Tuesday, September 13, 2016
Venezuela State Oil Company Looks to Swap $7 Billion In Upcoming Debt
Venezuela is a country rich with natural resources, so why hasn't it been able to come out of its economic struggles. Many economists have similar views that decades of bad economic policies, as well as centuries of oppressive colonial dictatorship have left the country week in institutions necessary to combat economic setbacks. Other economists refer to the "Dutch Disease" which relates to when an economy focuses on commodity exports and ignores other sectors of the economy. In the book, "Why Nations Fail", written by Daron Acemoglu and James A. Robinson, they refer to a phenomenon known as the "vicious circle", whereby, "extractive political institutions lead to extractive economic institutions, which enrich a few at the expense of many." (pg. 343). What we do know about Venezuela is that it is a country with tons of potential to be one of the richest countries in the Western Hemisphere. With the proper governing body, they will succeed. I have attached an article which covers another problem that the Venezuelan government is facing, paying back bond holders. They are asking the holders to not redeem their bond payments, but instead postpone to a later year. If the bond holders trust the government and believe that they will be paid, then they are very brave patriots.