Venezuela’s social and economic model in the new reality

Abstract

Since president Hugo Chavez came to power in 1999, the vector of social and economic development of Venezuela has changed dramatically. The nationalization of the key companies as a part of the course towards "Socialism of the 21st century" made it possible to create a system of state income redistribution, to raise education and healthcare to a new level, and to solve the problems of poverty and social stratification. However, the fundamental problems of economic development – monoculturalism and rentoriented economy – have not been resolved during the first 14 years of reforms. Development within the framework of a new social and economic model was interrupted by unfavorable conditions on the global oil market, global economic crises and especially by powerful sanctions (economic war) from the United States. In the new reality, the government was forced to change approaches to economic management. After Hugo Chávez’ death in 2013, president Nicolás Maduro first made attempts to increase state control. However, deep social and economic crisis, which has been deepening since 2014, forced the government to significantly liberalize economic relations. These measures, the increase of oil prices and some easing of pressure from the United States made it possible to achieve insignificant positive economic results in 2021.