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Economy of Venezuela: general information and development
Venezuela is one of the largest states of the South American continent. It consists of several islands in the Caribbean Sea, the largest of which is called Margarita. The country area of 916 thousand square meters. Km is bordered by Brazil and Colombia. As of early 2017, the population barely reached 31 million.
Climate and natural conditions
The central part is represented by a lowland plain with the Orinoco River. From the north to the west extend the Caribbean Andes, the Cordillera de Merida ridge, in the southeast rises a part of the Gvinsky plateau.
The climate is hot subequatorial. For most of the year the north of the country suffers from drought, while in the central regions rainy seasons are not uncommon.
The vegetation cover is rich and diverse: mangroves, xerophytic-succulent light forests, dry high-grass savannas, deciduous tropical forests, gilea, etc.
Development of the economy of Venezuela
Few people know that the described country of Latin America is the first exporter of oil. In the 16th century, the first barrel with black gold crossed half the world on its way to Madrid. In the XVII-XVIII centuries the main export items were indigo and sugar, a little later - cocoa and coffee. In 1922, near Lake Maracaibo in the village of Kabimas, one of the largest oil fields was discovered, which marked the beginning of the oil boom and brought about fundamental changes in the economy of Venezuela.
Location of deposits in close proximity to the sea, low living standards (cheap labor) and high potential of wells provoked active interest of oil companies. During the Second World War, new deposits were discovered and put into operation, a few years later, their total area reached 68 thousand square meters. Km.
In the lower reaches of the Orinoco River, the largest deposits of iron ore were discovered, the development of which was immediately intercepted by American monopolists. As of 1970, the volume of foreign investment in the development of Venezuela's economy amounted to $ 5.5 billion. 11% of this amount was owned by the United States.
From 1975-1980. The state took a leading position on economic development in Latin America. The infrastructure began to develop actively.
The nationalization of the oil and iron ore industry has become a responsible step towards independence and national sovereignty. In the foundations of the Venezuelan economy now lay full state control. In most industries, foreign companies were asked to transfer 80% of shares to citizens of the country within three years.
Import and Export
Specialists say that 50% of Venezuela's economy is foreign trade. The lion's share of sales falls on oil and related products, iron ore is in demand. In the list for export - coffee, cocoa, asbestos, gold, sugar, bananas, rice, skins, cattle, forest.
Priority import items are high-technology equipment, vehicles and components, raw materials for oil pipelines, industrial goods for general consumption. Every year the import of food increases, because agriculture is in decline and unable to meet the needs of the population. Most of the cost of procurement falls on the US - more than $ 3.5 billion a year.
Mining industry
The main products of the mining industry are iron ore. In the large deposits of El Pao, San Isidro and Cerro Bolivar, the fossil is extracted by open method and contains up to 70% iron. Its annual production is 15-17 million tons, 90% of this amount is exported to America and Europe.
In the Upata area (Guiana Plateau), manganese ore is extracted . In the Caribbean Andes, nickel, lead, zinc, asbestos, and silver are mined in small quantities. In the suburban zone of San Cristobal, phosphorite ores are being developed.
Gold is mined in El Callao. Here, the diamond production is actively gathering momentum (700-800 thousand carats per year). A large deposit of precious stones was discovered in the Kuchivero River basin and was accompanied by a diamond fever. For several years Venezuela has been the largest diamond supplier among Latin American countries.
Manufacturing industry
According to general information on the Venezuelan economy until 2013, the oil refining, chemical and engineering industries of the country developed at a rapid pace. Nevertheless, more than 50% of the value of the gross product is provided by the textile, food, woodworking and leather and footwear industries.
Development of the largest deposits of iron ore gave impetus to the development of the metallurgical industry. On the territory of the state there are several combines with a full cycle and blast furnace electric furnaces, aluminum plants, etc.
Production
At the heart of the development of mechanical engineering is the car assembly industry. The economy of Venezuela can be briefly described as being supported by factories for the production of implements for agriculture, tractors, construction equipment, tools, etc. Developing companies that produce television and radio equipment. Large-scale construction in the mining, oil and manufacturing industries stimulates the creation of production sites for the production of building materials.
Livestock raising
Cattle raising by 55% determines the value of agricultural products. Farms are concentrated in Llanos.
The territory of dairy farming is the valley of Caracas, the basins of the rivers Valencia and Maracaibo. In the same areas, bird feeders supply the city with eggs and meat. The arid Caribbean coast (Lara) is famous for the largest goat and sheep farms. Over the past 15 years, the livestock sector has significantly improved compared to crop production. The mass share of large farms using modern methods of growing and caring for animals has increased.
Fisheries are developed in the northern part of the country (the coast of Venezuela, Lake Maracaibo). Positive impact on the economy of Venezuela today is provided by tiger shrimps - the most valuable and revered gourmet product.
