Venezuela has seen an unprecedented exodus of people in recent months. In response to a dramatic economic downturn in which inflation is soaring, oil production tanking, and a humanitarian catastrophe unfolding, many Venezuelans are seeking refuge in neighboring countries. However, the lack of official numbers on emigration from the Venezuelan government, and receiving countries largely refusing to acknowledge a refugee status for affected people, it has been difficult to quantify the magnitude of this crisis. In this note we document how we use data from the social media service Twitter to measure the emigration of people from Venezuela. Using a simple statistical model that allows us to correct for a sampling bias in the data, we estimate that up to 2,9 million Venezuelans have left the country in the past year.
Although Venezuela’s experience since the 1980s would seem to make it a classic example of the resource curse, that perspective fails to explain the country’s impressive economic, social and institutional performance—including healthy public debate—during the first five decades after oil was first produced on a large scale. This chapter takes a long view of the Venezuelan experience and argues that this initial performance was lengthy and positive but fragile, given the incapacity of the country’s institutions to adapt to the different environment that developed afterwards, characterized by high oil price volatility and significant and sudden declines in oil revenues. The prolonged initial period of equilibrium became a curse of sorts. Lacking adaptive efficiency, political institutions were forced to rely increasingly on maintaining an illusion of harmony, and as faltering performance became evident, Venezuelans began questioning the model and its hegemonic arrangements. The scope and magnitude of the economic, social and institutional devastation that followed were such that public debate became one the first casualties. One of the main problems in contemporary Venezuela is the polarization of politics. This makes it difficult for the country’s population to arrive at reasonable solutions through public discussion.
The central question we will explore in this document is: Can we anticipate the opportunities that Colombian cities have to export specific products based on their existing productive capabilities?
In the following pages, we report a collection of results, analyses, and advances in which we assess how industry-related capabilities affect export possibilities. Our final goal will be to create a single measure that synthesizes all the knowledge and existing information about the productive capabilities of each city, both “horizontal” and “vertical”, and that quantifies how competitive a city can be if it aims at exporting a given product it does not yet export.
This document is broken in two main efforts: First, we want to understand the “mechanics” of diversification processes. And second, we want to be able to provide recommendations of products that are not produced in cities, but should be. The first effort requires a multitude of analyses, each trying to describe the characteristics of firms, of cities, and of the mechanisms that expand the export baskets of places. The second effort requires the development of a statistical model that is accurate when predicting the appearances of products in cities. These two efforts, explaining and predicting, are complementary, but different.
Explanations that lack the power of accurately predicting the future are useless in practice; predictions of phenomena for which we lack understanding are dangerous. But together they provide a unified story that can inform policy decisions.
Are the well-known facts about urbanization in the United States also true for the developing world? We compare American metropolitan areas with analogous geographic units in Brazil, China and India. Both Gibrat’s Law and Zipf’s Law seem to hold as well in Brazil as in the U.S., but China and India look quite different. In Brazil and China, the implications of the spatial equilibrium hypothesis, the central organizing idea of urban economics, are not rejected. The India data, however, repeatedly rejects tests inspired by the spatial equilibrium assumption. One hypothesis is that spatial equilibrium only emerges with economic development, as markets replace social relationships and as human capital spreads more widely. In all four countries there is strong evidence of agglomeration economies and human capital externalities. The correlation between density and earnings is stronger in both China and India than in the U.S., strongest in China. In India the gap between urban and rural wages is huge, but the correlation between city size and earnings is more modest. The cross-sectional relationship between area-level skills and both earnings and area-level growth are also stronger in the developing world than in the U.S. The forces that drive urban success seem similar in the rich and poor world, even if limited migration and difficult housing markets make it harder for a spatial equilibrium to develop.
Venezuela is at a breaking point. The political, economic, financial, social and humanitarian crisis that has gripped the country is intensifying. This unsustainable situation raises several urgent questions: Which path will the embattled OPEC country take out of the current turmoil? What type of political transition lies ahead? What short-term and long-term impact will the crisis have on its ailing oil industry, economy and bond debt? What would be the best and most effective prescription for oil and economic recovery under a new governance regime? To discuss these matters, the Center on Global Energy Policy brought together on June 19, 2017 a group of about 45 experts, including oil industry executives, investment bankers, economists and political scientists from leading think tanks and universities, consultants, and multilateral organization representatives. This note provides some of the highlights from that roundtable discussion, which was held under the Chatham House rule.
