This closing case explores the political and economic situation in Venezuela under Hugo Chavez and, after Chavez’s death, Nicolas Maduro. When Chavez, who was elected president in 1998, ran on a platform against corruption and economic mismanagement, Venezuela’s economy was in a deep recession. Once in office, Chavez consolidated his hold over the government by drafting a new constitution that put him in power until 2012. Chavez died in 2013, but during his presidency, Venezuela was considered to be only "partly free." Economically, things were also difficult for Venezuela. Chavez did achieve some gains. Unemployment, though still high, fell to 7.6 percent in 2013 from its high of 14.5 percent in 1998. Similarly, poverty remained a problem despite falling from 50 percent to 28 percent in 2012. Yet, corruption was rampant, and there was a move to take certain industries into state ownership, with the oil industry being a particular target. Following his death, the situation for his successor, Nicolas Maduro, became worse. The decline in the price of oil resulted in economic collapse with inflation reaching 275 percent, the poverty rate above 30 percent, and considerable value reduction of the Venezuelan currency, the bolivar. The result was heavy losses in December 2015 parliamentary elections which saw the opposition gaining a majority of seats over the ruling United Socialist Party.

How do you think that Chavez’s unilateral changes to contracts with foreign oil companies affected future investment by foreigners in Venezuela?

Question

03-04-2020
Business

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This closing case explores the political and economic situation in Venezuela under Hugo Chavez and, after Chavez’s death, Nicolas Maduro. When Chavez, who was elected president in 1998, ran on a platform against corruption and economic mismanagement, Venezuela’s economy was in a deep recession. Once in office, Chavez consolidated his hold over the government by drafting a new constitution that put him in power until 2012. Chavez died in 2013, but during his presidency, Venezuela was considered to be only "partly free." Economically, things were also difficult for Venezuela. Chavez did achieve some gains. Unemployment, though still high, fell to 7.6 percent in 2013 from its high of 14.5 percent in 1998. Similarly, poverty remained a problem despite falling from 50 percent to 28 percent in 2012. Yet, corruption was rampant, and there was a move to take certain industries into state ownership, with the oil industry being a particular target. Following his death, the situation for his successor, Nicolas Maduro, became worse. The decline in the price of oil resulted in economic collapse with inflation reaching 275 percent, the poverty rate above 30 percent, and considerable value reduction of the Venezuelan currency, the bolivar. The result was heavy losses in December 2015 parliamentary elections which saw the opposition gaining a majority of seats over the ruling United Socialist Party.

How do you think that Chavez’s unilateral changes to contracts with foreign oil companies affected future investment by foreigners in Venezuela?

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Shariqahmed Shariqahmed · Answer 1 · 2020-04-05T04:14:23+02:00

Answer:

The current contextual analysis is focused on the situation of macroeconomic fumble of the national economy without a reliable arrangement of the national government.In this point of view Hugo Chavez's choice of singularly changing the agreement conditions for remote oil firms has antagonistically influenced the future outside interest in the nation for the accompanying reasons-

This will result in to changes in income figures for remote oil firms regularly coming about in to misfortunes for them.
This will likewise bring about greater expenses of investigation and creation or misleadingly raise the costs which may not compare to showcase decided interest and supply conditions for the product.
This may likewise bring about the extended fights in court between outside oil firms and the Venezuelan government.

All the previously mentioned circumstances may influence profit contrarily and in this manner hinder future foreign interest in the nation.