THE EFFECT OF THE VENEZUELAN-CHINESE ECONOMIC RELATIONSHIP ON

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1017320151016UDCTHE EFFECT OF THE VENEZUELAN-CHINESE ECONOMIC RELATIONSHIP ONVENEZUELABy: Servio MárquezProf.Deng Lili学 学20169__ _
THE EFFECT OF THE VENEZUELAN-CHINESE ECONOMIC RELATIONSHIP ONVENEZUELA2ABSTRACTThe purpose of this study is to explain the effect of the Venezuelan-Chinese economicrelationshipon Venezuela’s own economy, as toanalyze the causation of the effect and giverelated suggestion.This study pursues its main goal by analyzing the data gathered through a series of surveysapplied to a sample group people whose professions are: International Business, Trades andRelationships; Economy; Political Sciences; International Public Law, and by revising theinformation obtained from the UN Commodity Trade regarding this topic. There has been somerelated studies regarding the oil-based trades between China and Venezuela, but none of themhas focused on the effects of this relationship on Venezuela’s state policies and economy. Theconclusions of this study may help to improve exponentially the relations between these twonations.The economic growth trend that China has exposed for over thirty years has certainly impressedan even influenced the economies of its Latin neighbors,in such growth, and in addition to theglobal trade trends from eastern to western nations, The international relations between Chinaand Venezuela grew significantly during the Presidency of Hugo Chávez in Venezuela and thetenure of Hu Jintao as the leader of the People's Republic of China. The Chinese-Venezuelantrade was less than $500m per year before 1999, and reached $7.5bn in 2009, making China,Venezuela's second-largest trade partner, it also brought as consequence Venezuela becomingChina's biggest investment destination in Latin America. Various bilateral deals have seen Chinainvest billions in Venezuela, and Venezuela increase exports of oil and other resources to China.Even though the nature and main objective of the majority of the trades signed betweenVenezuela and China is related to de same topic (oil, crude, petroleum, and related products), thetrades consequences, effects and repercussions might affect either positively or in a negative wayother areas; In this study we shall focus on the repercussion of this trading aspects andinternational relations on the Venezuelan economy. Other investigations have treated this topicfrom a positive point of view, or they focused on other areas such as the repercussion of the
THE EFFECT OF THE VENEZUELAN-CHINESE ECONOMIC RELATIONSHIP ONVENEZUELA3relations in the socio-political environment; that is why I consider this a most importantobjective, if we determine how is the Venezuelan economy affected by the relationship of saidcountry in trading terms with China, and we manage to establish a set of recommendations basedon the results of our study, both economic systems might be equally favored.As part of my research, the author has set up three hypotheses:H1: There is a significant effectof Chinese lending on the growth of Venezuelan gross capital formation. There is a significanteffect of Chinese lending on the growth of the Venezuelan gross domestic product. Theactualpolitical situation of Venezuela has negative impact regarding the perception and understandingof the Venezuelan population towards the international relationship between The BolivarianRepublic of Venezuela and The People’s Republic of China.Therefore Purpose of this researchwill be to answer the question ofWhat is the effect of the Venezuelan-Chinese internationaltrade relationship on Venezuela’s economy.One of the Results gathered from this research states thatIn the regression equation that belongsto the first research question, every dollar of 1-year lagged Chinese investment was associatedwith a 1.28e09 gain in gross domestic product per capita annual growth %. Proving China’sinfluence in Venezuela’s economy.This study suggests that overcoming data limitations should therefore be the first concern forresearchers working on the topic of Chinese and Venezuelan investment and economic outcomesin recipient countries.Keywords:Petroleum, International trade, Oil export, Economic Influence, Venezuela, China,
THE EFFECT OF THE VENEZUELAN-CHINESE ECONOMIC RELATIONSHIP ONVENEZUELA4TABLE OF CONTENTSTABLE OF TABLES AND FIGURES...........................................................................................5Glossary...........................................................................................................................................71Introduction.................................................................................................................................81.1Background............................................................................................................................81.2 Research Significance...........................................................................................................91.3 Literature Review.................................................................................................................101.3.1 Background Analyses: Venezuela-China Knowledge ..........................................101.3.2 The Chinese Perspective on Latin American Investments.............................................................111.4Research Content.................................................................................................................121.4.1 Research Questions...................................................................................121.4.2 Methodology..........................................................................................121.4.3 Research Design......................................................................................131.5 The Innovations And Limitations of The Study.................................................................141.5.1 The Innovations of the study........................................................................141.5.2 Limitations of the Study....................................................................................................142.Discussion of Theories.............................................................................................................152.1 Neoclassical Theories of Growth..................................................................152.1.1 The Lewis Theory....................................................................................152.1.2 The Solow Theory....................................................................................172.2 Inflows and Economic Growth............................................................................................192.3Theories of Soft Power........................................................................................................203 The Development of Venezuela and China Economic Relations.....................22
