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  HOME | Venezuela (Click here for more Venezuela news)

TalCual: Producing Everything Venezuela Needs
The one thing that makes sense in modern times is to reflect on how each country can be inserted into the circuits of international trade in the most successful way possible. In other words, how to export as much as possible in order to have the capacity and option to buy consumer goods and intermediate goods that their economies and societies need. The rest is poetry

By TalCual

An easy, but not very serious, way to earn recognition – especially before audiences poorly versed in economic matters – is to postulate Venezuela as a country that can produce everything it needs. This allows to feed the patriotic and nationalist hearts of those who hear. But the real truth is that no country can produce everything it needs. If so, they would not need to participate in the complexities of contemporary international trade, which is based precisely on the idea that a country sells what it can produce more easily or with less costs, and purchase in the international market with the revenues obtained through exports a series of goods that the country is not able to produce on its own territory or, if able, I would do it with much greater costs and sacrifices than through international trade.

Let’s look at some specific situations. The exports of crude oil and its derivatives, petrochemicals, iron and its derivatives, aluminum and its derivatives, rum, cocoa or other similar products with which Venezuela today plays in the circuits of contemporary international trade allows to generate revenues in dollars or other hard currencies, and with them buy inputs, raw materials, machinery, equipment and spare parts that are needed to produce a series of manufactured goods in Venezuela. Also imported are the final goods that cannot be produced in the country, such as computers or wheat, for example, for reasons related to the cost it would imply and/or technological limitations.

Even more specific: everything produced in Venezuela requires some kind of inputs or imported raw materials. No country can produce internally everything it needs. An attempt was made in the 20th century through the substitution industrialization model, which was implemented across Latin America, precisely because the lack of exports and dollars had paralyzed the ability to continue growing in an industry supplied by inputs from abroad. In subsequent decades, the countries without the capacity to export, or that have been unable to do so, were confined within their own borders, but have had to pay higher costs in terms of production, productivity and competitiveness.

Even in the field of agriculture – where it appears that cows and corn are raised and grown without the need of anything that is not on their nearest geographical environment – imported inputs are essential. Fertilizers and agrochemicals are needed to achieve good crops, and soybeans and other ingredients to produce food concentrates so animals can feed and grow properly.

Therefore, this romantic idea that a country is able to produce everything it needs is an idea that not only does not go with the current globalization times, but that has nothing to do with the world’s economic development over the past 200 years.

 

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