The Dutch Curse and VENEZUELA's Oil
Have you ever heard of the Dutch curse? This curse is an economic phenomenon that arises with the discovery of a large reserve of natural resources. In the case of the Netherlands, this happened in the 1960s, when there was a major discovery of natural gas. What happens is that the country begins to focus solely on extracting the resource and ends up experiencing deindustrialization and disinvestment in other areas, since the entire economy revolves around the natural resource.
Something similar could be said to have happened in Venezuela. The country, which had great potential for oil production due to its reserves, ended up becoming a hostage to them. After production began to decline due to extraction difficulties, the country had no other source of income because it ended up depending only on oil. Today, Venezuela suffers from hyperinflation and has a very devalued currency. Given this context, let's understand what happened to Venezuela, which went from being one of the richest countries in the world to having a weakened economy.
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The Oil Curse! A Vast Reserve of Natural Resources!
Interestingly, between 1950 and 1970, Venezuela was among the 5 largest economies in the world, with oil sustaining its entire economy. In addition to possessing large mineral reserves, Venezuela's oil reserves are so vast that they represent more than 15% of the global total, estimated at 300 billion barrels.
You've probably heard many authors advise against putting all your eggs in one basket, that it's important to diversify your revenue streams in case of unforeseen events, and many other similar tips. Unfortunately, when everything is going well, it's highly unlikely anyone will consider this advice. In the case of Venezuela, instead of using the financial resources from oil to build new revenue streams, investing in new factories and developing the productive sector, preparing for unexpected events, that's not what happened.
Due to periods of high oil prices, government spending increased, leading to significant expansion and indebtedness, ultimately leaving the country unprepared for what was to come. When the price of oil began to fall, the vulnerability and dependence on oil became evident. This scenario intensified over time, each time they considered immediate benefits instead of choosing sustainability for generations. Over time, the amount of production decreased, and the population ended up suffering the consequences of this choice.
How could they have avoided the economic crisis?
It's easy to point out mistakes after they've happened, but one way to prevent similar cases from occurring and mistakes from repeating themselves is by analyzing the past. The Dutch curse itself is an example showing that the export of natural resources led to the deindustrialization of manufacturing in the country. In the case of Venezuela, the country became rich so quickly and without planning for the future that the benefit ended up becoming a kind of oil curse.
Nowadays, some Middle Eastern countries whose economies are largely centered on oil have already realized this problem and are seeking to invest in other areas to diversify their economies. One example was the hiring of star players to play for national teams, seeking to increase the country's sports industry. Another is foreign investment in companies in different sectors. This is the same direction Venezuela could have followed; DIVERSIFICATION was the answer!
From this situation, you can take two insights into your life. The first is that no matter how good and perfect everything seems, there's always a chance that something unexpected will happen. After all, there's no way to know when something unexpected will happen, which is why it's unexpected. And the second is that one way to prepare is by diversifying your sources of income and investments!
Já ouviram falar da maldição holandesa? Essa maldição é um fenômeno econômico que surge com a descoberta de uma grande reserva de recursos naturais. No caso da Holanda isso aconteceu nos anos 60, quando houve uma grande descoberta de gás natural. O que acontece é que o país começa a focar apenas na extração do recurso e acaba tendo um desindustrialização e desinvestimento de outras áreas, já que toda a economia gira em torno do recurso natural.
Pode-se dizer que aconteceu algo um pouco parecido com a Venezuela. O país que possuia um grande potencial de produção de petróleo por conta das suas reservas, acabou se tornando refém delas. Depois que a produção começou a cair, por conta da dificuldade de extração, o país não teve outra fonte de renda por que acabou dependendo só do petróleo. Hoje a Venezuela sofre com hiperinflação e possui uma moeda muito desvalorizada. Dado o contexto, venha entender o que aconteceu com a Venezuela, que saiu de um dos países mais ricos do mundo à uma economia enfraquecida.
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A Maldição do Petróleo! Grande Reserva de Recursos Naturais!
Uma curiosidade é que entre 1950 e 1970 a Venezuela estava entre as 5 maiores economias do mundo, com o petróleo sustentando toda a sua economia. Além de possuir grandes reservas de minérios, a reserva de petróleo da Venezuela é tão grande que representa mais de 15% do total GLOBAL, sendo estimada em 300 bilhões de barris.
