Venezuela Economic Structure

 Venezuela’s economic structure has undergone a significant change since Hugo Chavez’s government came into power in 1999. President Chavez has announced the nationalization of several industries in the nation since 2007, including the communications and electricity sectors. The nationalization of the oil and petroleum sector, which contributes about one-third of Venezuela’s GDP, has been the most critical amendment to the economic structure of Venezuela.[br]

 Venezuela’s economic structure has undergone a significant change since Hugo Chavez’s government came into power in 1999. President Chavez has announced the nationalization of several industries in the nation since 2007, including the communications and electricity sectors. The nationalization of the oil and petroleum sector, which contributes about one-third of Venezuela’s GDP, has been the most critical amendment to the economic structure of Venezuela.[br]

Venezuela Economic Structure: Overview

Venezuela’s GDP, according to the CIA World Factbook, was $353.5 billion during 2009. The service sector contributed the lion’s share of this amount, accounting for 61.4% of the total GDP and 64% of the total employment in the nation.

The growth of the manufacturing sector in the nation has been slow, primarily due to a lack of private investment. Nevertheless, Venezuela has a fairly strong manufacturing sector, employing 23% of the population, which exports apparel, beverages, steel, aluminum and textiles. The sector also manufactures cement, paper, tires and fertilizers for the domestic as well as export markets.

In the agricultural sector, Venezuela is basically not self-sufficient. In fact, the nation imports approximately two-thirds of its food needs. The US supplies about a quarter of Venezuela’s food imports. However, Venezuela manages to export some food products, including rice, fish, tropical fruits, cocoa and coffee. Besides, the sector employs about 13% of the nation’s population.

The contribution by different sectors to the economic structure of Venezuela, during 2009, was as follows:

• Agriculture: 4%

• Industry: 34.6%

• Services: 61.4%

   

Venezuela Economic Structure: Status of the Financial and Banking Sector

The Central Bank of Venezuela, also known as the Banco Central de Venezuela-BCV, is the monetary agent of the government. The bank is responsible for creating, incorporating and administering the various fiscal policies and tasks, including:[br]

• Holding foreign exchange and gold reserves

• Making payments and collections for the Treasury

• Buying foreign exchange (from exporters and oil companies) and reselling it to commercial banks or the

• government.

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• Additionally, the BCV works in close association with the Venezuelan government to issue notes, helping to maintain balance of the Venezuela economic structure.

The government of Venezuela plays a significant role in administering the nation’s financial system, particularly in administering the trade exchange rate. In January 2010, President Chavez announced a dual exchange-rate system for the Venezuelan bolivar. Under the system, the rate of imports for essential commodities, including medicine, food and industrial machinery, was fixed at 2.6 bolivar per US dollar. The rate for import of other products, such as telephones and cars, was fixed at 4.3 bolivars per dollar.