprehensive assessment of various socioeconomic parameters including the levels of poverty, unemployment, GDP and Per capita, Economic growth, food shortage and also the health system. The research seeks to establish a comparative view of the best timed and the current which is worst timed economic system. The research also entails the review of the theoretical literature to provide the substantial foundation of knowledge on the economic systems. A qualitative research approach was utilized whereby data collected through publications and journals relating to the economic system and the respective paradigms. The study finds out that the systems have considerably fallen and it is at risk of collapse courtesy of some reasons top among them being the failure of the political system. The economic indicators depict the worse situation in the country, Latin America region and the world.

Introduction

Venezuela is one country nation that has enjoyed economic prosperity in the past and by a great measure in South America. As a stable economy, Venezuela racked up a great performance in socioeconomic measures, trade and an excellent financial system. Nonetheless, in the recent past, Venezuela has soared intensively and is on the verge of collapsing. Venezuela ranks at position 179 in the global economic ranking. The description attributable to the economy has turned to a crisis state. The country economy has sprouted as the index of hyperinflation, food shortage, financial crisis, soaring crime and health system failure (Lander, 2005). The rapid fall of the Venezuelan economy links to inefficient economic policies that have slowly taken down a once stable economy to rags (Di John, 2005). Presently, Venezuela is the subject of economic crisis not only in South America but globally.

The Venezuela economy is an economic disaster and comparatively, raises a lot of questions regarding what transpired to the nation. The country indicates shocking statistics regarding its important indicators of economic performance. The political system is in jeopardy following the incorporation of military and chaotic administration. The state’s health system is at the lowest level and fails to accommodate the health needs of the country (Gillespie, 2017). As a result, the onset of chaos concerning the dictatorial governance as well as health crisis paves the way to more traumatic fall in other socioeconomic pillars. Venezuela fell from a considerably stable economy with sufficient food for its citizen, well-organized health and financial system, democratic administration, high-security standards and substantial economic growth index. The translation is rather shocking and necessitates the evaluation into the economic slump that hit the country hard (Di John, 2005).

The research objective is to achieve a definitive solution to the comparative analysis of the stable economy and the shambolic economy of Venezuela. The research objective substantially concerns providing a crucial understanding and possible solution to the relative economic slump of Venezuela. First, the study rests on the investigation on how the economic growth of the country has gone from a positive, improving figure to a worsening decline in the recent years. The research also incorporates an evaluation of the health system which has fallen to the worst levels ever. The other objective is to establish the direct factors attributable to the collapse of the Venezuela economic system as compared to an active and well-established system in the past. The purpose of the research ensures that the appropriate hypothesis is developed to facilitate the provision of an authentic research which can be utilized in the future.

Research Structure

The research structure entails the composition of five chapters that address different concept but cumulatively provides information regarding the research topic. The first chapter introduces the subject of research by articulating essential information about the research topic. The chapter also articulates the objectives of the research which provide guides for the research. The second section encompasses the literature review whereby different publication and literature sources are reviewed to establish a backbone of information concerning the research topic. The third chapter articulates the methodology applied to the collection and analysis of authentic information on the research subject. The fourth chapter articulates the results and analysis of the information collected in chapter three. The last section addresses the conclusion and recommendations basing on the results of the research study.

Literature Review

The review of the literature provides an essential information background concerning the topic of study. The review of past publication and literature augments the scope and relevant details concerning the provision of a credible and substantially relevant term paper. The state of economic failure and collapse in Venezuela has led to numerous investigation concerning the shocking details about the decline of the economy (Weyland, 2003). The different research papers have taken different perspectives regarding the causes, effect and the future of the Venezuelan economy. Notably, the shocking statistics behind the comparative devour of a robust and stable economy lays the foundation for evaluating the fundamental details concerning the economy (Di John, 2005). The literature review hence postulates crucial information on various aspects indicating the slump of Venezuela economy and the possible worsening of the economic havoc.

The general assumption for the drop in economic performance for Venezuela would be the occurrence of civil wars. The assessment of the country’s economic statistics poses worse than countries hit by the calamity of civil war. In the past year, the economy recorded an economic decline of 10% which is even than that of Syria in the same period. Moreover, a slump on the GDP of up to 19% is also evident (Gillespie, 2017). The economy posts the worst inflation rate in the world of 200% which is hugely differing with the second rank of the newly established South Sudan nation. The hyperinflation rate in the economy renders the country’s currency almost worthless and the worsening goes on (Di John, 2005). The state of security has soured whereby the state has a higher murder rate close to a war hit nation.

