Economics Essays - Venezuela Culture Economics

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Venezuela Culture Economics

Venezuela is home to a rich culture consisting of a prideful population, beautiful land, and historic traditions. Located on the northern coast of South America, Venezuela offers a scenic coast line of the Caribbean to the north and part of the tropical Amazon Jungle in the south. On the western part of the country is the rise of the Andes Mountains and the Guiana Highlands lie to the east (The World & Its Peoples, 1966).

The country provides an array of physical beauty which amazes natives and visitors alike. Aside from its gorgeous scenery Venezuela also is overflowing with natural resources that the rest of the international community is quick to get at. Unfortunately recent threats to the land, people, and government have ravished the country into near destruction (Duarte, Ettkin, Helms, Anderson, 2006).

Descriptive Features

Historical Background:

The notorious Christopher Columbus stumbled upon the coast of Venezuela in 1498 upon his third voyage to the Americas, but it wasn’t until Americo Vespucci explored the new world in 1528 that Venezuela received the state name that identifies it to this day (Moron. 1965) Vespucci, called this beautiful land “little Venice,” or Venezuela, for its striking resemblance to Venice at the time (Duarte, Ettkin, Helms & Anderson, 2006).

Unfortunately for the natives of Venezuela, there is no written history before Spanish conquest. Germans were sent by Charles V of Spain to establish settlements and develop the area, in order to repay a debt. Instead they demoralized all European explorers by enslaving the natives and greedily searched for gold, pearls, and any other treasures the land was thought to hold, including El Dorado, the lost city of gold. Finally their grant was revoked, and the Spanish resumed their efforts to settle the area. However, they were now met with much native resistance.

With brutal success they eventually established many missionaries, and towns, which then became centers for piracy and smuggling. To improve trade and hopefully prevent smuggling, the Spanish Government gave control of all trade in Venezuela to the Guipuzcoana Company. This caused resentment among the Spaniards born in Venezuela (Creoles), who believed they should at least have a share in the power.

After Ferdinand VII was overrun by Napoleon I of France in 1808, the Creoles who had little power in town council overthrew Spanish authorities and formed their own government, however, still ruling in the name of Spain (Lombardi, 1982). Soon after this overturn of power, all remaining loyalty to Spain was discarded. On July 5th, 1811 independence was declared for the state of Venezuela. Venezuela was the first of all the Spanish American colonies to claim independence, although short lived. Spanish troops quickly regained control of the sate.

A decade long struggle between the Creoles and the Spaniards ensued. In 1812, under Spanish rule, the struggle for independence was lead by Simón Bolívar who gained control of the state in 1813, but was unfortunately taken over a just year later. The Spanish retained control of Venezuela until Bolívar returned, after fleeing to Haiti to build an army (Moron, 1965). He gained control of Venezuela yet again in 1816 and in 1819 a legislative body assembled by Bolívar declared a uniting of New Granda (consisting of modern day Colombia and Panama), Venezuela, and Ecuador, as the new Republic of Columbia.

In 1821 the Spanish army is defeated in the Battle of Carabobo and independence has been achieved for the Republic. José Páez, a strong leader in the independence revolution, supports yet another separatist rebellion in Venezuela, and it 1829 Venezuela became independent of the Republic of Columbia. The city of Caracas is declared as the capital of Venezuela, and it remains the capital to this day (Bernstein, 1964).

Economic Underpinnings:

In 1914 the first oil was pumped from Lake Maracaibo. So began the transformation of Venezuela to an oil based society, and a rentier economy. Venezuela is now fifth in the world proven reserves and has the world’s largest accumulation of liquid fuel (Moron, 1965). However, their strong reliance on the income from oil leaves the nation unstable due to any changes in world markets (Duarte, Ettkin, Helms, Anderson, 2006).

Their export of oil accounts for nearly 90% of the countries exports earnings and more than half of the federal budget revenues. Venezuela produces 2.802 million barrels of oil per day and exports nearly 80% of that, mostly to the United States (Central Intelligence Agency, 2008). While oil may be the most prominent resource that Venezuela provides, the state is also rich in other natural resources.

Venezuela is also the sixth largest in proven reserves of natural gas and with it’s abundance of hydrocarbons has been able to manufacture liquid coal. Other important resources are tapped in Venezuela by the mining industry. One of the largest mining reserves in the world is located in Venezuela and has vast coal deposits as well as valuable minerals such as iron, nickel, gold, and diamond (Duarte, Ettkin, Helms, Anderson, 2006).

