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Background information about Venezuela th
The Venezuelan economy is largely based on petroleum sector and manufacturing. Venezuela is the 6 largest member of the OPEC by oil production. The Venezuelan government chooses which goods are produced, when they t hey are exported and how much they should cost. Therefore, T herefore, they will d epend on their exports a lot and will try to benefit from them as much as possible as they have very good sources of oil which other countries find very essential and Venezuela can make a lot of money from this. Since they are a very popular and large member of oil production, they will be relying on the command economy system as they will need to make the prices which will obviously be selling more than it values so that they can profit from it. Venezuela is part of a command economy which is a system unlike the free market system where the government decides which goods are produced, how much of it is produced and the pricing of which whi ch the goods are sold so ld at. In 2014, they exported $63B and imported $36.6B which meant a positive profit of $26.3B. Venezuela’s oil production is very big, but has fallen since 1998. Now they are producing 2,300,000 barrels of oil daily when 3.5 million barrels where produced in the year of 1998. This is an example of Venezuela taking advantage of the opportunity they have with a command economy whereas if they had a free economy, they will be making a lot less as they will be selling their goods at the price of what the consumers and open market determine. Background information about Singapore Singapore is a country which is located in South-East Asia, right next to Malaysia. Modern Singapore th was founded in the 19 century but lived under the British Crown Colony. In 1959, Singapore had their first general election and The People’s Action Party won with 43 seats. This resulted in Lee Kuan Yew becoming the first prime minister min ister of Singapore. When Malaysia was formed in 1964, the Federation of Malaya, Singapore, North Borneo and Sarawak wsa compromised. This was done to create closer ties between the countries but Singapore’s merger was unsuccessful. Two years later on the 9th of August 1965, Singapore left Malaysia and became an independent sovereign democratic nation. Singapore now has a free market. Singapore has what we call a free market economy. A free market economy is an economy where the government does not interfere with any business activity, which results in the individuals controlling the market and making economic decisions themselves.
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Taxation in Venezuela. Tax percentage rate over the past 10 years have been the same which is 34%. This will apply to everyone even including people who are very poor. This is very bad as there will be a lot of people who will wi ll not be able to pay their tax, therefore th erefore making many debts if all the th e poor people who cannot pay their tax is accumulated. Therefore, they should have a progressive income tax rate. This is the taxation system used in different countries like Singapore and the US. The first time that a citizen is payed in Venezuela, Venezuel a, the amount of tax that they should sh ould pay should shou ld either be 0% or a smaller percent. The Th e next time that they will be payed, they should pay with an increase of tax, but not too much. From this, Venezuela’s government should be able to tell how many people are not able to pay tax and if they should reduce or increase the tax rate progression.
What makes up the GDP in Venezuela:
Agriculture
Agriculture is one of their key components in making their GDP. Venezuela is very large and agriculture takes up around 1 quarter of their country. Their main exports using agriculture is rice, corn, fish, tropical fruit, coffee, beef and pork. However, recent government policies have led to greater problems resulting to food shortages. Industry
The main segment is the petroleum and manufacturing sector. This is because of the amount of oil reserves that Venezuela has which helps them with manufacturing oil products. 36.1% of the GDP in Venezuela is made off the industry, making this one of the key elements to how Venezuela makes their money. A list of products like agricultural products, livestock, raw materials, machinery and equipment, transport equipment, construction materials, medical equipment, pharmaceuticals, chemicals, iron and steel products, crude oil and petroleum products are made from industries. Services
Services mainly include labour force. 13.3 million people make up this these labour force which is around 59.9% of the GDP made in Venezuela. This is why employment rate and unemployment rate is very important and will greatly affect Venezuela as labour force is one of their key segments of making their GDP.
Statistics of Singapore
GDP: $487 billion GDP per Capita: $87,100 GNI per Capita: 76,860 Adult literacy rate: 96.8% Life expectancy(years): 82.1 years old HDI: 0.912 GDP per capita growth rate: Unemployment rate: 2.1% Employment rate: - Population of Singapore: 5.7 million Poverty headcount ratio: N/A
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Top 5 products that export from Singapore: 1. Refined Petroleum – 23% 2. Integrated circuits – 19% 3. Computers – 3.3% 4. Oxygen amino compounds – 2.2% 5. Office Machine Parts – 1.3%
Top 5 products that import to Singapore: 1. Refined Petroleum: 19%
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2. Integrated circuits: 15% 3. Crude Petroleum: 9.2% 4. Petroleum gas: 2.7% 5. Computer: 2%
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Trade agreements: Singapore’s economy heavily relies on trading. Singapore has several trade agreements with both countries, developed and developing, and group trade agreements. Their FTA’s include, but are not limited to; China, India, Japan, Korea, New Zealand, Panama, Peru, Australia, Costa Rica, Jordan and the US.
