Integration and Venezuela:
a reverting process?
Work by Imelda Cisneros
hat follows is a summary of the main points
reviewed by Imelda Cisneros (Ph.D.) in an extensive work on Venezuela's role in the
several integration projects and agreements it has signed with Latin American and
Caribbean countries. The objective is to be able to "identify the integration strategy
being followed by Venezuela with regard to each of the schemes where it participates
and to evaluate its global integration strategy".
The work is divided into four sections: the first one deals with the integration
strategy's foundations. She starts by establishing the context where the economic
policies of the sixties and seventies interplay and the fundamental role performed by oil
during those decades. There is an explanation of the critical situation that resulted from
the foreign debt and the difficult steps taken in search of a transition towards a less
protected, less subsidized and less oil-dependent economy. The review "identifies the
policies and actions that have shaped the industrial, trade and integration processes.
In Venezuela, these processes are being carried on by a fragile State, by institutions
under crisis, a weak economy, collapsed service, imperfect markets and a poorly
competitive trade sector".
Integration has accelerated and supported the State's modernization by
facilitating the trend towards open and new markets, thus exposing the country's
production sector to a kind of competence it had never faced before. Such lack of
competence resulted in low efficiency levels.
Dr. Cisneros thinks that 1990 was a crucial year for the promotion of, and
commitments to, the regional integration process. On a parallel course, with the
launching of an adjustment and stabilization policy for the domestic economy,
complemented by more specific policies as a support for technology and human
resources training among other areas.
The fall of government in 1993 stopped the project unexpectedly. However, at
those times a free trade area was created between the Andean Pact member countries
and integration agreements were signed with Colombia and Mexico through the
creation of the Group of Three. Agreements were reached also with Caricom and
Chile.
The second section has a case by case review of the integration agreements
entered by Venezuela. It studies also the new relationship with Brazil (and the link to
Mercosur and LAFTA) and the relationships with North America through NAFTA and
an eventual hemispheric free trade agreement.
Imelda Cisneros is of the opinion that "the study of trade and investment flows
generated by the signing of integration agreements is essential in order to understand
how significant they are in terms of the interchange they create". She adds a
complement that lets her reach conclusions on Venezuela's future in matters of
integration. This complement arises when detecting six factors that affect the country's
participation in integration processes. She then goes on to an individual review of each
case (pp. 10-30).
The third section provides a weighing matrix for the six factors as function of the
several integration agreements, thus getting a view of the future.
The six factors acting as indicators having sometimes a positive influence an
other times a negative one over the integration strategy. They are the following:
1) Inertia (positive inertial effect inasmuch as the projects initiated in 1989 are
still going ahead)
2) Of signatories (pressure exerted by signatories on the government)
3) Difficulties: culturally, geographically and administratively and otherwise
featured factor that may accelerate or overcome the process. A common
language, for instance, is a facilitating factor, but distance and border difficulties
problems hinder the process.
4) Differentiation: a factor related to government decisions that may ţunder
political reasonsţ step ahead of the process under a desire to mark difference
with former administrations.
5) Internal pressure: a factor of issues by different factors towards the
government, either for or against a specific project.
6) Macroeconomic compatibility dealing with the degree of compatibility
between Venezuela's internal policies and commitments made in the several
integration agreements entered by it.
With the purpose of measuring these factors' influence an "Index of Projects"
was calculated for each of the integration schemes, based on the weighed average of
quantitative values assigned to each factor
The result of such analysis shows that the integration project with better medium
term prospects is the Andean Pact. However, it concludes that "success of the
integration process may be hindered by the absence of a clear economic program. This
is reflected in the new hurdles being faced by the explorers and in the government's
neglect towards the country's traditional markets and its failure to develop a global
integration policy".
Finally, the review concludes by answering to the following question:
What steps should Venezuela take towards an integration strategy?
1) First, to give a solid economic support to the integration process by promoting
trade and investment and avoiding protectionst measures and subsidies
compensating for government inconsistencies
2) To consolidate the country's participation in the agreements it has
already signed (Andean Pact, CACM, Group of Three, CARICOM and
Agreement with Chile). These agreements must be perceived as solid ones and
be seen as credible by potential negotiators.
3) Venezuela must act as a bridge between Mercosur and the Caribbean
and reinforce its relationships with Latin American countries because the
eventual Hemispheric integration will be defined on the basis of NAFTA and
Mercosur strategies.
4) Last, Venezuela must take and secure measures ensuring that its
integration commitments do complement and perfect the multilateral freeing of
its trade and investment and vice versa.
Readers of this column wishing to get the whole text of Dr. Imelda Cisnero's
work may address themselves to her e-mail address or to that of the editor or the
autor of these comments.
URL: http://www.internet.ve/analitica
Message to the author: motero@ccs.internet.ve