Forest industries are not given much importance. Procurement of tannins, vanilla, guayab resin and rubber, used in perfumery and pharmacology, is conducted in minimum quantities.
Crop production
The state has a record number of suitable for cultivation of land in Latin America. Only a third of them are processed. According to the latest information of the Venezuelan economy, crop production is recognized as the most backward sector.
45% of the value of agricultural products is given by agriculture. 2/3 of arable land is concentrated in the north of the country. In Llanos, plant growing is developed along the rivers and at the foot of the Andes. The region's problem is severe drought. In order to solve the problem, the government has developed a plan for the creation of a water sector for the next 30 years with the construction of dams and the organization of an irrigation system for 2 million hectares of land.
The fifth part of the area is occupied by the main export crops - cocoa and coffee. Raw materials for a fragrant invigorating drink grows in the mountainous states in the north-west. Raw materials for most of the world's chocolate bars are collected in the states of the Caribbean Sea. Cultivation of cotton, tobacco and sisal grew in Llanos over the past 8-10 years.
Transport
Venezuela's traffic routes are unevenly distributed. The maximum concentration of highways and railways is in the north. The latter are short, unconnected lines, with a length of 1,400 km. Passenger and ¾ of freight traffic are carried out by road.
The Orinoco River is the main inland waterway, steamship communication is supported on the lakes of Maracaibo and Valencia. The shortage and poor quality of land communications is compensated by coastal shipping by sea. By scale, the ocean merchant fleet is among the top three in South America. For export of oil and related products 23 ports are equipped, with the purpose of export and import of other goods - 8 more.
The organization of air communication with remote southern and eastern regions is of special importance for the Venezuelan economy. Regular airlines connect the capital with major cities, oil fields and mining centers.
Economic crisis
2013 became a fatal year for the economy of Venezuela. The crisis affected all spheres of the life of the state. From the default saved only high prices for the main exported goods - oil. At the beginning of the year, before Maduro came to power, the country's national debt was 70% of GDP, with a budget deficit of 14%. At the end of 2013, inflation was 56.3%. In the current situation, the parliament gave the new president extraordinary powers. To justify the expectations of millions of voters, the guarantor announced an economic offensive, within which a limit on profits of private enterprises was introduced in 30%. In the country there was an acute shortage of essential goods - sugar, oil, toilet paper. Government representatives unanimously declared that the reason for the collapse of Venezuela's economy was corruption, speculation, sabotage and the ongoing financial war against the state. Maduro initiated a program to combat speculation. A month later, the new service Daka trading network was nationalized. For establishing a mark-up on the goods in 100% instead of the permissible 30%, the property and the management of supermarkets were arrested.
2015: falling oil prices
In 2014, the Venezuelan economy, which was successfully moving towards a way out of the crisis, shook another blow. World oil prices fell sharply. In comparison with the previous year, the income from export of black gold was reduced by 1/3. In attempts to reduce the budget deficit, the Central Bank issues more notes, which leads to inflation of 150% (official data as of September 2015). Taking another attempt to contain inflation, the government is developing a complex system of currency exchange. Only a week later, the official dollar exchange rate exceeded the market rate by more than 100 times. Adhering to the ideology of Chavism, the parliament headed by the president limited the prices of food products, which provoked a total shortage of essential goods.
2016: situation worsens
In January, the left socialist Luis Salas was appointed to the post of the head of the Ministry of Economics. Understand the other members of the administrative apparatus of Maduro official sees the cause of the problems of Venezuela's economy in the conspiracy and financial war of Europe against his homeland.
According to the IMF estimates, in 2016 the level of GDP fall is close to 20%, unemployment is rapidly growing - 25%, the budget deficit is 18% of GDP. Inflation in 550% in conjunction with an external debt exceeding $ 130 billion, every day push the economy of Venezuela to default.
The banknote of the greatest dignity - 100 bolivars costs 17 American cents. Hyperinflation negates the purchasing power of citizens. According to the local Center for Documentation and Analysis (Cendas), the basic food basket for the family costs eight minimum wages.
Our days: the causes of the crisis
The main factors provoking economic destabilization are structural and political principles, in particular, dependence on imports, a sharp fall in the world price of oil, as well as total state control over the production and distribution of food products.
In connection with the aggravating economic situation in Venezuela in the first decade of 2017 and the refusal of President Maduro to hold a referendum on introducing changes to the political course of the state, mass protests took place in the largest cities. More than a million people unsatisfied with the actions of the authorities went to the central streets with the requirements to bring to the stores essential products - flour, eggs, milk, medicines.
The opposition accuses the incumbent head of state of following the antisocial laws of the dictator Hugo Chavez, leading to a deep crisis that will be exacerbated by a decline in the cost of oil. In turn, Nicholas Maduro accuses the aristocracy of the country of boycotting the economy in order to achieve its goals through corruption.
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