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Debate: Should Hugo Chávez focus on the private sector more than social spending?
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- | ===Will the development of private sector improve the investment climate?=== | + | ===Will the people of Venezuela support giving preference to private sector rather than to social spendings?=== |
- | + | ||
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====Yes==== | ====Yes==== | ||
- | *'''The lack of support to private sector makes Venezuela unattractive for investments.''' The business environment is claimed to be risky and discourages investment, according to El Universal. As measured by prices on local stock exchanges, investors are willing to pay on average 16.3 years worth of earnings to invest in Colombian companies, 15.9 in Chile, 11.1 in Mexico, and 10.7 in Brazil, but only 5.8 in Venezuela. The World Economic Forum ranked Venezuela as 82 out of 102 countries on a measure of how favorable investment is for institutions. However, the encouragement of private initiative will result in the improvement of the investment climate.[http://english.eluniversal.com/2006/08/17/en_eco_art_17A767757.shtml] | + | *'''Current social programmes do not bring benefit to people of Venezuela.''' Critics, including senior economic officials who have broken ranks with Chávez, say the money is being frittered on short-term programs that boost Chavez's popularity, rather than being invested in long-term growth.[http://www.boston.com/news/nation/articles/2006/08/13/critics_slam_venezuelan_oil_windfall_spending/ ] |
- | + | *Critics also cite the many public hospitals that lack basic medicine and hygienic supplies. Only a quarter of the 110,000 new houses needed each year are being built, because of the public sector's incompetence and its unwillingness to involve the private sector.[http://www.economist.com/displayStory.cfm?story_id=5526589] That also means insufficiency of the social programs in comparison with possible advantages of private sector development. | |
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====No==== | ====No==== | ||
- | *'''The increase in private sector in the economy causes instability.''' Investors are more interested in putting their mile into the economy that they are sure in. Economy where a lot of spheres belong to the government is easy to predict and, therefore, take profits from the investments. On the contrary, private sector that is extremely changeable and unpredictable will prevent the investors from putting their money in Venezuela's economy. | + | *'''Great social spendings allow people of Venezuela to use many services free.''' According Dan Grech, "President Hugo Chavez dedicates more than 20 percent of Venezuela's GDP to social spending. The U.S., by comparison, spends a similar percentage on its entire federal budget." This number is enough to provide free medicine, education, etc. However, cutting social spendings will deprive the population of Venezuela from the possibility of using of these free services and, as a result, cause dissatisfaction of the people. |
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- | ===Will the people of Venezuela support giving preference to private sector rather than to social spendings?=== | + | ===Will the development of private sector improve the investment climate?=== |
+ | |||
|- | |- | ||
|width="45%" bgcolor="#FFFAE0" style="border:1px solid #BAC5FD;padding:.4em;padding-top:0.5em;"| | |width="45%" bgcolor="#FFFAE0" style="border:1px solid #BAC5FD;padding:.4em;padding-top:0.5em;"| | ||
====Yes==== | ====Yes==== | ||
- | *'''Current social programmes do not bring benefit to people of Venezuela.''' Critics, including senior economic officials who have broken ranks with Chávez, say the money is being frittered on short-term programs that boost Chavez's popularity, rather than being invested in long-term growth.[http://www.boston.com/news/nation/articles/2006/08/13/critics_slam_venezuelan_oil_windfall_spending/ ] | + | *'''The lack of support to private sector makes Venezuela unattractive for investments.''' The business environment is claimed to be risky and discourages investment, according to El Universal. As measured by prices on local stock exchanges, investors are willing to pay on average 16.3 years worth of earnings to invest in Colombian companies, 15.9 in Chile, 11.1 in Mexico, and 10.7 in Brazil, but only 5.8 in Venezuela. The World Economic Forum ranked Venezuela as 82 out of 102 countries on a measure of how favorable investment is for institutions. However, the encouragement of private initiative will result in the improvement of the investment climate.[http://english.eluniversal.com/2006/08/17/en_eco_art_17A767757.shtml] |
- | *Critics also cite the many public hospitals that lack basic medicine and hygienic supplies. Only a quarter of the 110,000 new houses needed each year are being built, because of the public sector's incompetence and its unwillingness to involve the private sector.[http://www.economist.com/displayStory.cfm?story_id=5526589] That also means insufficiency of the social programs in comparison with possible advantages of private sector development. | + | |
|width="45%" bgcolor="#F2FAFB" style="border:1px solid #BAC5FD;padding:.4em;padding-top:0.5em;"| | |width="45%" bgcolor="#F2FAFB" style="border:1px solid #BAC5FD;padding:.4em;padding-top:0.5em;"| | ||
====No==== | ====No==== | ||
- | *'''Great social spendings allow people of Venezuela to use many services free.''' According Dan Grech, "President Hugo Chavez dedicates more than 20 percent of Venezuela's GDP to social spending. The U.S., by comparison, spends a similar percentage on its entire federal budget." This number is enough to provide free medicine, education, etc. However, cutting social spendings will deprive the population of Venezuela from the possibility of using of these free services and, as a result, cause dissatisfaction of the people. | + | *'''The increase in private sector in the economy causes instability.''' Investors are more interested in putting their mile into the economy that they are sure in. Economy where a lot of spheres belong to the government is easy to predict and, therefore, take profits from the investments. On the contrary, private sector that is extremely changeable and unpredictable will prevent the investors from putting their money in Venezuela's economy. |
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Revision as of 20:04, 29 September 2008
Should Hugo Chávez focus on the private sector more than social spending? |
Background and Context of Debate:Despite the high prices on oil, the economy of Venezuela has recently slowed down. Prices on food are increasing, the cost of feeding a family of five rose by 2.4% in May and stands some 60% higher than the minimum wage. The inflation is also on increase – the inflation rate climbed above 3% a month late last year. Many people believe that it's high time Hugo Chávez did something to overcome the ongoing crisis. This debate asks whether Hugo Chávez and the Venezuelan government could reduce the impact of this crises by focusing on the development of private industries. |
Would an increased motivation to succeed appear in a country with a larger private sector? | |
Yes
|
No
|
Is it possible that Chávez will consider greater private developent? | |
Yes
|
No
|
Will the people of Venezuela support giving preference to private sector rather than to social spendings? | |
Yes
|
No
|
Will the development of private sector improve the investment climate? | |
Yes
|
No
|
Would privatization help Hugo Chávez to solve food problem? | |
Yes
|
No
|
References:The Economist: Venezuela's economy Marketplace:Venezuela's social spending spree The Boston Globe: Critics slam Venezuelan oil windfall spending [http://www.economist.com/displayStory.cfm?story_id=5526589 Venezuela Mission impossible] | |
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