10 Lessons We Should Learn From Venezuela’s Economic Collapse

Venezuela is one of the countries that have some of the largest oil reserves in the world yet it has experienced a very severe economic collapse. During the collapse, there was widespread shortage of basic things like food. Demonstrations became the order of the day and Venezuela almost became a lawless country as the government struggled to control its citizens. At this difficult time, the currency lost 96 percent of its value and Venezuela was hit an inflation that has never been seen before. The Venezuelan people struggled to cope up with these extreme levels of inflation. Many people could not access food and medical supplies. Previously Venezuela was one of the richest countries in the region and poor economic decisions by the leaders plunged the country into an economic collapse that had devastating effects.

Because of this collapse, the people of Venezuela who once had a stable life now cannot get enough food and medical services and this caused a big humanitarian crisis. So how does a country that has large amount of oil find itself in such an economic disaster?
Back in 1998, Hugo was elected as the president of Venezuela and he promised the citizens that he would tackle problems like poverty and corruption. In the quest to bring equality among the people, he adopted some socialism ideologies. He used the money from Venezuelan oil to set up various social programs called Misiones with an aim of making people equal and eradicating poverty. He claimed that this was needed to bridge the gap between the rich and the poor. As he continued on to push this, his approach became very radical and he established a bureaucratic state where all the production means were nationalized.
All this was funded by the profits made from oil sales and from uncontrolled borrowing by the state. This made the debt levels to skyrocket. This damaged the well being of the nation and by the time of his death back in 2013; Hugo had his handpicked successor called Nicolas Maduro who was handed down a nation that was at the blink of collapsing.
Maduro continued championing the legacy of Hugo and he continued using borrowed money and profits from oil to fund 21 century socialistic ideologies. The new ruler did not address any of the economic problems left behind by Hugo.
Later on the oil prices went “burst” and at this time, still no economic reforms had been made and from 2103, economic problems begun to bite Venezuela and this culminated to a total economic failure and this turned out to be the worse economic collapse that has ever been experienced in the western hemisphere.
But will those who are running this nation now learnt the lessons from what happened in the past?

Here in epic economist, we have created a video on 10 lessons we can learnt from the Venezuelan economic collapse.

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