THE EFFECT OF THE VENEZUELAN-CHINESE ECONOMIC RELATIONSHIP ONVENEZUELA53.1Venezuela’s Economic Background and Projection............................................................223.1.1 Venezuela's Assets....................................................................................223.1.2 Venezuelan Agriculture..............................................................................233.1.3 The Venezuelan Legacy..............................................................................253.1.4 The roll of Aid........................................................................................263.2Chinese Involvement in Latin America...............................................................................303.2.1 The Imperial Period...................................................................................303.2.2 The Contemporary Period............................................................................303.2.3 The Chinese Need for Resources....................................................................314. The Analysis ofthe Effect of the Venezuelan-Chinese Economic Relationship on Venezuela.......................................................................................................................................................334.1Chinese Investments in Venezuela......................................................................................334.2Venezuela’s Debt to China.................................................................................................354.3Chinese Exports to Venezuelaand the Related Effect on Venezuela..................................354.4Venezuelan Oil Exports to China.........................................................................................364.5 Is there a significant effect of Chinese lending on the growth of Venezuelan gross capitalformation?..................................................................................................................................374.6 Is there a significant effect of Chinese lending on the growth of the Venezuelan grossdomestic product?....................................................................................................................424.7 Conclusions..............................................................................................................................495.Discussion of the Results......................................................................................................515.1 Introduction..........................................................................................................................515.2 Relation to Neoclassical Theories of Growth......................................................................51
THE EFFECT OF THE VENEZUELAN-CHINESE ECONOMIC RELATIONSHIP ONVENEZUELA65.3 Relation to WGI...................................................................................................................525.4 Relation to Theories of Economic Growth and Governmental Action...............................575.5 The Relations to the Politic-Economical Characteristics of the Venezuelan ChineseRelationship................................................................................................586Recommendations For Future Governmental Doing............................................................616.1Implications of the Study.....................................................................................................616.2 Research Suggestions.................................................................................626.2.1 Recommended Questionnaire Procedure and Questionnaire Results.........................63References......................................................................................................................................71APENDIX....................................................................................................85ACKNOWLEDGEMENT.............................................................................................................91
THE EFFECT OF THE VENEZUELAN-CHINESE ECONOMIC RELATIONSHIP ONVENEZUELA7TABLE OF TABLES AND FIGURESFigure 3-1. Venezuela Crude Oil Production................................................................................29Figure 3.2 China’s Economic Forecast..........................................................................................32Figure 4.1 Chinese Investment in Venezuela................................................................................34Figure 4.2 Venezuelan BOP with China........................................................................................35Figure 4.3 Gap between Venezuelan Oil Exports to China...........................................................36Figure 4.4 Rise of Venezuelan Oil exports to China.....................................................................36Table 4.1 GCF Measures for Venezuela........................................................................................38Table 4.2 GCF Measures for Venezuela and Chinese Investment................................................43Table 5.1 WGI Components..........................................................................................................24Table 5.2 Venezuelan WGI Performance......................................................................................25Figure 6.1.5 Participant Gender.....................................................................................................55Figure 6.2 Participant Profession..................................................................................................55Table 6.1 Profession and Career Indicators..................................................................................56Table 6.2 Personnel Data Indicators..............................................................................................56Figure 6.3 Work Experience in Years............................................................................................57Table 6.3 Work Experience in Years.............................................................................................57Figure 6.4 Rate of Effect................................................................................................................58Table 6.4 Rate of Effect.................................................................................................................58Figure 6.5 Possible Economic Outcomes......................................................................................59Table 6.5 Possible Economic Outcomes.......................................................................................59
THE EFFECT OF THE VENEZUELAN-CHINESE ECONOMIC RELATIONSHIP ONVENEZUELA8Figure 6.6 Hypothesis Question.....................................................................................................60Table 6.6 Hypothesis Question......................................................................................................60
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