The Venezuelan socialist experiences and the Cuban model led to economic decline in the region. Cuba developed an economic crisis after the Soviet Union, which was its main source of subsidiaries, collapsed. Furthermore, this caused conflict with its largest export market, the United States. The Venezuelan leadership forced the country into nationalism which led to price control and currency control scheme, which caused shortages, rationing, and deterioration of product quality resulting in foreign demand and increased inflation. According to new research Cuban government has started economic changes, including refurbishing buildings and public attractions to increase tourism and income (“Cuba for Sale – People & Power” 03:15–05:21). A new generation of Cuban Communists will be in charge of preserving the country’s socialist system.
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The 1959 revolution brought substantial changes to Cuban society, notably the formation of a socialist economic structure. The economy was stable, and people received free education and improved health care services. Sexism was prohibited, and women had equal access to education and the law. During the revolution, long-standing practices that prevented black Cubans from access to numerous public venues were abolished. They had equal access to education, allowing them to excel in government, military, education, and business.
Cuban revolutionary leaders imposed a command economy rather than a market-driven economy with Soviet assistance, which led to a rift with its biggest export market, the United States. The Cuban authorities attempted to industrialize while diversifying the economy. According to new research, sugar production has been prioritized by expanding planted land and automation and the export earnings utilized to buy machinery to diversify agricultural and industrial operations (“The Economy of Cuba” 03:15–05:21). Other industries have grown, including livestock, fishing, and citrus hence improving the country’s economy. The Soviet Union provided machinery to help boost cement, nickel, and energy production. With the free, global capitalist market, this system would not have functioned. However, Cuba got a guaranteed return for its exported core exports with assistance from the Soviet Union. However, the Soviet Union crumbled, and Russia no longer took the sugar output at fixed rates. The collapse of the economy brought back rationing, which led to an economic crisis.
President Hugo Chavez began the socialist regime in Venezuela, and the oil sector was nationalized to fund social welfare initiatives. The regime was started due to a huge drop in oil prices which triggered economic chaos, riots, political polarization, coup attempts, and poverty. By nationalizing the oil sector, the country’s government would prohibit foreign investment. However, in the following years, the nation eventually permitted foreign investment. These international corporations invested in oil production infrastructure and technologies. Amid rising oil prices that year, the government insisted on the majority state-owned oil firm holding the projects, generating antagonism. The leadership also diverted billions of dollars from oil production to social welfare programs, causing collapse.
The problem with nationalizing their oil business was that their government would not allow international investment. Another issue is that the government was undercutting costs and hiring more workers than necessary to pacify its people. Nationalization of land leads to price controls, shortages, rationing, and degraded product quality, resulting in high food demand and low-priced food. On top of that, the government imposed an inflated exchange rate between Venezuela and the United States. As a result, a black market for foreign cash emerged, and corrupt government officials profited greatly from cheap dollars. According to new research, the authorities had to print additional money to compensate for the loss because the currency was overvalued (“The Economic Failure of Venezuela” 03:15–05:21). Welfare programs and public works projects led to increased money printing, which resulted in a large deficit.
Despite the fact that capitalism may result in economic inequality, it is often recognized as the best economic system. Venezuela, on the other hand, is afflicted by an undemocratic government, hyperinflation, famine, high crime, and high levels of corruption. Foreign investors are reluctant to invest in the country’s market, and social welfare measures are to blame for this situation. Due to the economic crisis, former Cuban officials confessed the Cuban economic model failed.
“Cuba for Sale – People & Power.” YouTube, uploaded by Al Jazeera English, 2016, Web.
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“The Economic Failure of Venezuela.” YouTube, uploaded by Economics Explained, 2019, Web.
“The Economy of Cuba.” YouTube, uploaded by Economics Explained, 2020, Web.