Before the discovery of such resources, products of agriculture were Venezuela’s main exports. Coffee, cacao, and cattle were the largest exports of the country. With the oil revolution agriculture declined rapidly (Moron, 1965). Also contributing to Venezuela’s economy is their forested land. More than 50% of Venezuela is forested; however the timber industry is undeveloped because much of the areas are inaccessible.

The majority of the timber is used as fuel and also is used by the building and paper industries. However, this industry is highly contributing to the deforestation of the rainforest and endangering the beauty of the country. Venezuela has also given a high priority to the development of heavy industry. They have a significant steel industry that uses some of the country’s oil, and upon a general strike in the oil industry in 2002 the steel and manufacturing industries suffered major problems (Central Intelligence Agency, 2006).

Social Factors:

Venezuela has undergone constant social and political unrest in recent years. Much of this is due to dichotomous social classes. Over 80% of the Venezuelan population lives at or below the poverty level. The average Venezuelan citizen lives on merely two dollars a day, and with the national income forecasted to drop nearly 10% and the countries unemployment rate at 17%, the future is not bright for the Venezuelan people (Duarte, Ettkin, Helms, Anderson, 2006).

The best land for farming in Venezuela is held by very few landowners; unfortunately those who need to earn a living from the land are left with meager land. This has cause a mass migration from the rural farm land into the urban areas of Venezuela. The striking differences in social classes are also exemplified by the oil industry which has created multimillionaires living in massive homes and a standard of living easily equivalent to a modernized western country.

However, the majority of the population can not seek ridiculous wealth from the oil industry or the agriculture and are forced to live in poverty (Crisp & Levine, 1998). Although the government has made significant improvements in healthcare and education provisions to the poor and a significant decline in the infant mortality rate the public is still unruly. The access to health care is an important development in Venezuela since there is a high risk of major infectious diseases among the population including hepatitis A and malaria (Central Intelligence Agency, 2008).

The majority of the population in Venezuela is made of “mestizos,” who are people of both Native and European descent and only 2% of the population consists of indigenous peoples (The World and Its Peoples, 1966). The remainder of the population is Italian, Portuguese, Arab, German, and African. Since there is a somewhat diverse culture, ethnically, there is no official religion of Venezuela, although Roman Catholic is the most prominent (Central Intelligence Agency, 2008). Most people live in urbanized cities, either Caracas (the capital), or Maracaibo, the center for the oil industry. Education is a priority and it is mandatory for all children, there are even multiple institutions of higher education (colleges and universities) to further educate students (Duarte, Ettkin, Helms, Anderson, 2006).

Government and Electoral Institutions:

After Venezuela’s successful achievement of independence from both Spain and the Republic of Columbia, their first establishment of a formal government was a conservative oligarchy of which Páez presided over for twenty years. The end of his ruling was brought by the establishment of a liberal party which overthrew the conservative oligarchy, replaced by a more liberal one.

After multiple battles in the following years, a new party, the Federalist Party takes control in 1864. Continuous disturbances and uprisings finally bring down the federalists when the conservatives and liberals ban together and attempt to bring the states together under a central government (Lombardi, 1982). The 19th century in Venezuela, politically, carried on this way. There was much political instability, dictatorial ruling, and vacillation between multiple parties caused by multiple revolutions. The 20th century introduced times of authoritarianism and more dictatorships.

At the end of World War I the Venezuelan economy went from being agriculturally focused to a focus on oil production and export, and finally a system of civilian democratic rule was established. Since that time Venezuela has mostly been known as one of the most stable democracies (Levine, Crisp, 1999). Until, that is, 1989 when Venezuela began to experience mass riots in response to a strict economic program started by President Carlos Perez.

After three years of rioting an army lead by current President Hugo Chavez unsuccessfully attempted to overthrow the government, claiming that it was no longer serving for the good of the people (Molina V., Perez Baralt, 2004). Although unsuccessful, a congress was set up to prevent power corruption and they impeached Perez on charges of corruption. Up until this point in Venezuelan politics the Democratic Action party and the Christian Democratic Party had dominated the political scene.

Deep social frustration with the traditional parties lead to the election of Hugo Chavez in 1998 on a platform of political change geared towards socialism, and a more just distribution of resources and labor. In 1999 President Chavez created the National Constituent Assembly to write the Constitution of the Republic of Venezuela (Sylvia, Danopoulos, 2003). The previous constitution was outdated and had become irrelevant to the lives of the people who had experienced a severe decline in their living situation over the past years. A new political system was put in place by this constitution as follows.

