Economic Analysis

Economic Analysis: Venezuela
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I.
EXECUTIVE SUMMARY
Venezuela has experienced very rapid growth since the bottom of the recession in 2003, and
grew by 10.3 percent in 2006 and about 8.4 percent last year. The most commonly held view
of the current economic expansion is that it is an "oil boom" driven by high oil prices, as in
the past, and is headed for a "bust." The coming collapse is seen either as a result of oil
prices eventually declining, or the government's mismanagement of economic policy. There
is much evidence to contradict this conventional wisdom. Venezuela suffered a severe
economic growth collapse in the 1980s and 1990s, with its real GDP peaking in 1977. In this
regard it is similar to the region as a whole, which since 1980 has suffered its worst longterm growth performance in more than a century. Hugo Chvez Fras was elected in 1998
and took office in 1999, and the first four years of his administration were plagued by political
instability that had a large adverse impact on the economy. This culminated in a military
coup that temporarily toppled the constitutional government in April 2002, followed by a
devastating oil strike in December 2002-February 2003. The oil strike sent the economy into
a severe recession, during which Venezuela lost 24 percent of GDP. But in the second
quarter of 2003, the political situation began to stabilize, and it has continued to stabilize
throughout the current economic expansion. The economy has had continuous rapid growth
since the onset of political stability. Real (inflation-adjusted) GDP has grown by 87.3 percent
since the bottom of the recession in 2003. It is likely that the government's expansionary
fiscal and monetary policies, as well as exchange controls, have contributed to the current
economic upswing. Central government spending increased from 21.4 percent of GDP in
1998 to 30 percent in 2006. Real short-term interest rates have been negative throughout all
or most of the recovery. The government's revenue increased even faster than spending
during this period, from 17.4 to 30 percent of GDP over the same period, leaving the central
government with a balanced budget for 2006. The government has planned conservatively
with respect to oil prices: for example, for 2007, the budget planned for oil at $29 per barrel,
compared to an average price of $65.20 dollars per barrel for Venezuelan crude last year.
The government has typically exceeded planned spending as oil prices come in higher than
the budgeted price, so it is possible that spending would be reduced if oil prices decline.
However, Venezuela has a large cushion of reserves to draw upon before an oil price decline
would begin to squeeze its finances. A decline in oil prices of 20 percent or more could be
absorbed from official international reserves, which at $34.3 billion at the end of last year
(2007) are enough to pay off all of Venezuela's foreign debt. This does not include other
government offshore accounts, which are estimated at as much as $21.5 billion. With its low
foreign debt (11.4 percent of GDP), the government could also tap international credit
markets in the event of an oil price decline. Furthermore, a collapse of oil prices does not

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appear to be likely in the foreseeable future. The January 8 short-term outlook of the US
Energy Information Agency projects oil prices (WTI crude) at $87.21 per barrel for 2008 and
$81.67 for 2009, compared to an average price of $72.3 for 2007. The risks of unanticipated
supply shocks especially in the volatile Middle East seem to be mostly on the downside,
which would increase prices. The Chvez government has greatly increased social
spending, including spending on health care, subsidized food, and education. The most
pronounced difference has been in the area of health care. For example, in 1998 there were
1,628 primary care physicians for a population of 23.4 million. Today, there are 19,571 for a
population of 27 million. The Venezuelan government has also provided widespread access
to subsidized food. By 2006, there were 15,726 stores throughout the country that offered
mainly food items at subsidized prices (with average savings of 27 percent and 39 percent
compared to market prices in 2005 and 2006, respectively).
The central government's social spending has increased massively, from 8.2 percent of GDP
in 1998 to 13.6 percent for 2006. See Table 2. In real (inflation-adjusted) terms, social
spending per person has increased by 170 percent over the period 1998-2006. But this does
not include PDVSAs social spending, which was 7.3 percent of GDP in 2006. With this
included, social spending reached 20.9 percent of GDP in 2006, at least 314 percent more
than in 1998 (in terms of real social spending per person). The poverty rate has been cut in
half from its peak of 55.1 percent in 2003 to 27.5 percent in the first half of 2007, as would
be expected in the face of the very rapid economic growth during these years. If we compare
the pre-Chvez poverty rate (43.9 percent) with the first half of 2007 (27.5 percent) this is a
37 percent drop in the rate of poverty. However this poverty rate does not take into account
the increased access to health care or education that poor people have experienced. The
situation of the poor has therefore improved significantly beyond even the substantial
poverty reduction that is visible in the official poverty rate, which measures only cash
income. Measured unemployment has also dropped substantially to 9.3 percent in the first
half of 2007, its lowest level in more than a decade; as compared to 15.3 percent in the first
half of 1999 and 19.2 percent in the first half of 2003 (coming out of the recession). Formal
employment has also increased significantly since 1998, from 45.4 to 50.6 percent of the
labor force. Perhaps most importantly, employment as a percentage of the labor force has
increased by 6 percentage points since the first half of 1999, which is quite substantial.
(Since 2003, it has increased by almost 10 percentage points). The main challenges facing

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the economy are in the areas of the exchange rate and inflation. The Venezuelan currency is
substantially overvalued. The government is reluctant to devalue because this would raise
inflation, which is currently running at 22.5 percent and exceeds their target. Since there are
exchange controls and the government is running a large current account surplus (7 percent
of GDP), there is nothing that would force devaluation in the near future (as for example, the
currency collapses in Argentina, Russia, and Brazil in the late 1990s). But this poses an
intermediate run problem, since even if inflation is stabilized and begins to be reduced,
current rates of inflation will continue to appreciate Venezuela's real exchange rate. This
makes imports artificially cheap and non-oil exports too expensive on world markets, hurting
the tradable goods sector and eventually becoming unsustainable. It also makes it extremely
difficult for the economy to diversify away from its dependence on oil. Inflation itself is a
problem, now running at 22.5 percent. But it should be emphasized that double-digit inflation
rates in a developing country such as Venezuela are not comparable to the same
phenomenon occurring in the United States or Europe. Inflation in Venezuela was much
higher in the pre-Chvez years, running at 36 percent in 1998 and 100 percent in 1996. It
has fallen through most of the current recovery, from 40 percent annual rate (monthly, yearover-year) at the peak of the oil strike in February 2003 to 10.4 percent in May 2006, before
climbing again to its present rate Because of its large current account surplus, large
reserves, and low foreign debt, the government has a number of tools available to stabilize
and reduce inflation as well as eventually bring the currency into alignment without
sacrificing the growth of the economy. It appears the government is committed to
maintaining a high rate of growth, in addition to its other goals. Venezuela is also well
situated to withstand negative external shocks, including a likely U.S. recession or even a
serious global slowdown, a significant drop in the price of oil, and problems in the
international credit and financial system. Therefore, at present it does not appear that the
current economic expansion is about to end any time in the near future.
II.
INTRODUCTION
The Central Bank of Venezuela is responsible for developing monetary policy for the
Venezuelan bolvar, which is used as currency. The currency is primarily printed on paper
and distributed throughout the country. The President of the Central Bank of Venezuela is
presently Eudomar Tovar, who also serves as the country's representative in the
International Monetary Fund. According to the Heritage Foundation and the Wall Street
Journal, Venezuela has the weakest property rights in the world, scoring only 5.0 on a scale

