Question

Venezuela adopted policies that impacted the pricing of various nationalized products. What positive and negative results occurred from these policies? Do you think that it was the right decision for Hugo Chavez and the government? Why?

Answer 1

The current crisis in Venezuela starts during Chavez regime by 1979 there was nationalisation of Venezuela oil industry it makes the economy dependent on single resource hence state control oil industry means price decesions taken by the government this increases corruption as well.Also in2003 there was a takeover of the foreign exchange by the government which means exchange rates were not decided by the market.Hugo Chavez started Bolivarian mission providing housing ,employment,adult education under it.For all the expenses govt took debt from China and others.Since oil industry was under government hence private business suffered and the ultimate cause of Venezuela crisis is extreme socialism which involves government control of pricing of nationalised products and it lead to corruption as well as harmed the economy as mainly the private sector.In 2014 international oil prices plunge from $115 to $35 in 2016.The dependence on oil proved to be havoc for the economy all these policies of extreme socialism lead Venezuela to be in depest crisis.It was not the right decision of Chavez government for the above reasons as well as the controlled economy by the state to certain extent did not allow private business to flourish as well as for an economy it is required that the drivers of growth should be multiple not single as oil was only in case of Venezuela.