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The Economic Reality Facing Nicolás Maduro

By Francisco Monaldi

How long can the Venezuelan economy resist a major economic readjustment?

Hugo Chávez engineered an electoral budget boom on steroids to win the 2012 presidential election. His economic strategy resulted in a significant appreciation of the real exchange rate, an increase in imports to a historical peak, and a considerable increase in public wages. Facing a strong contender in Henrique Capriles—and the limits to his campaign effort imposed by his illness—he resorted to the proven strategy of pouring money into the pockets of his poorest constituents. This is the same strategy used very effectively in the 2004 and 2006 electoral challenges but one that will...

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