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of 100; expropriation without compensation is not uncommon. Venezuela has a mixed
economy dominated by the petroleum sector, which accounts for roughly a third of GDP,
around 80% of exports, and more than half of government revenues. Per capita GDP for
2009 was US$13,000, ranking 85th in the world. Venezuela has the least expensive petrol in
the world because the consumer price of petrol is heavily subsidized.
More than 60% of Venezuela's international reserves are in gold, eight times more than the
average for the region. Most of Venezuela's gold held abroad is located in London. On
November 25, 2011, the first of US$11 billion of repatriated gold bullion arrived in Caracas;
Chvez called the repatriation of gold a "sovereign" step that will help protect the country's
foreign reserves from the turmoil in the U.S. and Europe. However government policies
quickly spent down this returned gold and in 2013 the government was forced to add the
dollar reserves of state owned companies to those of the national bank in order to reassure
the international bond market.
Manufacturing contributed 17% of GDP in 2006. Venezuela manufactures and exports heavy
industry products such as steel, aluminum and cement, with production concentrated around
Ciudad Guayana, near the Guri Dam, one of the largest in the world and the provider of
about three-quarters of Venezuela's electricity. Other notable manufacturing includes
electronics and automobiles, as well as beverages, and foodstuffs. Agriculture in Venezuela
accounts for approximately 3% of GDP, 10% of the labor force, and at least a quarter of
Venezuela's land area. Venezuela exports rice, corn, fish, tropical fruit, coffee, beef, and
pork. The country is not self-sufficient in most areas of agriculture. In 2012, total food
consumption was over 26 million metric tonnes, a 94.8% increase from 2003.
Since the discovery of oil in the early 20th century, Venezuela has been one of the world's
leading exporters of oil, and it is a founding member of OPEC. Previously an
underdeveloped exporter of agricultural commodities such as coffee and cocoa, oil quickly
came to dominate exports and government revenues. The 1980s oil glut led to an external

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debt crisis and a long-running economic crisis, which saw inflation peak at 100% in 1996 and
poverty rates rise to 66% in 1995 as (by 1998) per capita GDP fell to the same level as
1963, down a third from its 1978 peak. The 1990s also saw Venezuela experience a major
banking crisis in 1994. The recovery of oil prices after 2001 boosted the Venezuelan
economy and facilitated social spending. In 2003 the government of Hugo Chvez
implemented currency controls after capital flight lead to a devaluation of the currency. This
lead to the development of a parallel market of dollars in the subsequent years with the
official exchange rate less than a sixth of black market value. The fallout of the 2008 global
financial crisis saw a renewed economic downturn.
With social programs such as the Bolivarian Missions, Venezuela made progress in social
development in 2000s, particularly in areas such as health, education, and poverty. Many of
the social policies pursued by Chvez and his administration were jumpstarted by the
Millennium Development Goals, eight goals that Venezuela and 188 other nations agreed to
in September 2000. It is expected that Venezuela will meet all eight goals by the 2015
deadline.
III.
POPULATION
A. TOTAL
It has a population of 31,292,000 as of 2014.
1. GROWTH RATES - 1.42% (2014 est.)
2. NUMBER OF LIVE BIRTHS
Total: 19.33 deaths/1,000livebirths
male: 22.73 deaths/1,000livebirths
female: 15.75 deaths/1,000 live births (2014 est.)
3. BIRTHRATES - 19.42 births/1,000 population (2014 est.)
B. DISTRIBUTION OF POPULATION
1. AGE
0-14 years: 28.2% (male4,143,840/female 3,985,489)
15-24years: 18.8% (male2,723,856/female 2,697,672)

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65 years and over: 5.9% (male 755,183/female 959,829) (2014 est.)
2. SEX
At birth:1.05 male(s)/female
0-14
years: 1.04 male(s)/female
15-24 years: 1.01 male(s)/female

65 years and over: 0.79 male(s)/female
total population: 0.98 male(s)/female (2014 EST.)
3. GEOGRAPHIC ARES (URBAN, SUBURBAN, AND RURAL DENSITY AND

CONCENTRATION)
Urban population = 27,113,033
% Urban = 93.4%
Rural population = 1,930,522
% Rural = 6.6%
4. MIGRATION RATES AND PATTERNS
Net Migration Rate (2010-2015): 0.3-migrants/1,000 populations
5. EHTNIC GROUP
The original inhabitants of Venezuela were Amerindians, predominantly Caribs and
Arawaks. The majority (about 68%) of the present population is mestizo (mixed race).
Approximately 21% are European, primarily Spanish, Italian, Portuguese, and
German. Blacks account for an estimated 810%, and Amerindians for about 2%.
Arab peoples are also represented in the overall populace.
IV. ECONOMIC STATISTIC AND ACTIVITY
A. GROSS NATIONAL PRODUCT (GNP OR GDP)
1. TOTAL
The Gross Domestic Product (GDP) in Venezuela was worth 438.28 billion US
dollars in 2013. The GDP value of Venezuela represents 0.71 percent of the world
economy. GDP in Venezuela averaged 92.13 USD Billion from 1960 until 2013,

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reaching an all time high of 438.28 USD Billion in 2013 and a record low of 8.61
USD Billion in 1960. The World Bank Group reports GDP in Venezuela.
2. RATE OF GROWTH (real GNP or GDP)
GDPrealgrowthrate:2.6% (2Q 2013 est.)

B. PERSONAL INCOME PER CAPITA
C. AVERAGE FAMILY INCOME

Distribution of family income - Gini index: 39 (2011) 49.5 (1998)
Lowest 10%: 1.7%
highest 10%: 32.7% (2006)
D. DISTRIBUTION OF WEALTH
Because of the oil wealth, Venezuelan workers "enjoyed the highest wages in Latin America.
This situation was reversed when oil prices collapsed during the 1980s. The economy
contracted, and the number of people living in poverty rose from 36% in 1984 to 66% in
1995. The country suffered a severe banking crisis (Venezuelan banking crisis of 1994).
Latin American countries, Venezuela has an unequal distribution of wealth.
E. MINERALS AND RESOURCES

