Sunday, 2 August 2015

The Chávez farce: import substitution

12 September 1999: Chávez unveiled a "plan" to diversify the economy and make it less dependent on oil.
End of 2009: One of Chávez's military pals, Jesse Chacón, announced in one of his many positions as minister for everything a program for import substitution.
January 2010: Chávez announced a new fund to substitute imports
September 2014: Another of the former military coupsters, now minister Rodolfo Clemente Marco Torres, unveiled a plan to substitute imports.
1 August 205: Maduro makes public a new plan to substitute imports and diversify the economy.

There were many more declarations in the last 15 years about the regime's commitment to diversifying the economy. Actually: Venezuelan governments have repeated similar wishes for the past 5 decades or so but since Chavismo is in power, Venezuela's productivity has only known one way: down. 

The truth is that in 1998 Venezuela's non-oil related exports accounted for about 15% of the total and nowadays it is less than 4%.

Still, a change will be extremely difficult. According to Hinterlaces (not a pollster I trust much, but I think they do have it right here), most Venezuelans still think the fixed currency exchange rate of 6.3 Bolivars for a dollar should be maintained.

Venezuelans do not know what a free currency exchange is. Nobody, much less economists, wants or can explain them how things work in the world and what currency exchange rates have to do with productivity.

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