While the likelihood is that we’ve all heard about countries in South America and Central America how many of us have actually considered moving there in our later years?
Countries such as Venezuela, like so many in South America, are often tainted by reputations of the past which very often have no resemblance to the current day. So let’s take a look at Venezuela and see exactly what this country has to offer and what many expats are already experiencing. It is likely that you will be surprised by the makeup of the country, the prospects for the future and the variation in standard of living.
Venezuela
Officially known as the Bolivarian Republic of Venezuela this is a country which is often overlooked as a potential place to lay your head in later years. However, Venezuela has had its problems in the past and indeed a number of ongoing territorial disputes still rumble on to this day. Like so many South American countries Venezuela has very close links with Spain which indeed was the first country to colonize Venezuela back in the 1500s. Politically Venezuela has been something of a hotbed for many years with various uprisings scattered amongst the country’s recent past. However, Venezuela has one particular resource which every country around the world is interested in, namely oil!
As a consequence, Venezuela has attracted a number of international friends over the years and the income from significant oil resources in and around Venezuela has assisted the overall economy and the overall Venezuelan population.
Where is Venezuela
Venezuela is situated on the north coast of South America with a population of around 27 million people and a landmass of around 1,000,000 km². The country itself is surrounded by Guyana, Brazil, Colombia, Trinidad and Tobago, Grenada, St. Lucia, Barbados and a whole host of other islands. The capital of Venezuela is Caracas which is the centre of the country’s economy and has attracted, and continues to attract, a whole host of visitors from overseas.
Interestingly Venezuela offers a very diverse environment, is renowned for its natural features and is also home to an array of wildlife and many protected species. It will therefore be strange to learn that Venezuela is also one of the most urbanized countries in Latin America with the vast majority of the population living in and around cities. Quite how the diverse landscape, mass of wildlife and prominent city areas come together will be difficult for some people to comprehend. However, we’ll try to paint a picture for those looking to relocate Venezuela at some point in the future.
The weather in Venezuela
To give you an idea of the landscape awaiting those leaving for Venezuela some 30% of the 21,000 plant species in the country are unique to Venezuela, as are 23% of the reptiles and 50% of the amphibian species in the country. When you consider the different landscapes and different climates required to host these creatures you can only guess what awaits you on a visit to Venezuela. The landscape of Venezuela ranges from the scrublands of the Northwest to the mangrove forests of northeast with forests and lowland rainforests present in many areas of the country.
Even though Venezuela itself is considered to be centred round the tropics this is a country which has a massive variation in temperature, anywhere from 28°C to 8°C in glacial region and the highlands. Rainfall in Venezuela can vary between 430 mm in the Northwest to over 1000 mm a year in the Far East giving a perfect example of what you can expect if looking to move to Venezuela. In simple terms the climate in Venezuela can be split into tropical, dry, temperate with dry winters and polar – is there another country in the world that can offer this type of variation?
Working in Venezuela
As we mentioned above, the oil industry is by far and away the most prominent employment opportunity in Venezuela accounting for around 80% of exports and around 30% of Venezuela’s overall GDP. Aside from the fact the country has some of the largest natural gas and oil reserves in the world there are also plentiful supplies of gold, diamonds and iron ore which all contribute significantly to the country’s overall economy.
It will come as no surprise to learn that the Venezuelan government decided to nationalise the oil industry in the 1970s and take total control of oil production in the region. Indeed it was the Venezuela government in the 1970s which was behind the creation of OPEC which is the leading cartel of oil exporting countries in the world. So from a very early stage it was evident that the country would depend upon its oil resources and indeed would do as much as possible to protect these in the future.
As you may guess with a country which depends almost wholly on oil exportation to survive there have been large swings in the economic performance of the country which has in many ways been hampered by very high inflation. Indeed as recent as 1997 inflation was over 50% although it is expected to fall to the low 20s in 2010/11. Therefore it has been very difficult for the Venezuela government to plan ahead for the future in the knowledge that inflation has for some time been out of control and until recently unemployment was well over 16%. However, on the flipside of the coin the relative strength of the price of oil in international markets has support Venezuela in the short to medium term and should support the economy for the foreseeable future.
Aside from the oil industry Venezuela also has relatively well-developed manufacturing, agriculture and international trade sectors with exports dominated by steel, electronics, aluminium, automobiles , textiles, beverages and food. The country also has a strong position in the cement, tyres, paper and fertilizer markets. There is also relatively large exposure to rice, corn, fish, tropical fruit, coffee, beef and pork. So while the oil industry continues to grab headlines in relation to Venezuela there is a little more going on behind the scenes.