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Venezuela is located in northern South America and borders the North Atlantic Ocean and
the Caribbean Sea, between Guyana and Colombia. It covers an area of 912,050 km 2 and
its total population is 28,047,938, according to 2012 estimates. The climatic conditions vary
from tropical to humid, and are moderate in the highlands.
Venezuela is awash with natural resources such as diamonds, bauxite, gold, iron ore, natural
gas and petroleum. The GDP of the country is $378.9 billion as of 2011. The country largely
depends on oil revenues, which accounts for about 95% of the export value and around 12%
of the countrys GDP value. After a major economic slowdown in the period of 2009 to 2010,
the country regained its economic status with an increase in GDP growth rate by 4.2% in
2011.
Overview of Resources
Venezuela has rich resources of gold, nickel, iron ore, steel, diamond, alumina, coal, bauxite,
asphalt, natural gas, and petroleum.
The major mineral resources produced in the country are:
Bauxite, accounting for nearly 1.2% of global production.
Aluminum, 1.1% of global production.
Nickel, 1.0% of global production.
The countrys mineral exports in 2010 amounted to $65.8 billion, of which petroleum exports
amounted to $62.3 billion and iron ore, cement, steel, aluminum, bauxite and other products
amounted to $3.5 billion.
Metals
According to 2011 reports, about 11 metric tons (Mt) of gold was produced by Venezuela.
The country has 365.8 Mt of gold reserves, which makes it the worlds 15 th largest gold

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producer according to a report by the World Gold Council published in August 2011. Gold
reserves in the country account for nearly 61% of the countrys total mineral reserves.
The Las Cristinas mine of Venezuela has gold reserves of 27 million ounces. In 2009, the
mine was estimated to have 464.4 million Mt of gold.
Fossil Fuels
Paso Diablo coalmine of Venezuela produces 7.5 million metric tons per year (Mt/yr) of
pulverized coal injection (PCI) coal. The Guasare coal basin has allowed the Carbones del
Guasare company to access nearly 175 Mt of coal reserves. Mina Norte coal mine is another
mine in the country which has considerable amount of coal.
The 5.1-trillion m3 natural gas reserves in Venezuela are the second largest in the Western
Hemisphere. In 2010, the total daily production of natural gas in the country was averaged to
be 3.3 million m3. The total amount of natural gas produced in the country in 2010 was
29,500 million m3. Barrancas and Yucal Placer Blocks are the major projects executed in
the natural gas mining sector.
In 2010, the Ministerio del Poder Popular para la Energa y Petrleo estimated crude oil
refining capacity of the country to be 1.28 Mbbl/d. The countrys crude oil production in 2010
amounted to nearly 986 million 42-gallon barrels. The major refineries of crude oil in the
country include:
Paraguana refining center with total capacity of 940,000 bbl/d
Puerto de la Cruz refinery, total capacity of 195,000 bbl/d
El Palito refinery, total capacity of 127,000 bbl/d.
Nearly 50,000 t of uranium reserves were found in the States of Amazonas and Bolivar.
Investment

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Venezuelas economy is mainly based on its supply of petroleum products and hence it was
greatly affected by sudden fall in oil prices during the global recession. The Venezuelan
government has implemented tax incentives for small and large companies that had invested
in the countrys mining sector, in an attempt to boost the economy.
Despite having abundant resources like gold, aluminum and petroleum, the countrys mining
industry is still underdeveloped. Few Australian companies play a vital role in the mining
industry of Venezuela. Excel Mining and RFC Finance Corporation are the companies
involved in two mining projects in the country. However, the government has nationalized
many industries that have major control over the countrys natural resources. The
government has invested about US$5.81 billion to develop its mining industry. It has also
approved US$159 million for the workers in the country's heavy industries that extract and
manufacture gold, bauxite, iron and other mineral resources.
The countrys large reserves of crude petroleum are more likely to attract investment from
countries like Russia, Italy, Iran and China in the future, despite its uncertain economic
condition and nationalization initiatives. In addition, PDVSAs plans for exploration and
production of natural resources could ensure development of Orinoco hydrocarbon
resources. Also, the plans for building new crude oil refineries could encourage the countrys
strategic alliances with other strong economies. In addition, the development of Las Cristinas
is expected to generate huge revenues. Thanks to all these ambitious development plans,
Venezuela's mining sector will likely improve in future and contribute more to the country's
economy.
F. SURFACE TRANSPORTATION
The most important mode of domestic cargo and passenger transport is shipping over the
country's more than 16,000 km (9,900 mi) of navigable inland waterways, which include
7,100 km (4,410 mi) navigable to oceangoing vessels. A large percentage of Venezuelan
tonnage is carried by ships of the government-owned Venezuelan Navigation Co. In 2002,

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the merchant fleet had 45 vessels of over 1,000 gross tons, for a total GRT of 716,361.
Shallow-draught ships are able to reach Colombian river ports in the wet season. Shallowdraught river steamers are the principal means of transportation from the eastern llanos to
Puerto Ordaz, which, thanks to constant dredging, is also reached by deep-draught
oceangoing vessels. Dredging operations also are maintained in Lake Maracaibo to allow
the entry of oceangoing tankers. The government has invested substantially in the port of La
Guaira, hoping to make it one of the most modern in the Caribbean area. Puerto Cabello
handles the most cargo, and Maracaibo is the main port for oil shipments.
Highway and railroad construction is both costly and dangerous because of the rough
mountainous terrain in the areas of dense population. Nevertheless, the government has
undertaken massive highway construction projects throughout the country. Major ventures
include the completion of the Caracas-La Guaira Autopista, which links the capital with its
airport at Maiqueta and its seaport at La Guaira, and a section of the Pan-American
Highway connecting Carora with the Colombian border. The General Rafael Urdaeta Bridge
crosses the narrow neck of water connecting Lake Maracaibo with the Gulf of Venezuela and
provides a direct surface link between Maracaibo and the east. By 2002, Venezuela had
96,155 km (59,751 mi) of highway, of which 32,308 km (20,076 mi) were paved. In 2000
there were 1,326,200 passenger cars and 1,078,578 commercial vehicles in Venezuela.
Venezuela's two railroads carry mostly freight. Rail transportation is concentrated in the
northern states of Lara, Miranda, Carabobo, Aragua, and Yaracuy, with branches connecting
the principal seaports with the important cities of the central highlands. There were 682 km
(424 mi) of track in 2002, 434 km (270 mi) of which were owned and operated by the
government. Much of the equipment is antiquated, and the linking of lines is difficult because
of the different gauges in use. The government planned in the early 1980s to build a 3,900km (2,420-mi) railroad network by the end of the decade; however, the financial crisis that
began in 1983 has scaled the program down to 2,000 km (1,200 mi) over 20 years. The first

