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Venezuela. Physical Geography. Economics Issues

Venezuela is located in the northern end of South America, with an area spanning approximately 354 thousand square miles. It has a 1,700-mile coastline bordering the Caribbean Sea and the Atlantic Ocean, administering a number of islands and archipelagos in those bodies of water. Venezuela is divided into three elevations of topography. These include the coastal sea level, the interior forested uplands, and the mountains reaching up to 16,400 feet. Within these divisions, there are 7 physiographic regions. These include the islands and coastal plains, with the Orinoco delta; the Maracaibo lowlands; the northern Andes mountain ranges; the coastal mountain system, the northwestern valley and hill ranges; the wide Llanos plains, and the Guiana Highlands (Heckel et al., 2020).

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Despite being the smallest part of the national territory, the coastal mountain system containing two parallel ranges – Coastal and Interior ranges have the highest concentration of Venezuela’s population. The intermountain valleys contain the largest cities of Valencia, Maracay, and the capital of Caracas. The country has over a thousand rivers, with largest being the Orinoco River flowing from the Guiana highlands into the Atlantic as well as the Caroni, which stems from the Orinoco and flows into the Caribbean. The country also has Lake Maracaibo located in the Maracaibo lowlands, considered the largest lake in South America. The majority of Venezuela’s major cities are located along the coastline or nearby the major watersheds described. Meanwhile, vast areas such as the Llanos and the Guiana highlands remain vastly empty and unsettled, with rich natural wildlife and tropical rainforests (Heckel et al., 2020).

The development of Venezuela has been dependent on the geography. As mentioned early, all major cities and settlements are located along the major bodies of water and river basins. These are critical to the infrastructure and economy. For example, the Caroni is one of the most rapid flowing rivers on the continent, providing opportunities for hydroelectric power generation. The most significant geographical areas for Venezuela are the Orinoco Belt, in the southern strip of the river basin which has the world’s largest known deposits of petroleum. The Maracaibo Basin of Lake Maracaibo is also a hydrocarbon region which has produced over 30 billion barrels of oil (Heckel et al., 2020). Caracas and other major cities are established in the intermountain valleys due to the protections of physical geography and easily accessible access to the coastline, which was crucial for early Spanish settlers. Later on, when city became the unofficial capital of the country, the central location allowed it to govern well. The majority of other regions such as the llanos and Guiana highlands remain sparse with secondary cities, primarily supporting agriculture and oil exploration (Minkel & Medina, 2019). Significant elements of the Venezuelan culture are influenced by the Spanish roots of its origins combined with Caribbean influences with which it has close contact with both politically and culturally.

Unique Issue

Venezuela is undoubtedly one of the most influential and powerful countries in South America. Its rich deposits of petroleum and other natural resources has allowed it to become a major player on the world market. During the oil price boom in the late 2000s, Venezuela reached an economic peak of 334,069 billion USD, becoming one of the wealthiest on the continent and maintaining high quality of living. Venezuela’s economy was fully dependent on its oil production and export. However, in the decade after, a series of internal political factors, economic mismanagement which have been in the making, and the declining price of oil on the global market resulted in a catastrophic economic default for the country, plunging it into a continuous recession which also impacted social factors such as quality of life and crime.

In the mid-20th century, Venezuela was experiencing an economic boom due its newly discovered oil resource. However, the decline of the country and its supporting oil industry can be traced back to 1976, when then President Pérez sought to nationalize the industry using it to fund development. A state-run monopoly was created named Petróleous de Venezuela (PDVSA). Initially, PDVSA had a lean efficient structure with competent management. Despite reform efforts, Venezuela never diversified its economy, which was felt strongly in the oil collapse price of the 1990s when production dipped. Foreign companies returned to the country at this time as well. In 1998, Chávez was elected president, running on a strongly authoritarian and socialist agenda. It is under Chávez that the PDVSA saw its top management stripped due to political reasons, and the government exerted full control over the organization, with hopes to maximize revenue which would fund the socialist agenda. However, PDVSA went into decline as new management appointed by Chávez had little knowledge of the industry and company assets were continuously mismanaged or used for political gains. Furthermore, by 2001, an energy law was passed that pushed out foreign firms by mandating that PDVSA lead all new oil exploration and they could only hold minority stakes in any developments (Johnson, 2018).

By 2002, Chávez was facing significant public pressure with protests and strikes, but managed to survive a coup. By 2005 and after, mismanagement of PDVSA became evident as accidents became frequent, efficiency dropped, and all specialists began to leave the company or the country. Meanwhile, Chávez was illegally siphoning billions in revenue from PDVSA as well as placing extremely unfair and high taxes on foreign firms to fund social programs to appease the growing frustration among the population. The majority of foreign firms left the country, but despite a drop in production the national oil industry continued to survive due to surging oil prices reaching almost $150 per barrel. Suddenly, Chávez died in 2014, replaced by President Maduro. At the same time, by 2015, oil collapsed to less than $30 per barrel. Therefore, with 95% of Venezuela’s export earnings based on oil, the GDP shrunk by 6% and the economy went into crisis (Johnson, 2018).

The issue was exacerbated by Maduro, also a socialist, whose administration virtually established a dystopian cartel-style of dictatorship in the country. Maduro and his following established a grip on power (opposition is virtually non-existent or quickly removed), have been involved in multiple corruption allegations (Venezuela is the 9th most corrupted country in the world), and continue to disregard any form of competent political and economic management of the country. Desperate measures such as printing more money were undertaken, deepening inflation. Maduro’s political stance and violation of human rights have resulted in the U.S. placing sanctions, which strongly limits Venezuela’s capacity to produce and sell oil, even more drastically crashing the economy and the currency losing 99% of its value (O’Brien, 2016).

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At this point, Venezuela’s economy and society are in ruin. The oil-exporting business which used to subsidize everything is at an all time low, due to the mismanagement, sanctions, and global situation combined. The country’s stores are empty and hospitals lacking not only medications but even electricity. In order to survive, many in Venezuela turned to crime, but the police often prosecute protesters and petty criminals for political showmanship. Venezuelan’s do not use the national currency anymore, reverting back to bartering since the value keeps on declining (O’Brian, 2016). Unfortunately, despite strong foreign pressure and leading opposition figures emerging, Maduro maintains an iron grip on power in the country, and it is unlikely that the status quo will change anytime soon while the once prospering and democratic Venezuela is being run into the ground.

References

Heckel, H.D., Martz, J. D., McCoy, J. L., & Lieuwen, E. (2020). Venezuela. Web.

Johnson, K. (2018). How Venezuela struck it poor. Foreign Policy. Web.

Minkel, C.W., & Medina, J. R. (2019). Caracas. Web.

O’Brien, M. (2016). Venezuela: The country that should have been so rich but ended up this poor. The Independent. Web.

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