Caracas, October 11, 2007 (venezuelanalysis.com) – Nobel Prize
winning economist and former vice-president of the World Bank, Joseph Stiglitz, praised Venezuela's economic
growth and "positive policies in health
and education" during a visit to Caracas on Wednesday.
economic growth has been very impressive in the last few years," Stiglitz said
during his speech at a forum on Strategies for Emerging Markets sponsored by
the Bank of Venezuela.
the fourth largest exporter of crude oil to the United
States, has experienced the highest economic growth rate
in Latin America in recent years, with fifteen
successive quarters of expansion and looks set to close the year with 8-9%
growth. Despite the high rate of growth, high public spending and increased
consumer demand have contributed to inflationary pressures, pushing inflation
up to 15.3%, also the highest in Latin America.
However, Stiglitz, who won the Nobel Prize for economics in 2001, argued that relatively
high inflation isn't necessarily harmful to the economy.
He added that while Venezuela's
economic growth has largely been driven by high oil prices, unlike other oil
producing countries, Venezuela
has taken advantage of the boom in world oil prices to implement policies that
benefit its citizens and promote economic development.
"Venezuelan President Hugo Chavez appears to have had
success in bringing health and education to the people in the poor
neighborhoods of Caracas,
to those who previously saw few benefits of the countries oil wealth," he said.
In his latest book "Making Globalization Work," Stiglitz
argues that left governments such as in Venezuela, "have frequently been
castigated and called ‘populist' because they promote the distribution of
benefits of education and health to the poor."
"It is not only important to have sustainable growth,"
Stiglitz continued during his speech, "but to ensure the best distribution of
economic growth, for the benefit of all citizens."
Although Stiglitz praised Venezuela's
"positive policies" in areas of health and education and policies to promote
economic diversification, he assured that Venezuela still faces the challenge
of overcoming structural problems associated with an economy overwhelmingly
geared towards oil production.
In terms of economic development Stiglitz argued it was not
good for the Central Bank to have "excessive" autonomy. Chavez's proposed
constitutional reforms, if approved in December, will remove the autonomy of
the country's Central Bank.
However, Stiglitz claimed, developing nations must strike a
balance between public and private control of the market.
"The key to success is to find the correct equilibrium
between the private sector and the government, which is different for each
nation," he said.
Stiglitz also welcomed Venezuela's
initiative to create the Bank of the South; due to be founded in Caracas on November 3, saying it would benefit the
countries of South America and boost
"One of the
advantages of having a Bank of the South is that it would reflect the
perspectives of those in the South," said Stiglitz, whereas, he argued,
the World Bank and International Monetary Fund often impose conditions that
"hinder the development effectiveness."
criticized the "Washington Consensus" of implementing neo-liberal policies in
Latin America, in particular the US
free trade agreements with Colombia
and other countries, saying they failed to bring benefits to the peoples of
Consensus "is undermining the Andean cooperation, and it is part of the
American strategy of divide and conquer, a strategy trying to get as much of
the benefits for American companies," and little for developing countries,
Stiglitz also met with Venezuelan President Hugo Chavez in
Miraflores, where they exchanged points of view on the global economic
situation, economic indicators and the behavior of world markets.
*Stiglitz quotes translated from Spanish