Historical Overview
Geographically,
Dissatisfied with
the Spanish involvement in local politics, in the 19th century the
country's creole population initiated a drive for
freedom. Although independence is celebrated on the fifth of July (based on the
1811 charge led by Simón Bolívar) it was not until 1821 that Bolívar became the
leader of a
The next one
hundred years were fraught with numerous caudillos and the reign of various
dictators. In 1958, the first elected government came into being. The most recent change came about when
Government
Due to recent
political upheaval, in a recent United Nations visit with Hugo Chavez, Kofi
Annan stated, “I hope those who seek to bring about change in
The National Assembly is unicameral and represented proportionally by deputies from each electoral district. The original creole inhabitants are also granted three Deputies under the new Electoral Law.
Citizen empowerment has been provided by the Republican Moral Council, which consists of the People’s Defender, the Public Prosecutor, and the General Accountant. Their job is to “observe, prevent, investigate and penalize acts against the public ethic and administrative moral and oversee the legality of the use of public fund.”[5]
General Statistics
The
major industries in
In
the past ten years, the population growth rate in
With
regard to unemployment,
The
Gross Domestic Product growth of
Inflation
over the past decade has experienced dramatic rises and falls, going from a (by
comparison) moderate 38 percent in 1993 to over 100% in 1996. In 2001
The Venezuelan population is young: 12.6% are under 4 years of age; 23.6% are between 5 and 14 years, 55.5% are under 25, and 4.1% of the population is 65 or older. The last group, however, is growing faster than that of the general population – a situation that could lead to difficulties in the future. Life expectancy at birth in 1995 was 72.2 years (69.3 for men and 75.1 for women).[8]
Some additional
statistics, as provided by the World Bank, may be found on the following page:[9]
|
1997 |
2000 |
2001 |
People |
|||
22.8 million |
24.2 million |
24.6 million |
|
2.1 |
1.9 |
1.9 |
|
.. |
.. |
.. |
|
72.8 |
73.3 |
.. |
|
3.0 |
2.8 |
.. |
|
21.0 |
19.4 |
.. |
|
25.2 |
23.8 |
.. |
|
5.1 |
4.4 |
.. |
|
86.1 |
86.9 |
87.2 |
|
7.7 |
6.9 |
6.7 |
|
9.1 |
7.9 |
7.6 |
|
Environment |
|||
912.1 thousand |
912.1 thousand |
912.1 thousand |
|
.. |
495.1 thousand |
.. |
|
.. |
0.4 |
.. |
|
.. |
35,002.1 |
.. |
|
6.6 |
.. |
.. |
|
.. |
84.0 |
.. |
|
Improved sanitation facilities, urban
(% of urban population with access) |
.. |
75.0 |
.. |
2,254.4 |
.. |
.. |
|
2,567.8 |
.. |
.. |
|
Economy |
|||
80.2 billion |
104.2 billion |
117.2 billion |
|
3,520.0 |
4,310.0 |
4,760.0 |
|
88.7 billion |
121.3 billion |
124.9 billion |
|
6.4 |
3.2 |
2.7 |
|
38.4 |
27.6 |
6.8 |
|
4.4 |
5.0 |
5.0 |
|
43.1 |
50.7 |
50.4 |
|
52.4 |
44.3 |
44.6 |
|
28.4 |
28.4 |
22.7 |
|
21.7 |
16.3 |
17.6 |
|
21.0 |
17.2 |
18.7 |
|
23.6 |
19.7 |
.. |
|
2.2 |
-2.1 |
.. |
Technology and infrastructure |
|||
168.7 |
325.3 |
.. |
|
Telephone average cost of local call
(US$ per three minutes) |
0.1 |
0.1 |
.. |
34.8 |
45.5 |
.. |
|
90,000.0 |
950.0 thousand |
.. |
|
33.6 |
.. |
.. |
|
72,700.0 |
138.5 thousand |
.. |
|
Trade and finance |
|||
40.8 |
39.7 |
.. |
|
83.6 |
94.0 |
.. |
|
2.0 |
3.0 |
.. |
|
110.0 |
.. |
.. |
|
Foreign direct investment, net
inflows in reporting country (current US$) |
5.5 billion |
4.5 billion |
.. |
.. |
38.7 billion |
.. |
|
32.3 |
15.7 |
.. |
|
4.2 billion |
1.8 billion |
.. |
|
0.4 |
3.2 |
.. |
Oil Background
Oil exportation
began in the early 1920s, making
An OPEC member,
In the late
mid-nineties, when oil prices fell, so did the Venezuelan economy. This crisis
led to the eventual governmental reorganization. The economic recovery from the
1999 recession was hampered due to a weak non-oil sector, capital flight, and a