The state of the economy is shambolic, and it is more likely to continue performing poorly as far as it goes. The country hugely relied on oil reserves which highly contributed to the country’s revenue (Karl, 1987). Moreover, the revenue from oil production was invested in developing social programs including health and food production. However, the country’s economy started to feel apart upon the decline of oil prices considering oil production as the primary economic activity. Additionally, the country also run out of cash reserves which further fueled the economic slowdown and ultimately the massive slump of socioeconomic pillars such as health and food security (Weyland, 2003). The rate of economic growth started to decline as well as the unemployment escalating at an astonishing rate. The rate of inflation also shot, and the economy records a hyperinflation rate and also a high unemployment rate of 20%.

Venezuela economy has also been a subject of political system failure with a devastating fall of the Democratic administration to the hands of bureaucrats (Karl, 1987). The citizens of the Venezuela has taken to the street to oust bad governance which has been pivotal in the fall of the once a remarkable performing economy. The country is plagued by high violence and crime rates attributable to lack of proper security management in the country (Roberts, 2003). The state of political chaos further jeopardizes the safety of the country for its citizens and indicates the failure of the government to deliver on the socioeconomic mandate. Comparatively, the changes in regimes mostly through chaotic military actions have played a vital part on the sweeping down of the country’s economy to the lowest levels (Karl, 1987).

The health system is in despair as the state of health serves has continually deteriorated to the lowest level. The health system in the country fails to offer any meaningful assistance to its citizens as it has crashed at the expense of poor management (Gillespie, 2017). Comparatively, the economy of Venezuela has been dealt blow after blow, and the evidence is quite clear. The entire system is in critical shape and without the proposition for reconstruction, the country is headed for greater trouble (Gillespie, 2017). The country is in trouble and plagued by a huge number of deaths as a result of the failure of the health system. Moreover, the poor management in the health sector translates to a calamity in waiting and the health of the nation is in question if the conditions worsen.

The financial system has also seen the better of days and is in a state of crisis. Venezuela financial shape is in great despair, and the massive depreciation of the currency indicates a financial system in trouble (Weyland, 2003). In the past two years, the nation has deteriorated from one dollar for 100 bolivars to the current one dollar for 1260 bolivars. The once stable financial system has crumbled and ranked amongst the worst in the world. Moreover, the country records the lowest standards of living in record history which translates to an extreme decline in the socioeconomic status of the country (Roberts, 2003). Cumulatively, Venezuela is nowhere close to its previous glories with respects to the economic performance and the subsequent repercussions on the citizens. In comparison to the previously established and stable economy, Venezuela has turned to world’s worst economy and a massive laughing stock especially in South America (Roberts, 2003).

Methodology

The term paper incorporates a qualitative approach in the assessment of fundamental parameters relating to the slump of sustainable economic growth and health system in Venezuela. The research integrates the information collected through primary and secondary data tools which include reports from the international monetary fund (IMF), World Health Organization (WHO) and World Bank. The research also utilizes peer-reviewed journals and literature to derive qualitative information which proves essential in understanding the research parameters. The research also faces a geographical and time limitation constraints resulting to the utilization of qualitative sources. The qualitative approach envisions a comprehensive analysis of information pertaining to the economic growth and health system slump in Venezuela between a great period of prosperity and the subsequent period of turmoil.

The information concerning the economic growth relates to the data on inflation, GDP, currency valuation, unemployment as well as general economic growth statistics. Notably, the economic statistics in questions alludes to the economic performance in the 1970s and as recent economic performance as 2016. The shocking decline in integral economic parameters constitutes numerical statistics as well as graphical information. Moreover, the individual economic parameters attribute to the rating of the economic capacity of the country. The numerical statistics includes financial figures and percentages which depict a synthesized format of the economic performance indicators. The identification of specific rates of employment, inflation, poverty levels and growths represents the typical measures for an economy and hence essential in the evaluation of relative economic growth in Venezuela.

The statistics on the health systems are also indispensable in the comparative analysis of the good times and poor times of the Venezuela economy. Health system is a fundamental socioeconomic pillar of the economy. The health system is evaluated on the merits of health indicators of the society including clinical statistics on mortality, birth, as well as the quality of health services in the country. Moreover, the health system analysis incorporates the use of percentages, charts, and numerical statistics. The measure of health system efficiency establishes the ability of the country or economy to engage in economic production actively. Venezuela health system has also been subject to slump and consequently the financial capabilities of the economy. The comparison of the health system in between the best and worst status of the economy provides an in-depth perspective of the shift in paradigms of socioeconomic issues in Venezuela.

Results and Analysis

To start with, the level of inflation has significantly escalated beyond control whereby the effect of hyperinflation has led to the loss of value of the Venezuelan currency. Notably, the rate of inflation in the economy has escalated immensely to rank the worst inflation levels in the world. The level of money circulation in the economy has soured whereby the economy is flooded with black market control (Weyland, 2003). The eclipsing of the inflation to extreme figures came into being by the failure of the government to control money circulation. Venezuela comprises of four exchange systems which include two under the control of the government, a black market and another one introduced by Maduro’s government. The inflation rate has escalated immensely standing at 7.2% in 1978 then rising to 81% in 1989 and currently stands at 700%.