Singapore relies mostly on their trade with China since they are their top importer, and second largest exporter. Singapore is still making connections with other countries. They currently have 15 free trade agreements under negotiation with single countries. According to the Singapore ministry of foreign affairs “Singapore has an extensive network of trade agreements of 20 agreements currently in place with 31 different trading partners” (MFA Singapore, 2017)
Singapore currently is undergoing negotiation about ab out trade agreements with several countries including but not limited to; Ukraine, Pakistan, Mexico and Canada. “Singapore FTAs - Trade from Singapore - International Enterprise Singa.” IE Singapore – Driving Singapore's External Economy, www.iesingapore.gov.sg/Trade-From-Singapore/InternationalAgreements/free-trade-agreements/Singapore-FTA. Accessed 23 Mar. 2017.
2.
Describe the economic system in place in your chosen countries and how they deal
with answering the key economic question of meeting needs with limited supplies.
Education: Education is very important to the Singaporean government, since having intellectual people in their population is i s obvious benefit. ben efit. The education system in Singapore Si ngapore is a bit complex co mplex but very good because there is a school for almost everyone. Primary school is the first part of every Singaporeans education. The primary education is over 6 years which usually is enough prepare some of the less mature students. After the 6 years, they have a huge test, called the PSLE, which determines what type of secondary school they will join based on their test score. When they receive their test scores, they will be placed in one of the 6 secondary schools based on your level of intellectuality. After the 4-5 years of secondary school, you go to postsecondary where you chose what type of education you want. (“Education System.” Education System, www.moe.gov.sg/education/education-system. Accessed 23 Mar. 2017.)
Health:
The healthcare system in Singapore applies different compulsory savings from payroll deductions. They do this to to get subsidies within a health insurance called Medisave. There are one of three levels of subsidy which is chosen by the patient at the given time (“Healthcare in Singapore.” Wikipedia, Wikimedia Foundation, 23 Mar. 2017, en.wikipedia.org/wiki/Healthcare_in_Singapore. Accessed 23 Mar. 2017.) Taxation:
The taxation method they use in Singapore is a tiered taxation system. This means that the tax percentage slowly increases for every x amount of money you make. This shows that the government in Singapore notices the low income earners. This means that for the first $20,000 you make; you get for free. After this, the tax percentage slowly increases depending on how much money you earn. (“Income Tax Rates.” Income Tax Rate s - IRAS , www.iras.gov.sg/irashome/Individuals/Locals/Working-OutYour-Taxes/Income-Tax-Rates/. Accessed 23 Mar. 2017.)
3. What are the key components of what makes up their GDP? Agriculture: The Agriculture in Singapore is less than 1%. The reason for the agriculture being so low in Singapore is because almost every square meter in Singapore is already built on. With Wi th a population populatio n of 5.4 million milli on with a population density of 7,987.52 per square kilometre, the third highest density in the world, there isn’t a lot of space left for huge farms. This gives Singapore a highly negative trade balance making them 100% dependent on their trade. So far this has worked very well for Singapore and it will hopefully continue that way. (“Country Comparison > Population Density.” Population Density - Coun try Comparison, www.indexmundi.com/g/r.aspx?v=21000. Accessed 23 Mar. 2017. )
Industry: The industry in Singapore covers about 24% of their total GDP ($116.8 billion). Singapore takes advantage of having a big harbour and being Asia's main trade hub. Because of their lack on natural resources, Singapore purchases what they are missing of raw material and uses it to produce other products such as electronic equipment, equip ment, machines, engines, pumps pump s etc.
Services: The Singaporean economy is highly dependent on import and export via shipping. Their dependency on trade is caused by Singapore's small amount of natural resources Singapore's domestic market is very small which limits their opportunity of capital growth and therefore they depend a lot on services. 75% of Singapore’s GDP comes from services. This is because of
Singapore having the main trading doc in Asia. The import and export are the services and this is what makes up 75% of Singapore’s yearly $487 billion GDP. This also means that if drastic changes happen in the shipping industry like companies discovering a more practical trading doc, Singapore's economy eco nomy would be in huge danger dange r since more than $365 $ 365 billion comes from this industry. If this shipping doc loses its priority, Singapore’s industry would also be in danger since they purchase all the raw material they use to produce from their trading partners. That means that if they lose their trading partners, they lose lo se their service. If th ey lose their service, serv ice, they will also als o end up losing losi ng their industry. indust ry. If all this is last the last industry Singapore has left is agriculture which only covers 0.5% of the total GDP ($24.4 billion). This means that if Singapore loses it trade, it loses everything, which would result in bankruptcy and losing their independency i ndependency (“Contact CIA.” Central Intelligence Agency, Central Intelligence Agency, www.cia.gov/library/publications/the-world-factbook/fields/2012.html. Accessed 23 Mar. 2017. ) Current political system of Venezuela
As Nicolás Maduro became president of Venezuela, he found that there were a lot of large shortages of food and a high inflation rate due to the policies of the previous president, Hugo Chávez. However, from the leadership of Hugo Cháves, development activities have initiated which has helped develop Venezuela even more and has prospered them in every sense of the term. From the shortages that have occurred, Venezuela now have regulated many products like milk, various types of meat, chicken, coffee, rice, oil, precooked flour, butter prices; and also basic necessities like toilet paper, personal hygiene products and medicine. m edicine. As a consequence cons equence of this, the t he prices of these products p roducts have either risen or became out of stock. People who do not have the luxury of buying these products have to resort to queuing up for lines taking hours, hunt for food, eat wild fruit or garbage or as a last resort, not purchase the product. Luckily, organizations like Amnesty International, United Nations and others have come to Venezuela's aid. However, the Venezuelan government has declined all the offers given to them. Most economists say that Venezuela started rationing their food in 2014 due to multiple issues. "According to Venezuelan residents, the government also rations public water to those who use water over 108 hours a week due to the nation's poor water delivery systems." (research.omicsgroup.org). This is showing how desperate the Venezuelan government was to rationing their residents. Other products like Gasoline, electricity and water but was mainly implemented in 2016. This would then lead to bigger problems like lik e an increase of cases of diseases. Venezuela should s hould be a very rich ri ch country because it i t has the largest oil reserves in the world. This is because of how the economy is run in Venezuela.
