Venezuela and Mercosur

Venezuela and MERCOSUR

There are great advantages to nation when they are considering joining a regional trade; however there are also disadvantages that each nation must carefully take into account before joining. As a Venezuelan business owner, this paper will strive to develop a plan for my business in order for it to continue to prosper as Venezuela is petitioning to become a member of MERCOSUR. A full understating of my country’s economic point of view is paramount. Also, information about MERCOSUR’s would be required with regard to their economic point of view. Most importantly though, what would be my company’s advantages and disadvantages and what type of changes will have to be made to my company as a result of Venezuela’s membership in MERCOSUR.

Oil revenues are around ninety percent of Venezuela’s export earnings, federal budget revenues are approximately fifty percent, with the GDP coming out at around thirty percent. In December, 2002, until February, 2003, a strike that went through the entire nation had major economic consequences. The GDP dropped to around nine percent in 2002 and it went down to eight percent in 2003. Since then the economic output has strongly improved. Record government spending elevated the GDP by approximately nine percent in 2006, eight percent in 2007, and nearly six percent in 2007, which was the result of high oil prices. Due to the government’s spending along with the minimum wage increase and easier access to domestic credit, it produced a consumption boom which resulted in higher inflation to around twenty percent in 2007 and more than thirty percent in 2008. Imports also have jumped significantly. Declining oil prices in the latter part of 2008 are expected to undermine the government’s ability to continue the high rate of spending (The World Fact Book). Just because Venezuela’s trade is primarily in oil revenues, it should also be noted that it is an agricultural nation which produces pork, beef, coffee,...