Development Blogs.com

In yet another poorly choreographed move, Venezuelan President Hugo Chavez strikes again. This time around, he has opened negotiations with Spain’s Banco Santander to nationalize the Bank of Venezuela, as part of his plan for “21st Century Socialism.” Venezuela’s GINI coefficient is .48, and an estimated 37.9 percent of Venezuelans live below the national poverty line. Given Venezuela’s natural resource base and other assets, those numbers could be lower. Up until the 1980s debt crises, those numbers were lower across Latin America; however, such conditions were based on the unsustainable practices of Import-substitution Industrialization (ISI), when the nationalized firms dominated the formal economy. Gabriel Garcia Marquez brilliantly captured, in One...

Venezuela is not unique.  The problems its facing, including rising prices of basic food supplies and other goods, are similar for many others.  Solutions to these problems, however, are the ones that failed time and time before. Trying to figure out how to stop supply shortages, the government is now nationalizing cement industry to make sure that cement is kept in the country and not exported. ( Many other countries are putting export controls in place and reducing import barriers to increase the domestic supply of grains and other foodstuffs, but not all of them go as far as nationalizing industries). Chavez is also increasing taxes on foreign oil companies.  But are citizens happy with the moves?  Well, as recent polls show, the approval ratings of Chavez have dropped from...