Saturday, 5 April 2014

GDP, Venezuela, Nigeria and Norway

Sycophants for the Venezuelan regime, people like Mark Weisbrot in the USA, often talked about the impressive GDP growth shown in the last decade or so. Of course, such impressive GDP rates are no longer present. But: did they ever mean something, at all?

GDP growth is, at most, a faint indicator of something. It can hardly be used to compared countries with different population rates and levels of actual development.

 Look at the following chart. It shows simple GDP growth according to the World Bank for three oil-exporting countries: Nigeria, Norway and Venezuela. As you can see, Nigeria supposedly "outperformed both Venezuela and Norway during most of the last 20 years. The Nigerian government didn't have the same amount of propaganda consultants as Chávez's regime. Few if anyone was talking about development there. 

There is another thing you can notice: both Venezuela and Nigeria show a very unstable growth. Periods of huge hikes switch to deep falls. Norway, on the other hand, remains smoothly just over the positive line.

Positive and negative years don't balance each other. What gets destroyed is gone. You cannot build on destroyed value. It is obviously much easier to show a rise if you firstly fall but that rise means almost nothing. You don't really have to be an economist to understand this.

The data reaches only up to 2012. Last year Venezuela grew by only 1.2% and that growth was based on a massive spending of loaned money. There was hardly any investment. It was money to buy food and appliances and a little bit of housing - but hardly enough - for yet a new couple of election rounds, elections that are supposed to show Venezuela has a democracy even if there isn't the slightest remain of rule of law. 

Venezuela's GDP is likely to stay very low in the coming years and the actual GDP per capita will keep going down as long as Chavismo is in power. Chavismo and its sycophants abroad will blame it on capitalism or some US embargo. Norway is likely to keep its humble but steady growth.

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