continued fall in oil prices. However, a period of reduced price volatility was
achieved when
In order to prevent future oil price induced recession, the government created the Macroeconomic Stabilization Investment Fund. Portions of the petroleum revenue are deposited into this fund whenever the price rises above $9 per barrel. The idea was to create a fiscal safety net that can be utilized when prices fall.[14]
Oil strike
In November 2001,
President Chavez enacted a new law that makes the government the majority
partner in any new energy venture in
The
Trade and FDI Summary
From the viewpoint
of the
U.S. Foreign
Direct Investment (FDI) in
Foreign investors receive relatively low tariffs and a competitive tax rate. New legislation designed to draw in foreign investment, has increased investment opportunities. Additionally, there are no capital repatriation limits, no profit transfer limits, and no prior authorization requirements for investment. Lastly, foreign companies are not treated any differently from their domestic counterparts.[21]
In early 2002, the government changed the exchange rate system from pegged to free-floating, which caused the Venezuelan currency, the Bolivar, to depreciate.[22] Since then, it appears that the Venezuelan Planning and Development Department has pegged the bolivar to the US dollar (pegged at Bs. 1600.00 – 1596.00). Currently, the Planning and Development Department is investigating a crawling peg system, which would modify the exchange rate on a weekly basis.[23]
Commercial History
In the late 80s,
Then, in early 1994, the country suffered an additional blow from a devastating banking crisis, which led to capital flight, currency erosion, and worsened the fiscal crisis. In June of that year, the President declared emergency currency and price controls.[25]
Economic recovery was dependent on the revision of labor benefits, the elimination of subsidies, and government withdrawal from industry. Plans were put into place for selling off state owned corporations, such as aluminum and steel mills. The government eventually sold several hotels, and banks, and telephone company shares.[26]
In the mid-nineties,
a landmark decision by the Venezuelan government opened the oil sector to
foreign investment. Eight international
groups were selected to explore potential new oil fields. The national oil company, PDVSA, planned to
invest USD 33 billion between 1996-2005 and foreign investment was expected to
provide an additional USD 27 billion.
This expansion plan was thought to increase imports of
Finally in 1996, the Government initiated a fiscal, monetary, and foreign exchange plan that was intended to lower inflation, balance the budget, restructure and strengthen the financial system. A new social security program, resource allocation to the most vulnerable sectors, and reformation of legal institutions was also part of the plan. [28] However, this plan also caused gasoline prices to be raised by over 400 percent.
Financial Overview
External debt as
of 2000 was $34.5 billion. The Inter-American Development Bank approved two
loans to
Summary of IDB Financing (USD millions)
|
1961-2001 |
2001 |
Lending |
$3,730.3 |
$97.5 |
Disbursements |
$3,093.6 |
$222.5 |
Due to the international financial crisis, which resulted in a decline in trade, the Venezuelan economy experienced a 5.9% drop in 1998 and 1999.[31]
In 2000, an expansive fiscal policy provided a 3.2% increase in economic growth. The external current account balance (reflecting oil revenues) was $13.365 billion in 2000 (more than twice that of 1999). International reserves totaled $21.647 billion. All of this led to the fall of inflation (to 13.2% in December 2000). Lastly, sages and salaries increased by about 5% in real terms. Despite strong oil prices in 2001, the economy contracted by 6.4% in the first nine months.[32]
The current
dispute over leadership has dampened investment outlook for Venezuelan bonds.
