Venezuela: The Economic Miracle Under Hugo Chavez

We tend to hear the same things from the Chavez bashers about Venezuela's economy: That it is headed over a cliff, that the current prosperity is just an oil illusion, that the private sector is being choked, that the poor are not really better off, etc. We never get any date to prove those remarks, but they "seem" true to enough newspaper writers and bloggers to get repeated ad nauseum.

Well here are the real facts, from the Center for Economic and Policy Research, which shows all of that is just plain bull. I call the impressive results an "economic miracle" because we have been told by our leaders and economists for years that it is impossible to pursue socialistsic economic policies and have results such as these:

Since the bottom of that downturn in the first quarter of 2003, Venezuela's real GDP has grown by 76 percent.

Moreover, the private sector is still a larger share of the economy than it was before President Chávez took office.

In real (inflation-adjusted) terms, social spending per person has increased by 170 percent during the period 1998-2006. But this does not include the state oil company PDVSA’s social spending, which was 7.3 percent of GDP in 2006. With this included, social spending was at least 314 percent more in 2006 than in 1998 (in terms of real social spending per person). This has brought about significant gains for the poor in health care, subsidized food, and access to education, some of which are detailed in the paper.

The official poverty rate, which measures only cash income and does not include such advances as increased access to health care and education, has dropped by 31 percent from 1998 to the end of 2006 – from 43.9 percent of households to 30.6 percent. Measured unemployment has dropped from 15 percent in June 1999 to 8.3 percent in June 2007.

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 plans for oil at $29 per barrel, 52 percent under the average $60.20 dollars per barrel that Venezuelan crude sold for last year.

In 1998 there were 1,628 primary care physicians for a population of 23.4. 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% and
39% compared to market prices in 2005 and 2006, respectively).