The danger of oil income as income finance for an oil producing country | OPINION

in Project HOPE24 days ago

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I believe that for any Venezuelan who has studied and analyzed the history of Venezuela he can come to the faithful conclusion that having become an oil producing country may have been the worst misfortune ever.

The problem is not the money that can enter a country as a result of oil exports; on the contrary, it is a blessing as long as those resources are well managed. However, in the case of Venezuela, when it was the oil boom, in which Venezuela reached the largest oil boom in memory in the contemporary history of Venezuela, I believe that the Venezuelan people and the governments of the moment were not prepared to face such an oil bonanza and income from the exports of the thousands of barrels that could be sold in international markets.

The leaders of the time were faced with an influx of millions of dollars from that oil bonanza, so that the politicians could figure and be popular with the people, they assumed an unsustainable public expenditure, with waste that went with the ambition of financing large projects, in which the government that preceded the previous one wanted to spend more to make itself felt.

The point arrived where public expense exceeded the money that the Venezuelan State could count on, we got into debt and acquired loans from the international monetary fund and the world bank, it was there where the country began to turn around in its vision and way of life, since the same leaders who were popular in their time because they gave the people the greatest possible amount of happiness, now imposed cuts in public expense, an increase in gasoline, the non-intervention of the State in the management of certain companies that belonged to the State.

These economic measures are not bad from my point of view, but in the short term they have a negative impact on the social welfare of the people, so that in Venezuela in the year 1989 the so-called Caracazo arises, which was an explosion of protests and looting in the capital of Venezuela (caracas). People were already accustomed to living a life of wealth from previous years, where Venezuela was considered as the Saudi Venezuela.

I don't know if we are suddenly paying for that erroneous vision of the past, because where there is abundance then there is scarcity, perhaps so much bonanza generated corruption, it generated a scenario where only a few got richer, while a majority got poorer and poorer.

The economic moral of the case is that if Venezuela manages to recover the economy of the past as an oil rentier country, with a daily production of 3,200,000 barrels of oil per day, both the Venezuelan people and the leaders of the moment must be aware that the excesses in the present can generate a state of economic detriment in the future, where corruption can take over all the strata of our society.

The convenient thing would be to assume the administration of that bonanza with criteria of scarcity, where there is a culture of saving, where our international reserves return to do as we once did. It is also important to point out that the governments in power must understand that the administration of the resources must not be used to be populist leaders or to impress the people, but that those resources must be administered with sustainable criteria, for the development and growth of my country for a long period of time.

This is an Opinion article with characteristics ranging from political, economic and social, I hope that the reading can be useful for all my public reader, until a next delivery from his friend @carlos84.

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Thanks for sharing an interesting overview, mismanagement are bound to happen mostly when a country center their source of income in a specific source of generating money it makes government to be more greedy and corruption tend to rise at an alarming rate it quite similar with most African countries that export large barrel of crude oil only the rich benefit from such natural resource and the poor are getting poorer.
I hope government set a better regulations on how any country's resource are out into better use for benefit of the mass and not self greed.

I think you have a point in this and also it is well said. And I was wondering do you think when there is abundance of oil in venezuela, this might later lead to scarcity of riches

a solid reading, and I think statistically things must change, because how a situation lasts a long time, the chances of it changing are on the rise.

Greetings friend @carlos84, in an interesting topic you share with us in this opportunity the same related to the dependence of any country to the oil rentier as it is the case of our beloved Venezuela, a lot of fabric to cut in this aspect, But in the case of Venezuelans, I share your criteria since we have not known how to look beyond the generation of income through hydrocarbons, be it oil or gas, during the last century.

The detail will be the real political will that I believe does not exist at present and this makes us find ourselves in a closed situation for the time being, that is the path of diversification and this is the momento.

Thank you, my friend, for this important article. Successes.

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