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7.2-km (4.5-mi) section of a government-financed metro line in Caracas was opened in
1983.
Cities and towns of the remote regions are linked principally by air transportation. In 2001,
there were 372 airports, 127 of which had paved runways. Venezuela has three main
airlines, the government-owned Aerovas Venezolanas S.A. (AVENSA), Lnea Aeropostal
Venezolana (LAV), and Venezolana Internacional de Aviacin, S.A. (VIASA); VIASA, an
overseas service, is jointly run by AVENSA and LAV. A new airline, Aeronaves del Centro,
began domestic flights in 1980. The government has expanded Simn Bolvar International
Airport at Maiqueta, near Caracas, to accommodate heavy jet traffic. In 2001, 4,051,700
passengers were carried on scheduled domestic and international airline flights.
USAGE RATES
Transportation: Railways: total: 806 km (2008). Highways: total: 96,155 km; paved:
32,308 km; unpaved: 63,847 km (2002 est.). Waterways: 7,100 km; Rio Orinoco and Lago
de Maracaibo accept oceangoing vessels (2011). Ports and harbors: Amuay, Bajo Grande,
El Tablazo, La Guaira, La Salina, Maracaibo, Matanzas, Palua, Puerto Cabello, Puerto la
Cruz, Puerto Ordaz, Puerto Sucre, Punta Cardon. Airports: 444 (2013).
G. COMMUNICATION SYSTEMS
1. TYPES
Media of Venezuela comprises the mass and niche news and information communications
infrastructure of Venezuela. Thus, the media of Venezuela consists of several different types
of communications media: television, radio, newspapers, magazines, cinema, and Internetbased news outlets and websites. Venezuela also has a strong music industry and arts
scene.
Telephone

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Venezuela has international country telephone code 58 and three-digit area codes (plus an
initial '0'), and phone numbers are seven digits long.
Area codes beginning with '04' - e.g. 0412, 0414, 0416 - are mobile phones, while area
codes beginning '02' - e.g. 0212 (Caracas), 0261 (Maracaibo) are landlines.
A single emergency number 171 is used in most of the country for police, ambulance and
firefighters.
The international phone number format for Venezuela is +58-(area code without '0')-(phone
number)
- To dial to another area code: (area code starting with '0')-(phone number)
- To dial to another country: 00-(country code)-(area code)-(phone number)
- Directory enquiries/information (in spanish): 113
- Emergency service for mobile phones: (in spanish): 911 (Movistar), 112 (Digitel)
Public payphones use prepaid cards, which cannot be recharged but are easily available in
shopping centers, gas stations, kiosks, etc. Phone boxes are common in the cities and do
not accept coins. The vast majorities are operated by the former state monopoly, CANTV,
although some boxes operated by Digitel or Movistar do exist, particularly in remote areas.
CANTV prepaid cards can be used only in their booths.
More popular today are the ubiquitous 'communication centers' or clusters of phone booths
located inside metro stations, malls, or like a normal store in the street. Most of these
comunication centers are operated either by CANTV or Movistar, and offer generally cheap
phone calls from a normal phone in comfortable booths equipped with a seat. A log is made
of all your calls and you pay when exiting the store.
Many street vendors or buhoneros also offer phone calls from portable (antenna-based)
landlines set up at improvised stalls. Callers are charged by the minute.
Mobile phones
Mobiles operated by Movilnet, a division of CANTV, start with the 0416 code and use the
CDMA system. Rival Telefonica Movistar, formerly Telcel, start with 0414/0424 and use both

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CDMA & GSM (GSM 850 Mhz). Digitel is another operator with a GSM (GSM 900 Mhz)
network and its numbers start with 0412. It is possible to buy a pay-as-you-go SIM card for
Digitel's GSM phones, but make sure your phone is unlocked. Please remember that the
pay-as-you-go SIM card from Digitel is not active immediately but after few days. The cost of
the card is around 80,000 Bs. Top up vouchers from 10,000 Bs. The cost of a text message
abroad is 300 Bs.
You may use your phone with a foreign SIM card in roaming. Check: www.gsmworld.com or
call to your operator for roaming information to Venezuela.
Internet
Internet cafes, often incorporated in the above-mentioned 'communication centers' are
increasingly common, and even small towns usually have at least one spot with more or less
decent connections.
Post
Venezuela's state-owned Ipostel is slow, unpredictable and not widely used. Ipostel offices
are few and far between, although they are still probably your best bet for sending postcards
back home. For mailing within Venezuela, courier services such as MRW, Domesa and
Zoom are the most popular. These usually guarantee next day delivery.
USAGE RATES
Communications: Telephones: main lines in use: 7.65 million (2012); mobile cellular:
30.52 million (2012). Radio broadcast stations: AM 235, FM n.a. (20 in Caracas),
shortwave 11 (2014). Radios: 10.75 million (1997). Television broadcast stations: 44
(2014). Televisions: 4.1 million (1997). Internet Service Providers (ISPs): 1.016 million
(2012). Internet users: 8.918 million (2009).
H. WORKING CONDITIONS

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In 1999, some 10.225 million Venezuelans were part of the formal labor force (accounted for
in official statistics), but it is possible that another 4 million workers may be part of the
informal labor force (workers, mostly in menial jobs, who lack legal protections and benefits).
Working conditions in Venezuela appear to vary according to the degree of urbanization that
the worker enjoys, with more workers in cities represented by a union. Many of the work
benefits made available by the Venezuelan Social Security Institute (such as maternity
benefits or payment for work-related illnesses) are less available to rural workers than to
their urban counterparts. Although only 25 percent of workers in the formal labor force are
organized, the unions have been able to exert an influence over politics that is far greater
than the number of workers they represent. For example, unions were instrumental in getting
a 10 percent increase in the minimum wage in 1999 and a 20 percent increase in 2000. The
Constitution of 1999 includes progressive provisions that regulate working hours and
conditions.
Urbanization has also encouraged the increased participation and empowerment of women
in the Venezuelan workforce. In 1987, women constituted 31 percent of the labor force. Still,
women continue to receive lower salaries than men for comparable work, and are more
likely to be members of the informal labor sector.
Venezuelans with a university degree are more likely to hold the prestigious jobs in business
and the professions, and they are generally more philanthropic and active in their
communities than their counterparts in other South American countries.
3. SALARIES AND BENEFITS
Minimum salary
The Decree establishes the following new minimum salary scales for workers,
effective as of January 6, 2014, regardless of the number of workers employed:

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Pensioners and retirees

The Decree homologates the pensions of pensioners and retirees of the National Public
Administration, as well as pensions granted by the Venezuelan Institute of Social Security
(IVSS), at the same amount as the minimum salary, namely Bs. 3,270.30 per month, as of its
entry into force.
Adolescents and apprentices
In accordance with Article 303 of the LOTTT, the Decree provides that when the work of
adolescents is performed in conditions that are equal to those of the other workers, the
minimum salary will be that which is set forth in Article 1 of the Decree, i.e., Bs. 3,270.30 per
month as of the entry into force of the Decree.
Method of payment
According to the Decree, the minimum salary must be fully paid in cash, not allowing for any
payment in kind.
Sanctions
Article 7 of the Decree provides that if an employer pays less than the established national
minimum salary, it will be punished, in accordance with Article 533 of the LOTTT, with a fine
of no less than the equivalent of 120 tax units nor more than the equivalent of 360 tax units.
Old Age, Disability, and Survivors

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Regulatory Framework
First law: 1940.
Current law: 2010 (social security).
Type of program: Social insurance system.
Coverage
Private- and publicsector employees; cooperative members; and household, seasonal, and
casual workers.
Voluntary coverage for self-employed persons, unemployed pregnant women, and persons
who were previously covered.
Special system for military personnel.
Source of Funds
Insured person: 4% of monthly covered earnings for private-sector workers; 2% for publicsector workers and cooperative members.
The maximum monthly earnings used to calculate contributions are 10 times the minimum
urban wage.
The minimum urban wage is 1,548 bolivares a month.
The insured's contributions also finance sickness and maternity benefits and the marriage
grant (see Family Allowances, below).
Self-employed person: A percentage of monthly covered earnings in the last 100 weeks.
The maximum monthly earnings used to calculate contributions are five times the minimum
urban wage.
Employer: From 9% to 11% of covered payroll for private-sector workers; 4.75% of covered
payroll for public-sector workers.
urban wage.

