Venezuela is the second largest economy in South America

South America: Venezuela the second largest economy in the region

Attilio Folliero and Cecilia Laya, Caracas 10/05/2005 - Updated 13/05/2010 and 21/05/2010

First published in http://www.folliero.it/02_articoli_...

It’s official: in 2009 the GDP of Venezuela has overtaken Argentina. According to data recently published by International Monetary Fund (1), in 2009 the GDP of Venezuela was 337.30 billon dollars, compared with 310.07 billion dollars of GDP in Argentina. It ’s the first time that Venezuela over Argentina and is the first time you found to be the second largest economy in South America.

The following shows the graph of GDP in Argentina and Venezuela in ultimi30 years (1980-2009).

Confronto Pil Argentina Venezuela 1980 2009 - Dati FMI

Growth in recent years has been massive, if you think that only in 1996 was the fifth largest economy in the region after Brazil, Argentina, Colombia and Chile The following table shows the data of GDP, GDP per capita and population in 1996 and 2009, in addition to the respective percentage changes that occurred during the period for complying with the various states of South America, met today nell’UNASUR.

As noted, Venezuela is in a state that grows stronger, both in terms of GDP (+378%), the GDP per capita (+273%). It also increases the weight of its economy in the region: the Venezuelan economy in 1996 accounted for 4.5% of the total economy of the region, arrived today at 11.77%. Brazil remains the leading economy of the region, although slightly decreasing its weight within the region.

If we consider the GDP per capita, Venezuelans are by far the richest in South America with $ 11,789 per year apiece, followed by the Chileans with $ 9,525 of GDP per capita, with 9425 the Uruguayans, Brazilians with 8220 and Argentina with $ 7,725. The poorest are absolutely Bolivians with only $ 1,723 of GDP per capita per year.

So, for the first time in Venezuela’s GDP is higher than that of Argentina. Recall that Argentina, for pimi fifty years of the twentieth century was the richest country in South America, indeed throughout Latin America. In 1950 it exceeded, for GDP, Brazil, Mexico in 1959 is outdated and now for the first time exceeded from Venezuela, making it the second largest economy in the region.

Venezuela, until the discovery of oil has always been a country poorer than Uruguay, Argentina and Chile by far the richest in South America again in 1920, per capita income of these three countries was virtually three times that of Venezuela. But by 1930 the difference is almost completely canceled and since 1938, Venezuela became the country with the highest GDP per capita in South America

Oil has literally transformed the country from 1914, when it began to exploit it. In 1929, only fifteen years later, Venezuela became the second largest producer after the U.S. and the first exporting country. For over 40 years, until the early seventies, Venezuela is the first oil exporting country in the world. The great impetus to the development of the country came with World War II, during which provides 60% for oil allied forces. Thanks to oil, then, after World War II, Venezuela became one of the countries with the highest GDP per capita in the world. In the 1948-1949 period, Venezuela has the third GDP per capita in the world, practically close to the U.S. and Switzerland. Throughout the fifties and sixties is among the top ten countries of the world still regard the GDP per capita.

In the seventies, with the nationalization of the oil industry, which occurred on January 1, 1976 and the creation of PDVSA, the national oil company, it creates a paradoxical situation: the massive petroleum inputs does not correspond to an adjustment of production and Consequently, it generates high inflation, leading to a massive capital flight. All the country’s economy revolves around oil, but when in the eighties falling prices for this raw material, governments find themselves in office with big financial problems and begin to rely on foreign debt. In 1983 the Government, chaired by Luis Herrera Campis to meet the huge capital flight in the country decides to establish a strict control note, accompanied by a sharp devaluation (100%) of local currency against the dollar (the famous Black Friday 02/18/1983). The situation of the country falls. The use of foreign debt and the IMF determines the deployment in 1989 of a rigid neoliberal policy by President Carlos Andres Perez. The "pacchettazzo" neoliberal is characterized by the liberalization of prices of all goods and services, including basic needs, reduction of wages, dismantling the entire welfare state and privatized privatize everything possible, including health and education as well the major companies in the country. PDVSA also the most important company in the country with the so-called policy of openness oil is moving towards privatization.

Poverty in the country increases rapidly in the late eighties and 80% of the Venezuelan population lives in poverty and more than 40% in extreme poverty. The social explosion was inevitable: February 27, 1989 in Caracas and major cities of the country explode the popular protests that are inmediately repressed by the police and the military. The budget is dramatic with an unknown number of deaths, but amounts to several thousand.

Discontent is spreading even to military forces, especially the troops and the sottoufficali, who were forced to order from the massacre of 27 and 28 February 1989. The discontent within the ranks leads to the rebellion of February 4, 1992, when a group of soldiers led by Hugo Chávez attempts to overthrow President Carlos Andres Perez. The attempt failed and the military rebels end up in jail. In November of that year, there is a new military rebellion, which also fails. The company has now shaken the country and supports the military rebels, who have since been sentenced to a long period of detention.

The economic situation of the country continues to fall and the banking crisis of 1994 by the coup de grace to the system and the government, which eventually fell under the weight of corruption. The entire political class is wiped out and the new President, Rafael Caldera, was elected on the promise to grant pardon to the military rebels.

The newly elected president keeps election promise and the military rebels out of the prison. Hugo Chavez, the first lieutenant colonel in charge of military rebellion, conscious to enjoy great popular support, decided to found a movement in politics, and presents the next presidential election of 1998. Vince and 2 February 1999 he became chairman. With the advent of the Chávez presidency, the Venezuelan history changes radically, becoming today, according to data published by the IMF in late April, the second largest economy in the region, after Brazil.

In this decade (1999-2009) of new government policies tend to a greater state presence in the economic sphere and the basic principles of the new policy are entitled to free health and education for all. In essence the policies of the new government seek to ensure a greater and more equitable redistribution of national wealth among all significant social classes.

These are policies that are driving the success of the country, as it moves to the role of regional power. Venezuela is the main energy reserve in the region, as well as numerous other raw materials in the soil is rich, at international level is strongly committed to a policy of integration, aware that the union of all countries of the region (and hopes to involve all countries in the hemisphere, from Mexico down) could lead to benefits for all.

Attilio Folliero and Cecilia Laya, Caracas 10/05/2010 - Updated 13/05/2010 and 21/05/2010

Note

(1) Data published by the IMF Url: www.imf.org/external/pubs/ft/weo/20...