Historically, in the late nineties, when President Chavez was temporarily
removed from power in a coup Venezuelan bond prices actually increased by nine
points. In 2002 bonds were again steadily increasing (rising by more than 17%)
until the oil strike caused them to lose a large percentage of the year’s
gains. Many analysts believe that the Venezuelan bonds remain over-valued
because Chavez has retained power into 2003. "The only other country in
It is thought that the oil problems may cause ratings agencies to start downgrading the country's debt, and fund managers to dump it. This could be disastrous, as Venezuelan debt is already rated as ‘junk’. Moody's, Standard & Poor's, and Fitch all give it a low rating, and two of the three have a “negative outlook on the credit.”[34]
The cumulative index return thus far into 2003
has been 22.8%, according to J.P. Morgan. One of the agencies has said there
are three pillars holding up the country's debt. One is that
On the domestic
front, local debt swaps of 4.55 trillion bolivars (there are roughly 1300
bolivars to the U.S. dollar) have helped the country manage its debt. More
recently,
These auctions have put Venezuela on slightly better footing for the not-so-distant future, reducing 2003 amortizations by three quarters of a billion dollars, or nearly one percent of GDP, and 2004 amortizations by half a billion. This will still leave nearly $3 billion in local debt maturing in 2003.[36]
Due to the financing needs for 2003, many analysts assume there will be a further devaluation in order to cover local debt obligations. This has been a costly tactic with regard to domestic prices: despite an estimated 6.5% drop in GDP this year, inflation through November 2002 was running at 31%, up sharply from 12.3% for the whole of 2001. In the first 11 months of 2002, the currency lost 42% of its value.[37]
Education
The
educational system in
Primary education was first opened to the general public after 1811, when a number of decrees were issued by Bolívar regarding free education. Implementation was slow – so slow, in fact, that “by the time of his death in 1830, most of the programs he had proposed had not been implemented.”[39] Because of the hero’s association with free education, however, it has become an integral part of the Venezuelan political landscape. Despite this association, the next century brought significant ups and downs, primarily in funding. It was not until the return of democracy in 1958 that education began to expand both in quality, quantity, and kind. Universities opened, primary education became compulsory, and alternative methods of educating hard-to-reach groups such as farming communities were developed.
Unfortunately, due to these historical roots, education has been geared primarily toward those seeking professional or academic careers, in favor of less glamorous but perhaps more necessary professions like the sciences and technology. The government in 1969 attempted to address this by facilitating the entry of students of various backgrounds, including technical, into the university system.
In the secondary system, which until 1980 was not compulsory,[40] there also exists a rather interesting social split. The strong support for education makes public schools better funded than private. However, the more traditional curriculum and the historical associations continue to make private schools the more prestigious of the two. Because of the social advantages given by association with a private school, some teachers choose to work in both.[41]
Since
the changes in 1958, the influence of international organizations has made
itself felt in the promotion of natural sciences. In addition, development work
in the
Another
item seriously affecting education since the introduction of compulsory
education in 1958 has been the dramatic growth in population, which necessarily
has fueled a commensurate growth in the educational system. From 1958 to 1984
the number of Universities in
As
of 1985,
The
current educational system involves nine years of required schooling (from the
age of six to fourteen). The required schooling is six years of primary and
three years of required secondary education.[43]
From the age of fourteen one can go on to two years of senior high school and
then a variety of colleges, universities or technical schools. A variety of
classes are also offered for adults to continue their education. As can be seen
from the table on the following page, education expanded dramatically during
the 70’s and 80’s. Until the economic downturn of the 80’s, skilled workers
were at a premium in
Schools, Teachers, and Enrollments by Public and Private Institutions,
1974-5 and 1983-4
|
|
1974-75 |
|
|
1983-4 |
|
|
Public |
Private |
Total |
Public |
Private |
Total |
Preschool |
|
|
|
|
|
|
Schools |
n.a. |
n.a. |
n.a. |
n.a. |
n.a. |
n.a. |
Teachers |
2,986 |
1,252 |
4,238 |
15,440 |
4,008 |
19,448 |
Enrollment1 |
108,500 |
43,800 |
152,300 |
442,700 |
80,600 |
523,300 |
Primary |
|
|
|
|
|
|
Schools2 |
9,982 |
1,116 |
11,098 |
11,397 |
1,285 |
12,682 |
Teachers |
54,276 |
8,922 |
63,198 |
71,454 |
9,176 |
80,630 |
Enrollment1 |
1,764,100 |
226,000 |
1,990,100 |
2,338,400 |
303,000 |
2,641,400 |
Secondary3 |
|
|
|
|
|
|
Schools |
735 |
438 |
1,173 |
1,486 |
710 |
2,196 |
Teachers |
24,222 |
9,133 |
33,355 |
41,350 |
13,964 |
55,314 |
Enrollment1 |
513,100 |
118,100 |
631,200 |
786,200 |
177,200 |
963,400 |
Higher Education4 |
|
|
|
|
|
|
Schools |
26 |
12 |
38 |
535 |
275 |
805 |
Teachers |
13,228 |
1,376 |
14,604 |
24,633 |
4,072 |
28,705 |
Enrollment1 |
172,100 |
21,200 |
193,300 |
320,800 |
63,900 |
384,700 |
n.a.--not available.
1 - Rounded off to nearest hundred.
2 - Includes preschools.
3 - Middle schools and high schools.
