The case of Venezuela shows how ineffective governance can harm a powerful economy through inefficient economic policies. Although the country was once a strong economy, with advanced technology and natural resources, such as oil, it collapsed under poor leadership. As a result, a majority of people live in poverty without ability to access basic needs, such as health care. My initial reaction to the peace is that economies require strong economic policies to grow and develop, while poor governance and policies make states with vast resources fail miserably. One of the lessons from the module is that economic resources are limited relative to wants. If poorly managed, the resources get depleted fast and can lead to significant economic challenges in a country, as evidenced in Venezuela’s case. The failure to enact effective policies that would promote the proper use of natural resources led to the country’s economic collapse through outcomes such as inflation.
Thus, when selecting an economic system, the government should consider pursuing economic growth instead of depleting economic resources. For example, a market economy strengthens the country’s economy by empowering various stakeholders in the market and development process. From the economic perspective, the Venezuelan case proves that Socialist systems are inferior to Market systems. The socialist system leads to market inefficiency and lacks the motivation and capability to continue building the economy. Venezuela is a natural outcome of a socialist government system that failed to protect the economy and has left the country in an economic crisis. Many people in the country live in poverty due to bad socialist economic policies that hindered the market from working efficiently to achieve economic growth.
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