56 eeery sy "er nies Hugo Chavez, a former military officer who was once jailed for engineering a falled coup attempt, was elected president of Venezuela in 1998, Chevez, a self-styled dermocratic socialist, won the presidential election by campaigning against corruption, economic mismanagement, and the “harsh realities’ of global capitalism. When he took office in February 1999, Chavez claimed he had inherited the worst economic situation in the country’s recant history. He wasn't ar off the mark. A collapse in the price of cil, which accounted for 70 percent of the COUNTY'S expOTS, left Venezuela with 2 large budget deficit nd forces the economy into a deep recession. Soon after taking office, Chaver worked to consolidate his nold over the apparatus of government. A constituent assembly, dominated by Chaver followers, drafted a new constitution ‘that strengthened the powers of the presidency. The national congress, which was controlled by Chavez supporters, approved a mezsure allowing the government to remove and appoint Supreme Court justices, effectively increasing Chaver’s hold over the judiciary. Chaver also extended Government control over the media, By 2012, Freedom House, which annually assesses political ‘and civil liberties worldwide, concluded Venezuela was only “partly free” and that freedoms were being progressively curtaied. ‘On the economic front, things remained cough. The economy shrank in the early 2000s walle unemployment remained persistently high et 15 to 17 percent znd the poverty rate rose to more than 50 percent of the population. A 2003 study by the World Bank concluded Venezuela was one of the most regulated economies in the world and that state controls over business activities {g2ve public officials ample opportunities to enrich themselves by demanding bribes in return for permission to expand operations or enter new lines of business. Indeed, despite Chaver's Sntcorruption thetorie, Transparency International, which ranks the world’s nations according {fo the extent of public coruption, has neted that corruption increased under Chavez. In 2013, ‘Tiansparency Intemational ranked Venezuela 160 out of 177 nations. Consistent with his socialist rhetoric, Chavez progressivaly tock various enterprises into state ownership and required that other enterprises be cestructured a3 “workers’ cooperatives” in return for government loans. in ‘2ddition, the government began to seize large rural farms and ranches that Chavez claimed were not sufficiently productive, turning ther into state-owned cooperatives In mid-2000, tho world oil market bailed Chavez out of mounting economic difficulties Cll prices Started to surge from the low $205 in 2903, reaching 5150 a barrel by mis-2008. Venezuela, the ‘world’s fifth-largest producer, reaped 2 bonanza, On the back of surging oi exports, the economy Grew at a robust rate. Chavez used the il revenues to boost goverament spending on socal programs, many of them modelled after programs in Cuba. As a result, the governments share of ‘GDP increased from 20 percent at the end of the 1990s to almost 40 percent in 2008, Chavez also and take 12 years to get @ new drug on the market). Without the guarantees provided by patents, itis unlikely that companies would commit themselves to extensive basic research.” ‘The protection of intellectual property rights differs greatty from country to country. While many countries have stringent intellectual property regulations J onthe books te enforcement of these regulations hes often boon lax. This has been the case even among some of the 187 countries that have signed the Paris Convention for the Protection of Industrial Property, en important remational agreement to protect intellectual property (jwww.wipe.int/ treaties ). Weak enforcement encourages the piracy of ‘Thailand have recently been among the worst| extended government control over foreign oil producers dcing business in Venezuela, which he accused of making outsize profits at the expense of a poor nation. In 2605, he announced an increase in the royalties the government would collec: from oil sales from 1 percent to 30 percent, ‘and he increased the tax rate on sales from 34 10 50 percent. In 2005, he announced plans to reduce the stakes held by foreign companies in oil projects in the Orinaco regiors ard to give the state-run «il company, Petroleos de Venezuela SA, a majority position Riding a wave of popularity st home, in December 2005 Chavez won reelection 2s president He celebrated his victory by stepping on the revolutionary accelerator. Parliament gave him the power to legislate by decree for 18 months, In late 2010, Chavez yet again oersuaded the National Assembly, where his supporters dominated, to once more grant him the power to rule by decree for another 18 months. Chavez feced reelection 2012 end won, only to cie one month into his fourth term. Despite his ability 10 corsolidate politcal power, on the economic front things seemed 10 slip away from Chavez. in spite of strong global demand and massive resarves, oil production in ‘Venezuela fell by a third since 2000. Moreover, when ol grices fell in 2008-09, the Venezuelan economy went into reverse, shrinking by 3.3 percent in 2009 and 2.8 percent in 2010. In 2011, the economy grew by 2.8 percent, largely due 10 a rebound in ol prices. Employment in state-owned ‘companies kept cap on unemployment (in 2011 it stood at 8.5 percent), but inflation surged. It vas running at over 25% annually for the past few yeers, one of the highest rates in the world. Lttle ‘changed in early 2013 wrth the death of Chave2, as his vice-president, Nicolas Maduro, assumed ower. Maduro won, by 2 narrow margin, a special election called in Apri 2013. So far he has Continued the economic pragrams of Chavez, though mary of the strident anti-American comments cf his predecessor have been toned down or eliminated Questions 1. What do you think will happen if oll prices continue to stay below $100 a barrel? 2, What are the broader implications to the country’s economy, and its people, of having such a highly regulated economy for over 15 years? Sources 9, wsnnow and Mil, “Chavez Pars 1 Tae Wore Catal fOilaway fom fomign Fim,” Te Wal/Steet Jour, Apri 24, 2006.9. AT F. Galea, “Chave7s Agenda Takes Spe." he Wa Sreet uma Decenber 21.2005. 9. At2: “The Systane of Cernupuon: areal," The carom, 1, 2606, o. 50 "Chavez Squtes thei Fins,” The Eemamst November 12,2005, 91, "Glmpans the Setter ofthe tore: Venezuela” The feanomst Febuary 3,2007, 9.51; “The Wind (Goes Cutof te Reroutor—Defeatfox Hugo Craw.” Te eenomst Once 8, 1037, p. 30-32, “Ol leak” The onan, Februny 26,2011, . 43; and "Mecoval Plies," The Economix, Aut, 2017. p38. offenders in Asia. Pirated computer software is widely available in China. Similarly, the streets of Bangkok, the capital of Thailand, are lined with stands selling pirated copies of Rolex watches, Levi's blue jeans, DVDs, and computer software. Piracy in muste recordings is rampant. The Intemational Federation of the Phonographic Industry claims that about one-third of all recorded music products sold worldwide are pirated (illegal) copies, suggesting that piracy costs the industry more than $4.5 billion annually. The computer software industry also suffers from lax enforcement of intellectual property rights. Estimates suggest that violations of intellectual property rights cost personal computer software firms revenues equal to $59 billion in 2010. According to the 37