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The employer's contributions also finance sickness and maternity benefits and the marriage
grant (see Family Allowances, below).
Government: At least 1.5% of total covered earnings to cover the cost of administration.
Qualifying Conditions
Old-age pension: Age 60 (men) or age 55 (women) with at least 750 weeks of contributions
(250 weeks in the last 10 years for voluntary contributors). The pensionable age is lower for
those in unhealthy and arduous work.
Retirement is not necessary.
The pension is payable abroad.
Old-age grant: Age 60 (men) or age 55 (women) and does not satisfy the qualifying
conditions for the old-age pension.
Disability pension: Paid for the permanent or prolonged loss of over 66.7% of working
capacity with at least 250 weeks of contributions (reduced by 20 weeks of contributions for
each year the insured is younger than age 35), including at least 100 weeks in the last three
years before the disability began. There is no qualifying period for a disability caused by an
accident.
Partial disability pension: Paid for an assessed degree of disability from 25% to 66.7%.
Constant-attendance supplement: Paid if the insured requires the constant attendance of
others to perform daily functions.
Disability grant: Paid for an assessed degree of disability from 5% to 24%.
Survivor pension: The deceased satisfied the qualifying conditions for an old age pension
or was a pensioner at the time of death. There is no qualifying period if the death is caused
by an accident.
Eligible survivors are a widow older than age 45 or at any age with dependent children; a
partner who cohabited with the deceased for at least two years who is older than age 45 or
at any age with dependent children; a dependent widower aged 60 or older or with a
disability; and unmarried children younger than age 14 (age 18 if a student, no limit if
disabled). A widow or partner younger than age 45 is eligible for limited benefits. If there are
no other survivors, brothers and sisters younger than age 14 and dependent parents are
eligible.

19
The widow (er)'s pension ceases on remarriage and a lump sum is paid.
Survivor grant: The deceased did not satisfy the qualifying conditions for an old-age
pension but had at least 100 weeks of contributions during the last four years.
Old-Age Benefits
Old-age pension: The pension is equal to the minimum urban wage plus 30% of the
reference salary and 1% of earnings for each 50-week period of contributions exceeding
750 weeks.
The reference salary is 20% of covered earnings in the last five years or 10% in the last
10 years (whichever is greater).
The minimum pension is equal to the minimum urban wage.
Deferred pension: An additional 5% of the pension is paid for each year the pension is
deferred after the pensionable age.
Old-age grant: The grant is 10% of the insured's total covered earnings.
Benefit adjustment: Benefits are adjusted periodically according to changes in prices and
wages.
Permanent Disability Benefits
Disability pension: The pension is equal to the minimum urban wage plus 30% of the
reference salary and 1% of earnings for each 50-week period of contributions exceeding
750 weeks.
The reference salary is 20% of covered earnings in the last five years or 10% in the last
10 years (whichever is greater).
The minimum pension is equal to the minimum urban wage.
Constant-attendance supplement: Up to 50% of the disability pension is paid if the insured
requires the constant attendance of others to perform daily functions.
Partial disability: For an assessed degree of disability from 25% to 66.6%, a percentage of
the total disability pension is paid according to the assessed degree of disability.

20
Disability grant: The grant is 36 months of total disability pension multiplied by the
assessed degree of disability.
wages.
Survivor Benefits
Survivor pension: An eligible widow (er) or partner receives 40% of the deceased's
pension. Other widows or partners receive a lump sum of two years of survivor pension.
The pension cannot be less than the monthly urban salary.
Remarriage settlement: A lump sum of two years of pension is paid.
Orphan's pension: Each orphan younger than age 14 (age 18 if a student, no limit if
disabled) receives 20% of the deceased's pension; one full orphan receives 40% of the
pension; two or more full orphans receive 20% each.
All survivor benefits combined must not exceed 100% of the deceased's pension.
Other eligible survivors (in the absence of the above): Eligible siblings and parents may
receive an amount equal to 10% of the deceased's total covered earnings.
The amount paid is recalculated if the number of eligible survivors changes.
Benefit adjustment: Pensions are adjusted periodically according to changes in prices and
wages.
Survivor grant: 10% of the deceased's total covered earnings is paid.
Funeral grant: The grant must not be greater than five times the deceased's monthly salary.
wages.
Administrative Organization
Ministry of the People's Power for Labor and Social Security (http://www.minpptrass.gob.ve)
provides general supervision.
Social Insurance Institute (http://www.ivss.gov.ve) managed by a tripartite board and director
general, administers the program.
Sickness and Maternity

21
First law: 1940.
Current law: 2010 (social security).
Coverage
Private- and publicsector employees; cooperative members; household, seasonal, and
casual workers; recipients of old age, disability or survivor benefits; and certain dependents.
Exclusions: Self-employed persons.
Source of Funds
Insured person: See source of funds under Old Age, Disability, and Survivors, above.
Self-employed person: Not applicable.
Employer: See source of funds under Old Age, Disability, and Survivors, above.
Government: See source of funds under Old Age, Disability, and Survivors, above.
Cash sickness and maternity benefits: Must be currently insured.
Medical benefits: Must be currently insured.
Sickness and Maternity Benefits
Sickness benefit: 66.7% of average daily earnings is paid after a three-day waiting period
for up to 52 weeks; may be extended under certain conditions. The benefit is reduced by
50% if the insured is hospitalized.
Maternity benefit: 66.7% of earnings is paid for up to six weeks before and 12 weeks after
the date of childbirth.
Workers' Medical Benefits
Free medical services are normally provided directly to patients by the medical facilities of
the Social Security Institute for up to 52 weeks; may be extended for another 52 weeks for
convalescent care. Benefits include general and specialist care, hospitalization, laboratory
services, medicine, dental care, maternity care, appliances, and transportation.

