1 venezuela an assessment of its national infrastructure
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1
Venezuela
An Assessment of its National Infrastructure
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Map & Background
Capital: Caracas Government: Federal
Republic Chief of State: Hugo
Chavez Frias Acts as both the chief of
state and head of government
National Assembly elected by people
3
Brief History
Discovered by Columbus in 1498 Controlled by Spain from 16th century to early 19th
century Independence from Spain in 1821 – Bolivarian
Revolution Discovery of oil in early 20th century Oil boom in 1970s helped shape the economy Poor oil market of 1980s led to economic and
political crisis.
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Hugo Chavez: Madman or Savior?
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Changing Flag & Crest 1954-2006 flag As of March 12, 2006
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Rise of Populism in Latin/South America Moderate/Social Democratic
Left Brazil – Luiz Inacio “Lula”
da Silva Chile – Michelle Bachelet Costa Rica – Oscar Arias Uruguay – Tabare Vazquez
Stand for prudent macroeconomic policies and retention of 1990s economic reforms
Also, better social policies
Latin American “traditional” Populism Venezuela – Hugo Chavez Argentina – Nestor Kirchner Bolivia – Evo Morales
Possible leaders Peru – Ollanta Humala or
Alan Garcia Mexico – Andres Manuel
Lopez Obrador Nicaragua – Daniel Ortega
(Sandinistas) ?
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Chavez rise to power continues an uncertain political stability 2002 Coup to oust Chavez 2002-2003 general strike at PDVSA Oil makes up
1/3 of GDP 80% of all Venezuelan exports Over 50% of Government operating revenues
Stability is mostly based on how well the oil market is doing.
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Government promotion of IT
Government promotion of IT very high Internet users increased 810% between 1998 and
2005 Opening of 2,000 public internet centers Pledging universal internet access of all citizens
Projecting a 50%/year growth of internet usage.
Currently, 4% of population access Internet a month.
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Trade barriers to IT diffusion and IT ownership Free trade zone in Merida – Venezuela’s
“Silicon Valley” Tax breaks and incentives to all national and
international companies starting there. Telecommunications open to unlimited
competition Includes fixed-line, cellular/mobile, cable, satellite,
data and multimedia. Investments in infrastructure continue to rise.
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Legal protections and copyright laws Improvement in copyright and IP law
Andean Pact of 1994 Creation of National Copyright office in 1995
Piracy very rampant Protection of satellite signals nonexistent Especially true of US satellite signals Piracy rate up from 60% (1999) to 79% (2004)
Intellectual Property protection still not adequate
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Educational System
Literacy rate (over age 15): 93.4% IT Literacy fairly low
Especially away from the coast 32% of public schools have computer equipment
Primarily used for administrative work Mostly obsolete No Internet access due to poor telephone service Very little teacher training Computer labs mostly found in universities
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Language
Official language is Spanish Also considered official “business” language Very little English spoken in countryside Upper class and businessmen speak English
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Hofstede Analysis
62
46
40
91
48
80
70
21
73
76
81
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0 20 40 60 80 100
Masculinity
UncertaintyAvoidance
Power Distance
Individualism
Venezuela
LatinAmerica
USA
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IT Diffusion
Phones per capita: 110 per 1000 people Computers per capita: 46 per 1000 people TVs per capita: 180-185 per 1000 people Extent of IT usage
Mainly the oil and petrochemical industries Banking and finance sector Insurance Telecommunications Government and Customs Manufacturing and Industrial Sector
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Telecommunications/Infrastructure Telecommunications Infrastructure is modern and expanding
Still behind other South American counterparts However, digitalization of fixed lines growing
66.1% (1998) to 80.5% (2001) Privatization of industry leading to more growth.
Only 5 out of every 100 people are internet users This number is probably higher, due to push for “public internet
centers” No official standard for EDI Digital Access Index: 0.47
United States: 0.78 Brazil: 0.50 Colombia: 0.45 Peru: 0.44
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Venezuela “Night Sky” BrightnessLuminance map of Venezuela - 1997
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Computer Industry
Native hardware industry – very low Virtually no hardware manufacturing Some well-known hardware resellers have subsidiaries or
operations in Venezuela Native software industry
Growing, especially in the telecommunications, banking and petroleum sector.
INTESA Joint venture between PDVSA and SAIC Largest information technology services company in Latin
America PDVSA outsources IT services to INTESA, the largest in Latin
America
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Economy
Physical Infrastructure best near cities Large number of airports Road quality decreases away from city centers.
Privatization trends reversing Telecommunication and IT sector highly privatized Oil industry now state run
PDVSA forced all foreign oil companies into joint ventures, or face a takeover
16 of 32 foreign companies so far have complied Total and Eni did not, fields were taken over by PDVSA
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GDP
Per Capita: $6,500 (2005 est) Growth rate: 9.1% (2005 est)
Venezuela - GDP - real growth rate (%)
-7.2%
3.2% 2.7%
-8.9% -9.2%
16.8%9.1%
-20.0%-10.0%
0.0%
10.0%20.0%
1999 2000 2001 2002 2003 2004 2005
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Joint Ventures & Stock Market Extent of Joint Ventures with International Firms
Growing in technology sector All foreign oil companies are now forced into Joint Ventures
Caracas Stock Exchange Emerging market Market cap of 7.59 billion 94 companies listed (1998)
Only a few are telecommunications/IT companies Hard to get funding for companies
Very expensive and inefficient Have to look to the United States or other developed
countries.
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Foreign Direct Investment Foreign Direct Investment growth slowing down
However, still much better than pre-90s Companies still investing, especially in telecommunications
Lucent launching 3G CDMA 2000 network end 2006 (2.4Mbps)
-1
0
1
2
3
4
Foreign Direct Investment (% of GDP)
FDI -0.17 1.29 0.08 0.11 0.93 1.27 3.88 2.95
1970 1975 1980 1985 1990 1995 2000 2003
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World Economic Forum’s Economic Creativity Index Attempts to measure country’s creativity and involvement in
innovation Index based on observed data and survey results Measures the level of technology and the conditions favoring
business start-ups.
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Conclusion
Future is uncertain Economy too tied to petroleum sector Chavez government shaky Uncertainty in continuing privatization
Overall Assessment of IT Capability of Venezuela Emerging IT based economy with emphasis for growth Working hard with other regional countries to increase IT
capability. Attractiveness of Venezuela from an IT perspective
Seems to be attractive, albeit high risk.
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Questions?
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