Monday, July 21, 2008

Chavez, Castro appeal to private sector

Venezuelan president Hugo Chavez appealed to 300 business leaders to bring their dollars home, promising tax relief and $1 billion in loans, as Bloomberg explains in "Chavez Pleads for Investment as Falling Output Fuels Inflation". Chavez has reason for concern:

Annual inflation quickened to 32.2 percent in June, a five- year record and the fastest increase in prices among the 79 economies tracked by Bloomberg.

Total investment in Venezuela, the biggest oil exporter in the Western Hemisphere, shrank in the first quarter after growing at an average of 35.5 percent each year since a national strike against Chavez ended in 2003, according to Moody's

Foreign direct investment has dropped 90 percent since 1997, the year before Chavez was elected, to $646 million last year from a record $6.2 billion, according to the central bank.

That puts Venezuela, a country of about 28 million people and a gross domestic product of $182 billion, on par with Guatemala, a nation without any oil and an economy less than a quarter the size.

Meanwhile, in Cuba, Raoul Castro is privatizing state-owned farmland because public production is woefully inefficient.

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