Você já deve ter ouvido diversos autores falando para não colocar todas as fichas em único lugar, de que é importante você diversificar as suas fontes de receita para caso aconteça algum imprevisto e muito mais dicas nesse sentido. Infelizmente, quando está tudo indo bem, é muito improvável que qualquer pessoa pense nesses conselhos. No caso da Venezuela, ao em vez de utilizar os recursos financeiros que vinham do petróleo para construir novas fontes de receita, investindo em novas fábricas e desenvolver o setor produtivo, se preparando para caso algo de inesperado acontecesse, não foi o que aconteceu.
Por conta dos períodos de alta do petróleo, os gastos do governo aumentaram, uma grande expansão e endividamento, acabaram deixando o país despreparado para o que viria. Quando o preço do petróleo começou a cair, a vulnerabilidade e a dependencia do petróleo ficaram visíveis. Esse cenário foi se intensificando ao longo do tempo, toda vez que pensavam no benefício presente ao em vez de escolher sustentabilidade por gerações. Com o tempo a quantidade de produção foi diminuindo, e a população acabou sofrendo as consequencias dessa escolha.
Como poderiam ter evitado a crise econômica?
É fácil apontar os erros depois do ocorrido, mas uma das formas de evitar que novos casos semelhantes aconteçam e que os erros se repitam, é analisando o passado. A própria maldição holandesa é um exemplo que mostra que a exportação de recursos naturais levou à desindustrialização da manufatura no país. No caso da venezuela, o país enriqueceu tão rápido e sem planejamento para o futuro que o benefício acabou se tornando um tipo de maldição do petróleo.
Hoje em dia, alguns países do oriente médio que tem grande parte da economia centrada no petróleo já perceberam esse problema e vem buscando investir em outra áreas para diversificar a economia do país. Um exemplo foi a contratação de grande jogadores para jogar nos times do país, buscando aumentar a indústria do esporte no país. Outro é o investimento externo em outra empresas de áreas diferentes. Essa mesma direção que a Venezuela poderia ter seguido, DIVERSIFICAR era a resposta!
Dessa situação, o insight que você pode levar para a sua vida são dois. O primeiro é que por mais que tudo pareça estar bom e perfeito, sempre há chance de que algo inesperado aconteça. Afinal não tem como saber quando algo inesperado vai acontecer, por isso é inesperado. E o segundo é que uma das formas de se preparar é diversificando as suas fontes de receita e investimentos!
Venezuela's problem was the socialist model implemented by Hugo Chávez and continued by Maduro.
They destroyed their economy and their oil industry. They went into debt and mismanaged it. They ended up destroying the oil industry and spent heavily on weapons.
They have the largest oil reserves in the world. Their governments were inept at exploiting them.
Yeah, with these types of leaders you really can't expect anything good in return while they are in position.
Excellent reflection, my friend, and to top it all off, we have a corrupt government and incapable
Thanks. Everything adds up to the final result.
Hey there! The TradFi community is more supposed to be traditional finance (stocks, bonds, and businesses).
So for something like this, you would want to talk more about how particular businesses were impacted and what happened to these businesses.
Like what is the risk of being an oil explorer in Venezuela? What happened to the publicly traded companies that did business there?
That being said, typically I think https://peakd.com/c/hive-180505/created would be a better community fit for this style content.
I will work on the rules more. This community has ramped up quick so I am a bit behind on everything I want to accomplish but it has been a blast so far either way 😊
I thought that understanding economy is important for business, and both were connected. Knowing about the Dutch Curse and what happened to venezuela's oil helps to understand about the importance of diversification.
"From this situation, you can take two insights into your life. The first is that no matter how good and perfect everything seems, there's always a chance that something unexpected will happen. After all, there's no way to know when something unexpected will happen, which is why it's unexpected. And the second is that one way to prepare is by diversifying your sources of income and investments!"
But I understood less economy and more focus on business. I'll check the Finance and Economy later, thanks for the recommendation!
Yea it is still a really good post. I was just thinking of some things that could be added to make it more TradFi.
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I never thought Venezuela got a good economy back then thru oil and gas industries. I always thought middle east is the center of distribution of the oil and gas supply.
Diversification really plays a crucial role in country's economy, it also is applicable to people. They should diversify if what asset they hold is coming to its valueless era. Time is really an unpredictable situation.