Essay Example on Venezuela Crisis: Poor Governance, Black Market & Failing Economy

The Venezuelan crisis and the rise of the black market is a devastating issue that can be traced back to the poor governance of the country. President Nicholas Maduro's government continuously failed to stabilize the foreign exchange rates because of a failing economy and thus the rise of the black market. The government has been in a very bad state as far as the economy is concerned, and this has seen the prices of common commodities rise to unfair prices and the bolivar dollar exchange rates keeping on rising (Boskov, 2018). The economic crisis in the country has been the major cause in the rise of the black market because for many people the local shops and supermarkets quickly closed and so there was no alternative but to trade in the black market. Black market and the economic crisis were simply due to the fact that the government was unable to strike a balance in their currency regulation and creating a stable stock exchange for their currencies in the foreign market.

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The main issue in the case is the failed economy of Venezuela and the rising crisis of the black and grey market, which has since deteriorated its economy further to a very bad state. The Venezuelan government is on the brink of collapse because of the continued economic crisis and unstable currency in the foreign exchange. The country's main foreign exchange is oil, and this has since been a challenge also the product cannot fully sustain the economy is the expected way. The black market has then become a major problem where dollar exchange and foods are being sold outside of the usual market. The Maduro government failed economy presents the main reason for the rise of the black market in the country. The black market is poison to any economy, and thus every government should be ready to put an end to any of its development.

The country could no longer hold it's economy stable, and this subsequently sparks a major crisis, especially in food production and the foreign exchange rates. Black markets offer food products in a very high sale and dollar exchange at high rates because of the failed normal channels by the government as a result of an unstable economy (West, 2016). Grey markets include the exchange of currency to foreign markets; the grey market in Venezuela continuously failed and got worse because of similar transactions being carried out in the black markets. Black markets in this accord kill the viability of the grey market because it makes the exchange rates to widen up gradually and thus crippling the economy through the weakening of the domestic currency to the foreign markets.

Financial Analysis

The financial analysis that Venezuela came hopefully use for awakening their economy is first through eradicating and totally eliminating the black marketing because black markets are a total crackdown of the economy because they do not reflect in the national economic progress of the country. By doing so, the country will then have the chance to control money flow and capital inflow from goods sold. Capital control is also a means of maintaining economic stability in the country. With a stable and controlled capital by the government, the state of Venezuela will thus have a chance to increase their capita per income, which equally reflects on the economic progress of the country and its people. Maintaining financial system stability as a reform strategy aids in keeping the financial system and economical at a stable pace to equally enable the country to trade in the foreign markets.

References

Boskov, T. (2018). Venezuela currency crisis: analysis of the causes. IJIBM International Journal of Information, Business and Management, 10(4), 119-125.

West, W. G. (2016). Front: Washington's Efforts to Destabilise any Succeeding American. The Second Economy in the Marxist States, 122.