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Practical lessons from venezuela
Venezuela was once prosperous due to its large oil reserves, but declined sharply when oil prices dropped. The socialist government had provided free services and goods to citizens without developing other industries. When oil money decreased, the country could no longer afford these handouts and inflation skyrocketed. Shortages of food and basic necessities led to looting, prostitution, and even reports of cannibalism as 35 million Venezuelans had come to rely on the state for survival. This practical example shows the dangers of excessive dependency on a single resource without economic diversification.
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Practical lessons from venezuela
- 1. Practical Lessons fromVenezuela By Dr.MALATHI SELVAKKUMAR
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- 3. A brief roundup… •It is a big country, that is bigger than UP, Bihar, Punjab, Haryana, Bengal and Orissa put together. • Total population is 35 million • This is less than the population of Delhi
- 4. Natural resources • Fullof fertile land, hundreds of small rivers and beaches • Abundant rainfall • Huge resources of fish • Millions of hectares of grazing land • But they do not grow wheat, rice and vegetables
- 5. Venezuela 20 yearsback…. • Has the largest crude oil reserves in the world, that is much larger than that of Saudi Arabia • After the 2nd world war, demand for crude oil across the world was high, followed by high prices
- 6. Venezuela 20 yearsback…. • In 1945, they made 1 million barrels of oil per day • They exchanged oil for fruits, vegetables, ration, cereals, textiles and medicine • They imported cabbage and tomatoes from Europe
- 7. Government Policy…. • Inthe 1950s and 1960s, there was no manufacture carried out in Venezuela • The government provided all its services to its people at FREE • There was FREE distribution of all resources to the citizens
- 8. Government’s Tourism Policy…. •Foreigners were not allowed, as the government feared they will enjoy the free services offered, so no hospitality • So there is no established Tourism Industry • Even in 1970s tourists were discouraged
- 9. Government Policy…. • Nofarming of crops, fruits, vegetables • No dairy farming, poultry farming and fishing despite abundant resources • No manufacturing took place • But still because of crude prices, till 20 years ago it was a prosperous and developed nation
- 10. The change andits impact… • When the crude oil prices started dropping, Venezuela had a government owned oil company called PDVSA • To sustain the free policy of the government, the then communist government insisted that the company provide everyone with jobs
- 11. The change andits impact… • Though there were no openings, the government insisted that at least one man of every household be employed in PDVSA • There was no work, but they were paid free fat salaries • Wit further fall in crude prices, the company incurred heavy losses
- 12. The change andits impact… • Providing free stuff was becoming very difficult • There was a commodity scarcity all over • The inflation was at its peak • The rate was 16,98,488% compared to the last year • There was so much of hunger
- 13. The change andits impact… • The government still did not learn • They started taking loans to continue providing FREE services • 1 plate of food costs 1.5 million Bolivar
- 14. The change andits impact… • 1 Indian Rupee = 3607 Bolivars • Today a pocketful of bread costs more than a bag of Bolivars • People are hungry for the last ten years
- 15. The change andits impact… • This resulted in 35 million freeloaders with no work
- 16. The change andits impact… • Caracas the capital of Venezuela is the world’s most unsafe place • Men started looting • Women and young girls were forced to take to prostitution to have even a few slices of bread • Men have turned to cannibals
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