Venezuela has been facing a high rate of inflation for decades and there is no sign of letting up. Some reports indicate its getting worse under the latest socialist government. Generally, lack of goods is the primary cause of inflation. The other associated factor in this case is economic mismanagement. A lot of it has to do with politics - the need for the socialist government democratically elected to prioritize the poor and win votes by providing a great deal of welfare, while being hostile to other classes and defending against hostile foreign elements. What might Venezuela to improve the situation? Here are some quick recommendations: * Venezuela has to ease up on their lurch toward socialism and pay more attention to fostering capitalism. * Price controls and arbitrary seizures of businesses destroy market confidence. If scarcity is driving up prices, they need to focus on production, import, distribution, and promote market competition. * Give a bottom floor to the poor (education, healthcare, etc.), but also support the middle class. Dont make the upper class and businesses your enemy but find ways to bring them in and allow them to participate responsibly. * Diversify the economy through industrial policy and using the petro-dollars. Grow the manufacturing sector. Bring in foreign partners by loosening investment rules but upon condition of technology transfer. * Set up import/export bank and promote trading networks to promote both imports, import substitution, export industries, and internal distribution. * Build multiple distribution centers and markets to facilitate both export and import and distribution. Infuse the networks with market forces to promote competition and innovation. * Strengthen law and order. Strengthen property rights. Clearly delineate public and private spheres. * Build consensus and (carefully) bring on board the estranged classes to build internal stability against foreign intervention. bbc.co.uk/news/world-latin-america-24883849
Posted on: Sun, 10 Nov 2013 06:16:08 +0000
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