Figure 1: The inflation fluctuations in Venezuela (1980-2015)

The statistics on the GPP and per capita income of Venezuela have also declined astonishingly over time indicating the deteriorating economic performance of the economy. Venezuela hugely relies on oil production and enjoyed great times in the 1960s and 1970s. In the earlier years, the production of oil fetched massive revenues which would otherwise be invested in socioeconomic programs such as health and food security. However, the souring of the oil prices significantly cut down on the revenues and the GDP of the country. The translation in the political system in Venezuela have escalated the steady decline in GDP down to the lowest levels (Karl, 1987). Moreover, the per capita income of the nation has also decline inevitably indicating the deterioration of the country’s productive capacity. The state fails to recover from the unexpected oil prices shock and inevitably reported lower and lower GDP amounts.

Figure 2: GDP Levels of Venezuela (1950-2016)

Evidently, the economy of Venezuela has the highest unemployment and also the poverty levels. The citizens of Venezuela have faced the wrath of unemployment and poverty following the falling performance of the economy. Notably, a rise from 36% to 66% of the population living below the poverty line was recorded in 1995 while the rate of unemployment presently stands at 17% and expected to 20% in the near future. The high level of unemployment and poverty levels significantly differs from the stats of a more stable Venezuela where a better portion of the population was in active employment and living above the poverty line. The deteriorating economic performance of the country has given rise to socioeconomic problems, and the poverty levels and unemployment are clear indicators. The government has continually failed to provide a solution and contributed to the fall of the economy to be one of the worst in the world.

Figure 3: Poverty rates of Venezuela (1997-2013)

The rate of economic growth for Venezuela is at currently worst whereby the country is failing beyond recovery point. According to IMF, the country has a negative eight growth rate which depicts poor performance of the economy. The economy has come down crumbling at the hands of poor and dictatorial governance (Roberts, 2003). The political system ultimately adopted a social approach which further accelerated the burden of oil prices shocks in the country. Continually the economy has experienced negative growth and the accumulation of other economic parameters, Venezuela economy is lurking in a great zone of collapsing. Notably, the economic system has come crumbling, and the inefficiency of the financial system sums up the economic crisis currently facing the country. Moreover, the central bank of the country has run out of cash where it only has a foreign reserve of $10.4B and a debt of $7.2B.

Figure 4: The overall score of the Venezuela economy over time (1995-2005)

Venezuela also faces a great problem concerning food shortage and the level of the crime rates in the country. The crime rate has escalated to uncontrollable levels which result to socioeconomic repercussion on the economy. A high crime rate puts at risk the economic engagement in the country and further sabotage the social development of the country. Moreover, Venezuela has run out a mechanism to provide sufficient food to feed the citizens. Food shortage is a critical socioeconomic problem whereby a greater proportion of the economy is starving and ultimately dying of hunger and drought (Gillespie, 2017). The government system has failed and crumbled down the Venezuela economy which may take a century to restore to its previous best. Venezuela’s economic status is at comparably the worst point ever not only in the country but the Latin American region and the world (Gillespie, 2017).

The health system has experienced a significant drop as a sign of poor socioeconomic management in the country. The health system has suffered from a shortage in the supply of medications, funds and poor management in the health sector. The current situation indicates that 85% of the medicine in the country has gone missing translating to insufficient medication in the hospitals in the country. The condition is much critical that patients turn to risky alternatives which further puts the health of the nation at risk all the same. The collapse of the health system further indicates that the country’s economic system is shambolic and in a deep crisis (Tanaka, 2006). It is unfortunate that the citizens of the country have taken to the street to demonstrate the worse conditions of the economy which is solemnly the misdoings of the government and the political system.

Conclusion and Recommendations

In conclusion, the failing and crisis that has seen the recent status of Venezuela economy can be summed as the worst disaster for the country. In comparison to the past few decades where the excellence of the economy was the talk of the Latin America region, Venezuela has been reduced to a shadow of its former status. The unfolding of the political situation is solemnly responsible for the economic crisis. At the hands of the government, Venezuela has negatively transformed from once an economic harbor to a nation in the center of an economic catastrophe that turns worse at the dawn of every day. The country has been reduced to an unexpected decline, and it applies as a learning example for other economies in the world. The rate of the failing of Venezuela has been quite a shock, and the revelation of a possible hack down of the economy is a massive disaster.

The research further recommends for the proposition of research on specific policies and mechanisms that would envision the recovery of Venezuela economy. The identification of the major indicators which are currently at the worst possible levels necessitates the provision of authentic mechanisms for recovery. Moreover, the research also recommends the interventions of international bodies such as IMF and World Bank in the recovery and reconstruction of the economic system of Venezuela. The rebuilding of the economic system cannot be entrusted on inherent ability whereby the country has been incapacitated of its capacity through food shortage, insecurity, poor health system and the collapse of its political system.