Thursday, May 22, 2008

Venezuela: Yes, There's More

In two recent posts I covered the debate about social and economic policies in Venezuela, partly to emphasize how in considering development issues it's important to understand the facts and all their nuances before lanching into ideological debates.

I linked to an article from Francisco Rodriguez, former economist to the Venezuelan national assembly, who made the intriguing argument that the Hugo Chavez government had not actually made a very high priority of addressing poverty (something generally assumed by both boosters and critics of Chavez).

I then discovered a piece by US analyst Mark Weisbrot, who critiqued Rodriguez' use of data and suggested that in fact the evidence generally pointed to increased social spending and steady progress for the Venzuelan poor.

My second post was sympathetic to Weisbrot's contention that the picture changed after a fuller review of the data. However, I then received a communication from Francisco Rodriguez himself, who pointed out that I had obviously not seen his rebuttal to Weisbrot. He noted that because Foreign Policy does not allow the use of footnotes, it hadn't been possible to make clear all the data sources he had used, which in fact drew from the work he has been doing for at least ten years.

Rodriguez says that the arguments of Weisbrot "[rely] on erroneous reading of the evidence or use of severely biased indicators that do not accurately reflect the evolution of the Venezuelan economy or the well-being of the poor".

Let's review the substance of the rebuttal to Weisbrot, under the categories I used in the previous two posts.

Spending Priorities

Rodriguez questions the relevance of Weisbot's point that the absolute level of social spending has increased during the Chavez administration. Given that Venezuela has had a huge windfall thanks to oil boom, he points out, all categories of spending are going to increase. Therefore, " if we are interested in evaluating a government’s priorities... we want to study how it has allocated it among different possible objectives". And he returns to his original point that the relative portion allocated to Venezuelan health, education, and housing is the same as it was in the 1990s.

The only big increase in government social spending is on social security, which Rodriguez argues is regressive because people in the informal economy don't have access to pensions (an important point, and akin to my convoluted argument about Peruvian labour laws in this post -- i.e. for them to be important, first you've got to have a job).

Weisbrot had also pointed to what he quoted as $13 billion social spending by the Venezuelan state oil company PDVSA. Rodriguez publishes the detailsof the PDVSA budget, showing that of this spending only about a quarter is on health, education and housing (the 'misiones'). The rest of the 'social spending' includes debt refinancing, infrastructure projects, and defense projects.

My question would be: although not as large as claimed, the social programmes funded by PDVSA are new initiatives, and therefore should they not bolster the total proportion of public spending counted as 'social'?


In the two previous posts I described how Weibsrot and Rodriguez disagreed about whether inequality, as measured by the Gini coefficient, had gone up or down during the Chavez administration. Weisbrot had been unsure about which sources Rodriguez had used for his inequality measures and suggested that they might have been cherry picked. He cited data from the Venezuelan National Statistics Insitute to suggest that inequality has actually dropped since Chavez came to power.

In his rebuttal, Rodriguez points out that the series cited by Weisbrot excludes people whose reported income is zero (presumably the poorest of the poor). Furthermore, he provides time-series graphs using data derived directly from the Venezuelan Household Surveys. Using different methods (and including people with zero income), these all show that income inequality has dropped from a peak in 2002, but is only now back to the level it was in 1995. Latest data suggests inequality is still on a downward track, but that still excludes the zero-income groups, so the jury is out.

Poverty reduction

Weisbrot had interpreted Rodriguez as saying that many developing countries achieved a two point reduction in poverty for every point of GDP growth -- meaning Venezuela would have had to eliminate poverty entirely by 2007. Rodriguez makes clear that he was talking about the 'income elasticity of poverty reduction', a technical calculation, which, despite digging tentatively into some background reading, I can't entirely understand. Suffice to say that according to Rodriguez, given its level of economic growth, Venezuela should have seen poverty reduced to between 18--22.5 percent, rather than the 27 percent that has been achieved.

In correspondence, Francisco Rodriguez agreed that Peru was a far worse performer again (having seen poverty reduce very slowly from 54 to 43 percent in a period when its economy grew by around 40 percent) but that Chile, Mexico and Brazil are the examples commonly cited as having combined economic growth with good social progress. I'd note that each of these countries is subject to its own debate -- there are some discussions of Chile here and here.


Rodriguez had written a paper with co-author Daniel Ortega (presumably not the Nicaraguan Sandinista leader) which cast grave doubt on whether the Chavez government's Mision Robinson literacy programme had taught 1.5 million Venezuelans to read and write. Using information from the Venezuealan Household Surveys, Rodriguez and Ortega pointed out that there were still more than a million illiterate Venezuelans in 2005, barely less than the 1.1 million before the start of the Mision Robinson programme.

Weisbrot complained that Rodriguez had used a question from the Household Survey not designed to measure literacy, and also took issue with some of the methodology in the analysis. But Rodriguez argues in his rebuttal that if we assume the Household Survey data to be accurate, there is no possible interpretation consistent with the claim that Mision Robinson enrolled and educated 1.5 million people. At most, around 40,000 people (a small fraction of the number claimed) could have been taught to read and write since 2003.

Health Indicators

Weisbrot suggested that individual indicators which Rodriguez reported as worsening (low birth-weight babies, ) could be due to measurement errors, since overall the indicators show improvement. Rodriguez counters by arguing that under a government with a strong focus on poverty we should expect to see across-the-board improvements. Instead, infant mortality has declined at the same rate as during the 90s, while some things might have got worse. He concludes by agreeing with Weisbrot that "official Venezuelan statistics are far from...ideal", pitching this as further evidence of a haphazard approach by the government to implementing and evaluating its social programmes..


Phew. There endeth the debate (for now at least). Why have I spent so much time on this, and how indeed do I justify including it in what is supposed to be my development studies journal (ends next week)?

I guess because in looking at development issues there are several different questions to ask. There's the question of what development is, which is a favourite in the humanities section of the academic setting and which I've flirted with in a couple of recent posts. There's the question of how this can be achieved, which is the issue that a lot of the practical and political debate focuses on. Then there's the third question, worth asking before we jump to the second or even the first: do we know what's actually going on?

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1 comment:

Terence said...

Hi Simon,

Thanks for the heads up on my blog. I'll aim to have a read over Rodriguez's rejoinder and offer my thoughts when I get a chance (income elasticity of poverty is something I know a bit about).

Oh and I think you're reading of this debate is eminently justifiable for your journal. Chavez is claimed as a champion by many (although by no means all) of those who reject neo-liberalism. And the neo-liberalism debate can probably fairly be described as one of the development debates of our times.