The head of the government and the head of the state is the president, who is elected by a majority vote in which all citizens of Venezuela may vote, beginning at the age of 18. The presidential term is six years and a president may run and be reelected on one consecutive term. The president then chooses the vice president, and decides the size and persons in the cabinet. Law making may be initiated by this executive branch, a legislative branch, a judicial branch, a citizen branch, or by a public petition.

The legislative branch which contains the National Assembly may veto any objections the president may make to laws, and the president must ask permission of the National Assembly to reconsider portions of the laws. This National Assembly is composed of the Senate and Chamber of Deputies in which persons are elected by both the party and voters.

The judicial branch is lead by the Supreme Tribunal of Justice. There are 20 justices, chosen by the National Assembly, who each serve for a term of 12 years. However in subsequent years the number of justices has increased to 32. There are also multiple district and municipal courts.

The citizen’s branch of the government is composed of three branches: the attorney general, the defender of the people, and the comptroller general. Together they form the “Republican Moral Council” which challenges the Supreme Tribunal of Justice on any act they find unconstitutional or illegal. They are also selected by the National Assembly and serve for seven years.

The National Electoral Council is responsible for holding elections at local, state, and national levels. Five members are elected for a term of seven years by the National Assembly (Constitution of the Republic of Venezuela, 1999).

The government of Venezuela is set up in the form of a federal republic, meaning the power of the central government is restricted and the states maintain a self – government, and sovereignty is practiced by the voters who choose their own governmental representatives (Central Intelligence Agency, 2008).

Though seemingly a rather balanced system, supposedly in place to protect the people, there has been much political unrest as President Hugo Chavez’s platform of socialism has turned more to a dictatorship, and the people of Venezuela are suffering more than ever (Derham, 2002).


Within the State:

With Venezuela’s continuous political unrest it is unlikely that a promising immediate future is coming. A history of political instability may be at risk to repeat itself. The government has had little success with “redistributing the resources” throughout the country, which will only consistently contribute to political unrest Already President Chavez has chosen to be dictator rather than further the success of his country. The unsuccessful focus on reducing poverty has allowed little focus on the aspect of improving the industrial sector (Derham, 2002).

Venezuela does, however, have a promising oil industry which will remain profitable for the country for a few years. If the oil industry ever does turn Venezuela’s economy will plummet, a sole reliance on oil, while certainly profitable now, may be also very dangerous in the future. Unfortunately, the excessive governmental control of the oil industry may suffocate any developing strengths in the country, as they have control, but are not using it to better the industry (Billig, 2004). It would be wise of Venezuela to begin focusing on other industries, specifically the technology marketplace.

Technology and entrepreneurship are both vital in the future development on Venezuela, since information technology is in such high demand throughout the world. By expanding their technology Venezuela will be able to further their competency for competition and hopefully succeed into a place on the world market. The beauty of the country can surely attribute to Venezuela’s economy by attracting tourists, if tourist safety in the country had not become so threatened in recent years amongst the political unrest and dangerous border with Columbia (Duarte, Ettkin, Helms, Anderson, 2006).

Within the Region:

With the election of Hugo Chavez came the isolation of Venezuela from the rest of the western world. An extreme anti – western position threatens the United States with the possibility that Venezuela may stop exporting oil to us, and begin exporting to China and the east (Molina V., Perez Baralt, 2004). This is dangerous for Venezuela’s development, it should be known that a country can not isolate itself from the dominate powers of the world, and still hope to be successful.

Venezuela’s growing hostile relations with the United States are not only negative for the United States but are also dangerous for Venezuela. Venezuela has also been breeding hostile relations with Columbia for centuries. Columbian rebels have taken refuge in Venezuela and the border between the two countries has remained a hot spot for violence. This intense clash threatens the economy of both Venezuela and Columbia (Duarte, Ettkin, Helms, Anderson, 2006).

Within the International System:

With all the state, and regional instability and risks, Venezuela’s future participation in the International System is highly threatened. Firstly, it is essential that the government provide additional security for foreign investors, currently there is so much potential risk that many investors are beginning to look unfavorably upon Venezuela. The state has taken steps to build a relationship with other countries besides the United States for a growing oil market.

The incentive for the expanding of international oil relations was to avoid a world of U.S. dominance (Parenti, 2006). Fortunately for Venezuela, in recent years they have increased participation in the international community by having an economic liberalization policy and by promoting foreign investment. Venezuela is an active part in multiple international agreements and international organizations including the World Trade Organization, and Preferential General System in the European Union (Duarte, Ettkin, Helms, Anderson, 2006). Venezuela has a promising future if they properly utilize the resources, natural and human.