22
Dependents' Medical Benefits
Free medical services are normally provided directly to patients by the medical facilities of
the Social Security Institute. Benefits include general and specialist care, hospitalization,
laboratory services, medicine, dental care, maternity care, appliances, and transportation.
The maximum duration of medical benefits for the dependents of pensioners is 26 weeks;
survivors of pensioners are entitled to medical service benefits for up to 52 weeks.
Work Injury
First law: 1923.
Current law: 2005.
Coverage
Private- and publicsector employees; cooperative members; and household and custodial
workers.
Exclusions: Members of the military and self-employed persons.
Source of Funds
Insured person: None.
Self-employed person: Not applicable.
Employer: 0.75% to 10% of covered payroll, according to the assessed degree of risk.
Government: See source of funds under Old Age, Disability, and Survivors, above.

23
Work injury benefits: There is no minimum qualifying period.
Temporary Disability Benefits
100% of the insured's earnings are paid after a three-day waiting period until the insured is
rehabilitated, recovered, or certified with a permanent disability.
Permanent Disability Benefits
Permanent disability pension: The pension is 100% of the insured's last covered earnings.
If the insured person has an assessed degree of disability of at least 66.7%, is unable to
continue in the same job, and is subsequently rehabilitated and reinserted into the
workforce, the pension will be reduced based on the percentage of the reassessed degree of
disability.
Partial disability: For an assessed degree of disability greater than 25% but less than
66.7%, a percentage of the full pension is paid according to the assessed degree of
disability. For an assessed degree of disability of up to 25%, a lump sum of five years of the
full disability pension is paid.
Schedule of payments: Fourteen payments a year.
Medical benefits:
Benefits include free general, specialist, and dental care; hospitalization; medicine;
laboratory services; appliances; and rehabilitation services.
Survivor Benefits
Survivor pension: An eligible widow (er) or partner receives 60% of the deceased's last
covered salary. Other widows or partners receive a lump sum of two years of survivor
pension.

24
Eligible survivors are a widow, widower, or partner older than age 45; unmarried children
younger than age 18 (age 25 if a student, no limit if disabled); brothers and sisters younger
than age 18 (age 25 if a student, no limit if disabled); and other dependent family members.
Orphan's pension: Each eligible orphan receives 20% of the deceased's last covered
salary, up to 40%; 100% if there are no other eligible survivors. If there are other eligible
survivors (excluding a widow (er) or partner), 40% is split equally among orphans and other
dependent family members.
Other eligible survivors (in the absence of the above): Other dependent family members may
each receive 20% of the deceased's last covered salary, up to 60%.
Schedule of payments: Fourteen payments a year.
Funeral grant: 5,000 bolivares are paid.
National Institute for Prevention, Health, and Security at Work (http://www.inpsasel.gob.ve)
manages and administers the program.
Unemployment
First law: 1940.
Current law: 2005 (unemployment).
Coverage
Private- and publicsector employees, cooperative members, household and custodial
workers, self-employed persons, and apprentices.
Source of Funds
Insured: 2.5% of covered earnings.
The minimum monthly earnings used to calculate contributions are one minimum urban
wage.

25
The maximum monthly earnings used to calculate contributions are 10 ten times the
minimum urban wage.
The insured's contributions also help finance health insurance for unemployed persons.
Self-employed person: 2.5% of covered earnings.
wage.
urban wage.
The self-employed person's contributions also help finance health insurance for unemployed
persons.
Employer: 2% of covered payroll.
wage.
urban wage.
The employer's contributions also help finance health insurance for unemployed persons.
Government: Contributes as necessary; may subsidize up to 50% of contributions for lowincome insured persons.
Unemployment benefits: The insured must have at least 12 months of contributions in the
24 months before unemployment began and must be available for training or suitable
employment. Self-employed persons must have involuntarily lost their income.
Unemployment Benefits
The benefit is 60% of the insured's average monthly earnings in the last 12 months and is
paid for up to five months.

26
Unemployed insured persons and dependent family members are covered for health
insurance for 26 weeks.
Employment services administer training and guidance.
Family Allowances
Marriage grant: A lump sum of 7,000 bolivares is paid with at least 100 weekly contributions
made in the three years before marriage. (The grant is provided under Old Age, Disability,
and Survivors, above.)
I. PRINCIPAL INDUSTRIES
Since the economy was largely dependent on oil (in 2003 it accounted for approximately
80% of exports and nearly 50% of fiscal revenues), Venezuela neglected other domestic
industries for decades in favor of importing goods to satisfy Venezuelan consumer needs.
The government has recently encouraged industrial diversification and development through
protective tariffs and tax exemptions for reinvestment. Industrial output grew by 1.6% on
average during the 1980s and by 3.8% annually during the 1990s. Manufacturing industries
grew by an average of 4.3% annually during the 1980s and 1.7% per year between 1988
and 1998. In 1998, manufacturing accounted for an estimated 15% of GDP. Industry as a
whole accounted for 40% of GDP in 2001.

27
Although much of Venezuela's petroleum is exported in crude form, petroleum refining is a

major industry. Venezuela's five refineries had a total capacity of 1,282,000 barrels per day
in 2002, and reserves are estimated at 74 billion barrels. The country is the world's fifthlargest producer of oil. A two-month general strike in 200203 severely affected oil
production, but it began to recover in March 2003. The steel industry operates at about 48%
of capacity. The Venezuelan metal engineering industry produces auto body parts, valves,
boilers, piping, wire mesh, and many other cast products. By 1983, Venezuela had the
largest aluminum-smelting capacity in Latin America, with a total of 400,000 tons a year.
Bauxite is processed in plants owned by the three state companiesBauxalum, Venalum,
and Alcasa. Other industries include shipbuilding, automobile assembly, and fertilizer
manufacture. Venezuela produced 13,170 automobiles in 2001, down 38% from the 21,190
units produced in 2000.
The government is involved in a massive decentralization project to relocate industries in the

peripheral cities and the interior. Valencia, the capital of Carabobo State, is a major new
industrial center. A second major industrial development scheme has made Ciudad Guayana
the hub of a vast industrial area with a 160-km (100-mi) radius. Puerto Ordaz was founded
on the basis of the Cerro Bolvar iron ore deposits. West of Puerto Ordaz are the Matanzas
steel mill, with a yearly capacity of 750,000 tons, and the Bauxalum bauxite-processing
installation.
Venezuela has large and underexploited reserves of natural gas. In 2003, oil and natural gas
production, water, whiskey, and the chemicals sector showed potential for growth. Further
political unrest could undermine those sectors and the rest of the Venezuelan economy,
however.
J. FOREIGN INVESTMENT
FDI in Figures

28
In a context where global foreign investment increased by 10.9% in 2013, in particular in
Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies
reached a new high of US$759 billion. However macroeconomic fragility and policy
uncertainties are driving investors to caution.
Despite the attractiveness of the country due to its godsend oil, the large size of its
domestic market and the richness of its natural resources, the inflows of FDI in Venezuela
have been smaller in the last few years. The economic and political crisis set off by the
international financial crisis of 2008-2009 has provoked a significant back-flow of FDI
between 2009 and 2011. The uncertain climate born from the "Bolivarian" reforms
(infringement of private property rights, foreign currency control, increasing regulations,
nationalizations, etc.), Chavez's anti-American speech and the ineffectiveness of the port
system are some of the many hindrances to investment.
Venezuela is combining regional and revolutionary politics, without closing its doors to
foreign investment, which it needs badly. Still, the "Bolivian" socialism pursued by very
interventionist the government hinders the increase of FDI flows. Nevertheless, FDI
reached over 3,2 billion USD in 2013.
Information on the 2013 FDI influx in this region can be accessed in the Global Investment
Trade Monitor published in January 2014 by the United Nations Conference on Trade and
Development (UNCTAD).