This paper documents negative cumulative abnormal returns (CARs) to five exchange rate devaluations in Venezuela within the context of stiff exchange controls and large black-market premiums, using daily stock prices for 110 multinationals with Venezuelan subsidiaries. The results suggest evidence of statistically and economically significant negative CARs of up to 2.07% over the ten-day event window. We find consistent results using synthetic controls to causally infer the effect of each devaluation on the stock prices of global firms active in the country at the time of the event. Our results are at odds with the predicaments of the efficient market hypothesis stating that predictable devaluations should not impact stock prices of large multinational companies on the day of the event, and even less so when they happen in small countries. We interpret these results as suggestive indication of market inefficiencies in the process of asset pricing.
Are regions poor because they have bad institutions or are they poor because they are disconnected from the social channels through which technology diffuses? This paper tests institutional and technological theories of economic convergence by looking at income convergence across Colombian municipalities. We use formal employment and wage data to estimate growth of income per capita at the municipal level. In Colombia, municipalities are organized into 32 departamentos or states. We use cellphone metadata to cluster municipalities into 32 communication clusters, defined as a set of municipalities that are densely connected through phone calls. We show that these two forms of grouping municipalities are very different. We study the effect on municipal income growth of the characteristics of both the state and the communication cluster to which the municipality belongs. We find that belonging to a richer communication cluster accelerates convergence, while belonging to a richer state does not. This result is robust to controlling for state fixed effects when studying the impact of communication clusters and vice versa. The results point to the importance of social interactions rather than formal institutions in the growth process.
Recent work suggests a connection between domestic debt and external default. We examine potential linkages for Venezuela, where the evidence reveals a nexus among domestic debt, financial repression, and external vulnerability. The financial repression tax (as a share of GDP) is similar to OECD economies, in spite of higher debt ratios in the latter. The financial repression “tax rate” is higher in years of exchange controls and legislated interest rate ceilings. We document a link between domestic disequilibrium and a weakening of the net foreign asset position via private capital flight. We suggest these findings are not unique to Venezuela.
Venezuela has an oil-dependent economy subject to large exogenous shocks and a rigid labor market. These features go straight to the heart of two weaknesses of real business cycle (RBC) theory widely reported in the literature: neither shocks are volatile enough nor real salaries suf ficiently flexible as required by the RBC framework to replicate the behavior of the economy. We calibrate a basic RBC model and compare a set of relevant statistics from RBC-simulated time series with actual data for Venezuela and the benchmark case of the United States (1950–2008). Despite Venezuela being a heavily regulated economy, RBC-simulated series provide a good fit, in particular with regard to labor markets.
Labor informality, associated with low productivity and lack of access to social security services, dogs developing countries around the world. Rates of labor (in)formality, however, vary widely within countries. This paper presents a new stylized fact, namely the systematic positive relationship between the rate of labor formality and the working age population in cities. We hypothesize that this phenomenon occurs through the emergence of complex economic activities: as cities become larger, labor is allocated into increasingly complex industries as firms combine complementary capabilities derived from a more diverse pool of workers. Using data from Colombia, we use a network-based model to show that the technological proximity (derived from worker transitions between industry pairs) of current industries in a city to potential new complex industries governs the growth of the formal sector in the city. The mechanism proposed has robust strong predictive power, and fares better than alternative explanations of (in)formality.
Cities thrive through the diversity of their occupants because the availability of complementary skills enables firms in the formal sector to grow, delivering increasingly sophisticated products and services. The appearance of new industries is path dependent in that new economic activities build on existing strengths, leading cities to both diversify and specialize in distinct areas. Hence, the location of necessary capabilities, and in particular the distance between firms and people with the skills they need, is key to the success of urban agglomerations. Using data for Colombia, this paper assesses the extent to which cities benefit from skills and capabilities available in their surrounding catchment areas. Without assuming a prioria a definition for cities, we sequentially agglomerate the 96 urban municipalities larger than 50,000 people based on commuting time. We show that a level of agglomeration equivalent to between 45 and 75 minutes of commuting time, corresponding to between 62 and 43 cities, maximizes the impact that the availability of skills has on the ability of agglomerations to generate formal employment. Smaller urban municipalities stand to gain more in the process of agglomeration. A range of policy implications are discussed.
Even before the oil price crisis began in 2014, progress in reducing poverty in Venezuela had ceased and official figures showed that. According to the INE, between 2008 and 2013, the percentage of the population living in poverty remained almost the same, going from 33.1% to 34.2%.