However, after taking into account all of the relative strengths of Venezuela and its weaknesses it is surprising to learn that around 30% of the population still live on less than two dollars a day!
Caracas
Situated in the north of Venezuela, Caracas has a population of just over 2 million and is the capital of the Metropolitan district of Caracas. The district as a whole has a population of just over 3.2 million and is well situated to take advantage of overseas visitors and international trade. The city of Caracas itself has a history which goes back more than 500 years and as seems so common with many countries in South America it has very strong links with the country of Spain.
The economy of Caracas in his fairly well spread taking in areas such as service companies, banks, shopping malls, chemicals, textiles, leather, food and iron with the Caracas Stock exchange is also very prominent within the economy of Venezuela. Caracas has also become the focal point of the Venezuelan oil industry and houses the Petroleos to Venezuela which is in charge of negotiating all international agreements for the distribution and export of petroleum.
Maracaibo
Maracaibo is officially the second-largest city in Venezuela with a population of just over 1.5 million and is the capital all the Zulia district of the country, which has a population of around 3.7 million. Rather bizarrely, Maracaibo has been “founded” three times with history showing the first overseas arrivals in 1529. While there is no doubt that Caracas is the modern-day capital of Venezuela but many believe that Maracaibo has played more than a passing role in the creation and development of the country. This has often led to some friction between neighbouring districts which have boiled over throughout the years.
Like all of the larger cities in Venezuela there is no doubt that the oil industry has a very significant role within the local economy although Maracaibo is something a little different and many people believe the local economy is more in keeping with Colombia rather than Venezuela. For nearly 400 years Maracaibo was effectively isolated and separated from the rest of Venezuela due to its location at the head of a massive lake although the creation of a bridge in the 1950s changed the outlook and the situation for the city.
Valencia
Valencia is the third-largest city in Venezuela with a population of over 1.5 million and is situated in the north of the country which seems to be the base for the major cities of the Venezuela. This is an area of the world which has a history going back to the fourth millennium BC and has managed to retain its position in the pecking order of Venezuela over the years. While there has been significant development with regards to the transport network in and around Valencia there have been major problems regarding utility services and pollution.
The cost of living in Venezuela
As seems the norm with so many countries in South America, Venezuela is a country which has a massive divergence of cost-of-living and standard of living. In general the consumer price index in Venezuela today is around 50% of that in the UN’s base city of New York, just 36% of the rent index, 27% of the groceries index with local purchasing power around 43%.
It is possible to obtain a meal for one act at an inexpensive restaurant for under seven dollars, and a meal for two at a midrange restaurant for around $40 with domestic beer costing around $1.25, imported beer four dollars and Coke/Pepsi/bottled water all around $1.60. A litre of milk will cost under one dollar, a loaf of bread around 20c, eggs around $1.20 for 12, cheese over three dollars per kilogram with a midrange bottle of wine setting you back nearly 8 dollars. While there are many well-developed transport networks within Venezuela, in general there has been chronic underinvestment by the Venezuela authorities over the years although this problem is being addressed.
One problem which blights the history of Venezuela, and continues to do so to this day, is inflation which is currently over 30%. Despite attempts by the central bank to try and curb the rate of inflation across Venezuela this has proved unsuccessful at the moment and is impacting upon both the cost-of-living and standard of living. The economy is also struggling to survive, let alone grow, under the weight of massive price increases across the board.
Conclusion
Venezuela is one of many countries in South America which has a very close relationship with the oil industry. Official statistics show that around 30% of gross domestic product in Venezuela is directly linked to the oil industry and the country has agreements in place with a whole host of international oil companies. Unfortunately, the problem of inflation has been closely linked with the Venezuelan economy for many years and the rate is currently running at around 30% per annum. There is no way that the economy can grow significantly in the short to medium term until this inflation problem is addressed and the rate begins to fall.
While not necessarily your first port of call with regards to looking for a new homeland in the future there is no doubt that Venezuela has the potential to attract international visitors, expats as well as businesses from overseas. However, as we touched on above, the problem with inflation is something which will dominate the short to medium-term outlook for the country and as a consequence the ongoing effective reduction in spending power will be difficult for some people to live with.
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