29
Why You Should Choose to Invest in Venezuela

Strong Points
Ports and airports are being privatized and important markets should develop in these
sectors. The oil sector is very dynamic, prospecting and exploitation remains attractive, even
if the government has made the conditions of exploitation more difficult. Numerous markets
remain unexploited in the country, mainly those concerning the production of finished
products, which are mostly imported. The technological sector has developed very little. In
the recent years, a policy of aid to production has given a new impetus to the agro-food
industry: coffee, tropical fruits, rice, tobacco, cacao, alcoholic drinks, as well as to the car
industry and audiovisual production.
Weak Points
The control of the state developed and promoted by the current government could steer into
an unattractive commercial environment to foreign investors. Inflation, corruption,
unemployment, the importance of the informal sector, poverty and violence are all restraints
to the establishment and prosperity of a business.
Government Measures to Motivate or Restrict FDI
Venezuela has adopted the Decree 2095 on foreign investment, which is encouraged and
protected by a new legal framework. In addition to this, there is a policy supporting
production activities that are particularly dynamic or potentially good for exports. The
government also gives fiscal bonuses, ranging from tax exemptions to special credit treaties,
in order to encourage investment in the so-called "strategic" sectors, or in order to stimulate
the establishment of businesses in the country's five least developed states.
Procedures Relative to Foreign Investment
Freedom of Establishment

30
Freedom of establishment is guaranteed, but new barriers have been set up, notably in the
oil sector (a percentage taken off the highest profits).
Acquisition of Holdings
Acquisition of a majority stake in a local company's capital is authorized in Guatemala. There
are however restrictions concerning certain sectors such as the press, aviation, shipbuilding,
for the obvious reasons of security and independence.
Obligation to Declare
Foreign investments are encouraged in Venezuela, and protected by a new legal framework,
especially through the dispositions stipulated in the Decree 2095.
The country's agency promoting foreign investment provides information about the permits
necessary to business establishment.
Competent Organization For the Declaration
Venezuelan Council for Investment Promotion
Requests For Specific Authorizations
None. In strategic sectors a special authorization is needed.
K. INTERNATIONAL TRADE STATISTICS
1. MAJOR EXPORTS
Important trade partners of Venezuela, according to the 2008 statistics published any the
CIA World Fact book, include:
Exports
US: 39.8%
The Netherlands: 7.6%
China: 4.6%
Major export commodities in Venezuela, besides petroleum and gas are:
Aluminum and bauxite
Steel
Chemicals

31
Agricultural products
Exports in Venezuela decreased to 22231 USD million in the third quarter of 2013 from
22386 USD Million in the second quarter of 2013. Exports in Venezuela averaged 11281.82
USD Million from 1992 until 2013, reaching an all time high of 30743 USD Million in the third
quarter of 2008 and a record low of 2995 USD Million in the first quarter of 1992. The Banco
Central De Venezuela reports exports in Venezuela.
2. MAJOR IMPORTS
Imports
US: 26.1%
Colombia: 12.6%
Brazil: 10.7%
China: 6.9%
Mexico: 4.8%
Major import commodities in Venezuela are machinery and equipment, construction

materials and other raw materials, to support its domestic industries and increase exports.
Imports in Venezuela decreased to 12040 USD million in the third quarter of 2013 from
13257 USD Million in the second quarter of 2013. Imports in Venezuela averaged 6429.30
USD Million from 1992 until 2013, reaching an all time high of 17841 USD Million in the
fourth quarter of 2012 and a record low of 1970 USD Million in the third quarter of 1994. The
Banco Central De Venezuela reports imports in Venezuela.
3.
BALANCE-OF-PAYMENTS SITUATION
Venezuela has enjoyed an enviable balance-of-payments position for many years. Although
the country was forced to import goods to satisfy the demand for many industrial,
construction, and household items, its income from exports has more than equaled its
expenditures for imports. Venezuela experienced foreign exchange problems throughout the
1990s, largely because of the fluctuation of world oil prices. Venezuela's balance of

32
payments position deteriorated from its strong performance of 1991. In 1992, the
merchandise trade surplus fell to $1.6 billion, a drop of 66% from 1991, primarily due to the
economic recovery program and a decline in exports. The current account balance rose
from3.7% of GDP in 1993 to an estimated 11.5% in 1996, but fell by 2.8% in 1998.
As of 2003, private consumption as a share of GDP had risen, and the shares of gross fixed
investment and exports of goods and services fell. Venezuela's dependence upon oil exports
continues to make it vulnerable to the vagaries of the international economy.
The US Central Intelligence Agency (CIA) reports that in 2001 the purchasing power parity of
Venezuela's exports was $29.5 billion while imports totaled $18.4 billion resulting in a trade
surplus of $11.1 billion.
The International Monetary Fund (IMF) reports that in 2001 Venezuela had exports of goods
totaling $26.7 billion and imports totaling $17.4 billion. The services credit totaled $1.28
billion and debit $4.61 billion. The following table summarizes Venezuela's balance of
payments as reported by the IMF for 2001 in millions of US dollars.
CurrentAccount
Balanceongoods
Balanceonservices
Balanceonincome
Currenttransfers
CapitalAccount
FinancialAccount
Directinvestmentabroad
DirectinvestmentinVenezuela
Portfolioinvestmentassets
Portfolioinvestmentliabilities
Otherinvestmentassets
Otherinvestmentliabilities
NetErrorsandOmissions
ReservesandRelatedItems
4. EXCHANGE RATES
3,931
9,335
3,334
1,453
617
811
148
3,448
340
936
4,414
293
5,183
2,063

33

34

35
L. TRADE RESTRICTIONS
Venezuelas trade involves several restrictive processes and heavy documentation.
Moreover, foreign exchange is not available in the nation freely. This implies that all trading
transactions need to be administered by a bank managing the documentation process, in
collaboration with the nations government agency, Comisin de Administracin de Divisas.
The agency has complete discretion to permit or refuse a bank foreign exchange to trade.
Venezuela is a country endowed with great natural wealth; its vast petroleum, mineral,
hydroelectric and other resources have made it a power in the energy sector in the
Americas.
The present world economic situation, characterized by globalization and internationalization
of economies, has obliged Venezuela to reorient production activity and redefine its trade
policy.
Since early 1989, it has been extremely active in the area of trade policy, including in
particular full participation in the multilateral trading system through its accession to GATT in
1990 and subsequent membership of the World Trade Organization (WTO) in January 1995.
It has intensified trade integration with its close neighbours, consolidating the Customs
Union of the Andean Group (Cartagena Agreement), and concluding free trade agreements
with Colombia, Mexico (Group of Three) and the Central American countries (Trade and
Investment Agreement). It has also concluded a "lopsided" free trade agreement with the