Estas son las últimas cifras oficiales de pobreza de ingreso que disponemos ya que la última contabilización oficial de porcentaje de población en situación de pobreza es la del segundo semestre de 2013. A partir de ese momento la descripción social de la pobreza en Venezuela ha dependido de estudios independientes realizados entre otros, por un consorcio de varias universidades del país que dan cuenta de la evolución de la pobreza entre 2014 y 2015 (ENCOVI, 2014 y 2015), años donde se precipitaron los precios del petróleo hasta un tercio de lo que llegaron a ser durante 2008 acelerando un proceso de deterioro en los indicadores de desempeño económico y bienestar del hogar.
Según estas fuentes independientes de información la pobreza de ingresos en Venezuela habría llegado hasta un 55% en 2014 y 76% en 2015. Cifras que por sí solas hablan de la necesidad diseñar un plan de reformas económicas y sociales para hacerle frente al impacto social de la caída de los precios del petróleo, así como al conjunto de factores, más allá de los precios del crudo, que han llevado al país a tres años continuos de recesión y aumento de la pobreza.
En atención a lo anterior, el presente trabajo se enmarca dentro del conjunto de ejercicios de investigación que son necesarios para poder diseñar un programa de estabilización económica y su correspondiente plan de protección social. En ese sentido, en lo que sigue trataremos de dimensionar el número de familias que necesitarían formar parte de este potencial plan de protección social.
Para ello nos valdremos como fuente de información de la ENCOVI 2014 y 2015, encuestas desde las cuales no sólo tenemos información para contabilizar los hogares e individuos en estado de necesidad, sino además las coberturas probables de los programas sociales (Misiones) que actualmente implementa el gobierno de Venezuela, para de esta forma estimar; en primer lugar, las familias en situación de pobreza que reciben beneficios sociales; en segundo lugar las que estando en esa condición de pobreza no los reciben y; por último, y con miras a la reforma de los programas y la introducción de elementos de progresividad distributiva, los beneficiarios que aún sin ser población objetivo, por no estar en situación de pobreza, son receptores de transferencias, pensiones o becas por parte del Estado.
Adicionalmente a lo anterior, las políticas de control de cambio y la regulación de los precios, aunado a los problemas de abastecimiento, han hecho que los precios de los bienes a los que tienen acceso los distintos grupos sociales varían según si se adquieren en los mercados controlados o en los informales. Estos diferenciales de precios son muy importantes y están generando impactos distributivos difíciles de estimar, pero fundamentales para entender las necesidades de protección social que requieren los hogares para cubrir la canasta de productos básicos.
Es por ello que este trabajo también se propone describir a muy alto nivel los problemas distributivos generados por los diferenciales de precios. Si bien probablemente no sea posible llegar a conclusiones definitivas, al menos plantearemos lo relevante del tema para entender como la escasez de productos y las regulaciones de precios han introducido un conjunto de distorsiones en los precios y en el acceso a los bienes esenciales y presentaremos algunos de los dilemas y preguntas que estas distorsiones generan al momento de analizar la capacidad de satisfacer necesidades básicas en Venezuela.
 En Agosto de 2016, el Instituto Nacional de Estadística (INE) publicó estadísticas sobre el porcentaje de hogares en situación de pobreza por primera vez desde el año 2013. La serie fue actualizada para incluir los datos de 2014 y el primer semestre de 2015. Para el primer semestre de 2014 la cifra de hogares en situación de pobreza por ingreso alcanzó 29,5%, para el segundo semestre de ese año llegó a 32,6% y finalmente para el primer semestre de 2015 33,1% de los hogares se encontraban en situación de pobreza por ingresos. Sin embargo, el INE no ha hecho públicas ni el valor de Canasta Alimentaria Normativa para 2015, ni las Encuestas de Hogares que sustentan este cálculo ni las cifras de pobreza por ingreso como porcentaje de la población.
 We refer to the National Survey of Living Conditions (ENCOVI) conducted in 2014 and 2015 by the Andrés Bello Catholic University, the Simón Bolívar University and the Central de Venezuela. The results and report of the 2014 survey can be seen in: Zuñiga, Genny and González, Marino. A look at the social situation of the Venezuelan population. National Survey of Living Conditions. 2014 . IIES-UCAB. Caracas. 2015, The report of the 2015 survey is being prepared but the database is available at the Institute of Economic and Social Research of the UCAB.