4 - Universities, teachers' colleges, technical colleges, polytechnical
institutes, and other comparable institutions.
5 - 1981-82 figures.
Venezuela Country Data – Library of Congress – Appendix Table 5
http://lcweb2.loc.gov/frd/cs/venezuela/ve_appen.html#table5
One of the more interesting (and troubling) results of Chavez’s rise to power is a proposed overhaul of Venezuelan education. The National Educational Project (PEN) is, according to the government, an overhaul intended to fix some of the things still considered wrong with the educational system, such as the failure of nearly 10% to complete primary school, and nearly 20% to complete secondary.[45] In addition, according to the World Bank, illiteracy is still nearly 7% among males 15 and over, and 7.6% among females 15 and over.[46] Thus there is still significant improvement to be had. However, the draft plan also “rails… against the evils of globalisation and privatisation” and is led by former revolutionaries. Teachers groups and the church leaders claim it is a “Cuban-style indoctrination of youth.”[47]
Venezuela conducts an annual census in all public and private educational institutions in order to provide the country (and its creditors, such as the IMF) a statistical overview of the educational system. According to documents filed with the IMF, Venezuela is currently looking at ways to improve the data collection in order to break the data down into smaller geographical units. Current uses of collected data include evaluating causes of class repetition and causes of drop-outs, both items cited by the IMF in other documentation as high-priority items.[48]
Summary
All
available information on
Anonymous;
“The Americas:
The Economist;
Commercial Overview; STAT-USA on the Internet US Department
of Commerce;
Country Health Profile for
Deen, Thalif; Politics – U.N. Chief Stresses Rule of Law
in Venezuelan Dispute;
Emerging Debt-Venezuela bonds dip as strike
continues; Reuters Limited 2002; http://www.bradynet.com/bbs/em/100296-0.html
Foreign Trade Barriers; pgs
418-422; http://www.ustr.gov/pdf/2000_venezuel.pdf
International Monetary Fund. GDDS - República Bolivariana de Venezuela - Table B. Data Categories and
Indicators Socio-demographic Data. DATA CATEGORY: Education.
http://dsbb.imf.org/Applications/web/gdds/gddscountrycategorydcreport/?strcode=VEN&strcat=EDUC0
Psacharopoulos, George and Steier,
Francis. Education and the labor market in
http://www-wds.worldbank.org/servlet/WDS_IBank_Servlet?pcont=details&eid=000178830_98101902100736
Roth, Charles; Dow Jones
Newswires;
Rudnicki, Robert; US$-Bs. Exchange rate may be modified in 15 days;
Rudnicki, Robert; United States Brands Venezuela as an unreliable supplier of crude oil;
Rumbaut, Luis;
Venezuela Country Paper; Regional
Operations Department 3, Country Division 5; Executive Summary and pgs 1-6
Wilson, Scott; Venezuelan’s Oil
Crisis Boils Down to Power;
World Development Indicators database; April
2002; The World Bank Group; Country Profile Data; http://devdata.worldbank.org/external/CPProfile.asp?SelectedCountry=VEN&CCODE=VEN&CNAME=Venezuela%2C+RB&PTYPE=CP
The World Factbook; CIA; 2002; http://www.cia.gov/cia/publications/factbook/geos/ve.html
[1]
[3] Politics – U.N. Chief Stresses rule of Law in Venezuela Dispute
[7] http://165.158.1.110/english/sha/prflven.html and http://www.cia.gov/cia/publications/factbook/geos/ve.html
[9]http://devdata.worldbank.org/external/CPProfile.asp?SelectedCountry=VEN&CCODE=VEN&CNAME=Venezuela%2C+RB&PTYPE=CP
[10]
[11] Venezuela’s Oil Crisis Boils Down to Power
[12] World Factbook
[15] Venezuela’s Oil Crisis Boils Down to Power
[16] Venezuela’s Oil Crisis Boils Down to Power
[22] World Factbook
[38] http://lcweb2.loc.gov/frd/cs/vetoc.html
[39] http://lcweb2.loc.gov/frd/cs/vetoc.html
[40] Psacharopoulos et al. Education
and the labor market in
[41] http://lcweb2.loc.gov/frd/cs/vetoc.html
[42] http://lcweb2.loc.gov/frd/cs/vetoc.html
[43] Psacharopoulos et al. Education
and the labor market in
[44] http://lcweb2.loc.gov/frd/cs/vetoc.html
[45] The
[46] World Development Indicators database, April 2002
[47]
The
[48] IMF GDDS Table B