Analyzing Venezuela's Oily Hyperinflation Story | Case Study - Learning IRL By ABGLP

Imagine this: you the common man or woman, is struggling to buy daily rations and 2 meals a day. Everything from soaps, to the internet seem out of your financial effort zone, because everything is expensive. While you struggle to make the 2 ends meet, your country’s president visits with international communist and socialist leaders and makes impossible deals with other countries in a bid to buy political clout and show off his power. Your nation’s greatest natural resource, a matter of pride for many, the natural oil wells in your country, are used as a political tool by the president to gain public support and stay in office. Meanwhile, you wait in a long line to convert pesos into dollars so that you can pay an exorbitant amount for a cup of coffee. Sounds morbid right? But this is exactly what happened and is happening in Venezuela. Hyperinflation has the country in its vice like grip. Once known as the pioneer in oil mining and policy across the world, today Venezuela has fallen on harsh times. How did this happen. Check out the case study below and answer the following questions to understand Venezuela’s situation.This is a part of the Learning IRL series brought to you by ABGLP.

Based on key information and data provided in this case study, analyse Venezuela's Oily Hyperinflation Story and answer the following questions:

  • If you were a PDVSA executive, assuming a corrupt official would not be the President, what strategies would you put in place to bring PDVSA out of debt?
  • What economic and social factors do you think are the main reasons for Venezuela’s poverty?
  • If you were working at a financial institution in Venezuela before and after the strike, what advice would you give your customers regarding personal finance?
  • How would you solve Venezuela’s poverty? What measures would you implement to revive and bring back Venezuela’s economy?

24 days ago

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1 Answers

1 Answers
Prateek Gupta
Alumni | Indian Institute Of Management Lucknow

Few points that Venezuela need to focus to get its golden hat back again

• Oil Expoloration Policy: Change the oil exploration policy so that big oil exploration company can feel that their investment are safe and they can bring new technolgies to explore oil in Venezuela.

•Revenue or Profit sharing program: The PDVSA can share the revenue/profit based on oil output from the fields and spend some portion of those profit for social causes.

♦ Too much socialism and dependence on oil led to the Venezuela in poverty, Venezuela need to diversify in argiculture, manufacturing information technology and tourisim based economy.

• Spending and Saving both at same time. Buy dometic product to help economy to boost and save so that country can spend on infrastructure projects. Socialism will help in short run people need to work hard to leave country in glory for new generation.

•Venezuela’s economy need boost. Privatization of some oil fields to get the initial funds to get started and bring new technology, open new sectors for large MNC to invest and bring funds.

23 days ago


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