36
Caribbean Community, as well as a number of bilateral trade agreements with Caribbean
countries.
In addition, the Latin American integration process has been speeded up (agreements with
Chile, Brazil and Argentina), and there has been concrete progress in setting up the Free
Trade Area for the Americas.
During the next few years, Venezuela will pursue its policy of negotiation and opening up of
trade so as to establish a broader economic area that will enhance the competitiveness of its
economy internationally.
M. EXTENT OF ECONOMIC ACTIVITY NOT INCLUDED IN CASH INCOME ACTIVITIES
Counter trade includes for distinct transactions: barter, compensation deals, counter
purchase and buyback. Barter is the direct exchange of goods between two parties in a
transaction.
N. LABOR FORCE
1. SIZE
Labor force: 14.01 million (2013 est.)
2. UNEMPLOYMENT RATES
Unemployment Rate in Venezuela remained unchanged at 7 percent in September of 2014
from 7 percent in August of 2014. Unemployment Rate in Venezuela averaged 11.01 Percent
from 1999 until 2014, reaching an all time high of 20.70 Percent in February of 2003 and a
record low of 5.60 Percent in December of 2013. Unemployment Rate in Venezuela is
reported by the National Institute of Statistics, Venezuela.
O. INFLATION RATES
Venezuela's annual inflation rate has risen to 63.4%, the highest in Latin America, according
to official figures published on Tuesday. The figures are the first released by the central bank
since May, which has led critics to accuse the government of withholding data for political
reasons.

37
V.
DEVELOPMENTS IN SCIENCE AND TECHNOLOGY

The National Council of Scientific and Technological Research (founded in 1967) and the
State Ministry for Science and Technology direct and coordinate research activities. Among
the principal research institutes, academies, and learned societies are the National Academy
of Medicine (1904), the Academy of Physical, Mathematical, and Natural Sciences (1917),
and the Venezuelan Association for the Advancement of Science (1950). Major research
institutes include the Institute of Experimental Medicine (1940), the Venezuelan Scientific
Research Institute (1959), and the Center for Investigation of Petroleum Technology (1979).
All of these societies and institutes are located in Caracas. Venezuela has 20 universities
and colleges that offer courses in basic and applied sciences. In 198797, science and
engineering students accounted for 26% of college and university enrollments. In 2002,
research and development (R&D) expenditures amounted $518.300 million, or 0.38% of
GDP. Of that amount, government provided the largest portion at 60.6%, followed by the
business sector at 20.9% and higher education 18.5%. In that same year, there were 222
scientists and engineers per million people, that were engaged in R&D. High technology
exports in 2002 totaled $94 million, or 3% of all manufactured exports.
VI. CHANNELS OF DISTRIBUTION (MACRO ANALYSIS)

Restrictive regulations negatively affected the quantity and variety of goods in all categories
of retailing in 2013. Many consumers made panic purchases and overstocked whenever
possible. However, their purchasing power declined as the prices of many items increased at
rates above inflation. In this context, consumers were forced to avoid some desired
purchases. As an overall result, retailing posted negative growth in constant terms.
Euro monitor International's Retailing in Venezuela report offers insight into key trends and
developments driving the industry. The report examines all retail channels to provide sector
insight. Channels include hypermarkets, supermarkets, discounters, convenience stores,
mixed retailers, health and beauty retailers, clothing and footwear retailers, furniture and
furnishing stores, DIY and hardware stores, durable goods retailers, leisure and personal

38
goods retailers. There are profiles of leading retailers, with analysis of their performance and
the challenges they face. There is also analysis of non-store retailing: vending; home
shopping; internet retailing; direct selling, as available.
Retail operations in Venezuela do not look very different from those in the United States.
Although there are few department stores, there are numerous malls, and price haggling is
uncommon. In 1995, 69.5 percent of the national income (GDP) was spent on private
consumption, a figure that fell to 63.2 percent in 1996, rose to 65.8 percent in 1997, to 72.1
percent in 1998, and fell again to 70.2 percent in 1999. The year 2000 saw an increase in
sales by clothing and food stores, sellers of telecommunication equipment, electrical
appliances, and lottery tickets. Sellers of cars, pharmaceutical products, and hardware items
experienced decreased sales. Venezuela has a well-developed professional services sector
(physicians, attorneys, accountants, engineers and architects), with prestige attached to
being a member of one of these professions.
VII. MEDIA
Venezuela is covered by a network of telephone, telegraph, and radiotelephone services and
is also served by international cable and radiotelephone systems. In 1991, the government
sold 40% of the state-owned CANTV to a consortium led by GTE. In 2003, there were an
estimated 111 mainline telephones for every 1,000 people. The same year, there were
approximately 273 mobile phones in use for every 1,000 people.
In 2004, there were 344 commercial radio stations and over 150 FM and AM community
radio stations, as well as 31 television channels. In 2003, there were an estimated 192
radios and 186 television sets for every 1,000 people. About 32.4 of every 1,000 people
were cable subscribers. Also in 2003, there were 60.9 personal computers for every 1,000
people and 60 of every 1,000 people had access to the Internet. There were 114 secure
Internet servers in the country in 2004.
In 2004, there were 15 national newspapers, 77 regional newspapers, and 89 magazines
and weekly journals. Leading daily Venezuelan newspapers published in Caracas, with their

39
2004 circulations, are: Ultimas Noticias, 200,000; El Universal, 120,000; El Nacional,
100,000 (down from 200,000 in 2002); and Diario 2001, 100,000. Panorama, published in
Maracaibo, had a 2004 circulation rate of 120,000. El Carabobeno in Valencia had a 2004
circulation of 97,000.
REFERENCES:
http://venezuelanalysis.com/basicfacts
http://www.indexmundi.com/venezuela/demographics_profile.html
http://en.wikipedia.org/wiki/Economy_of_Venezuela
http://www.azomining.com/Article.aspx?ArticleID=73
http://www.nationsencyclopedia.com/Americas/Venezuela-TRANSPORTATION.html
http://www.infoplease.com/country/venezuela.html?pageno=15
http://www.princeton.edu/~achaney/tmve/wiki100k/docs/Media_of_Venezuela.html
http://www.expatfocus.com/expatriate-venezuela-communications
https://en.santandertrade.com/establish-overseas/venezuela/investing
www.tradingeconomics.com/venezuela/

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