Current political system of Singapore
The People’s Action Party (PAP) has dominating the Singaporian politics since the 9 th of August, 1965 (the day then won their independency).
When Singapore first won their independency, the PAP has a communist political system but is today described as a Socialist Soc ialist Democracy. A Social Democratic system is where the governments earns money in benefit of the public.
Current political system of Venezuela
As Nicolás Maduro became president of Venezuela, he found that there were a lot of large shortages of food and a high inflation rate due to the policies of the previous president, Hugo Chávez. However, from the leadership of Hugo Cháves, development activities have initiated which has helped develop Venezuela even more and has prospered them in every sense of the term. From the shortages that have
occurred, Venezuela now have regulated many products like milk, various types of meat, chicken, coffee, rice, oil, precooked flour, butter prices; and also basic necessities like toilet paper, personal hygiene products and medicine. m edicine. As a consequence cons equence of this, the t he prices of these products p roducts have either risen or became out of stock. People who do not have the luxury of buying these products have to resort to queuing up for lines taking hours, hunt for food, eat wild fruit or garbage or as a last resort, not purchase the product. Luckily, organizations like Amnesty International, United Nations and others have come to Venezuela's aid. However, the Venezuelan government has declined all the offers given to them. Most economists say that Venezuela started rationing their food in 2014 due to multiple issues. "According to Venezuelan residents, the government also rations public water to those who use water over 108 hours a week due to the nation's poor water delivery systems." (research.omicsgroup.org). This is showing how desperate the Venezuelan government was to rationing their residents. Other products like Gasoline, electricity and water but was mainly implemented in 2016. This would then lead to bigger problems like lik e an increase of cases of diseases. Venezuela should s hould be a very rich ri ch country because it i t has the largest oil reserves in the world. This is because of how the economy is run in Venezuela.
Current political system of Singapore th
The People’s Action Party (PAP) has dominating the Singaporian politics since the 9 of August, 1965 (the day then won their independency). When Singapore first won their independency, the PAP has a communist political system but is today described as a Socialist Democracy. A Social Democratic system is where the governments earns money in benefit of the public.
Compare and Contrast
From all the data that we have put together, we have found out that Singapore has a much more developed economic and political system compared to Venezuela. We can tell this by the statistics that have been displayed above. As we can see, the GDP of Venezuela in year 2013 was 438.3 billion USD, where Singapore is 297.9 billion USD. However, Venezuela is 1309 times bigger than Singapore, and compared to how much Venezuela makes, it is no where close enough to the efficiency of how much Singapore makes even with such a small island. The poverty headcount ratio in Venezuela is 33.1% and in Singapore there seems to be no data of poverty. There will be more poor people in Venezuela too as the unemployment rate is 6.7% compared to Singapore which is 2.2%. Since Venezuela has an even larger population, a larger amount of the t he people will be b e unemployed compared co mpared to Singapore Singap ore which has a smaller sm aller population. With the economic system, it seems to be that having a free market will be better for the country. Especially for Singapore as depends on a lot on their consumers as they make their money by selling their products that they have bought. bough t. If Singapore were to have a command economy, eco nomy, they would wo uld be setting their prices up at a certain price, but if their consumers find it too expensive, they may not buy it from Singapore and buy from other countries. This will be a very large problem as Singapore greatly depends on selling their products. This may have been the reason to why Venezuela is not doing very well for themselves. Including the fact that they have one of the best oil reserves and biggest in the world, they should be making a lot of money and should be very rich. Venezuela is a country with natural resources and has a lot of space for infrastructure like factories and other different types of industries like mining and electrical power generation when Singapore is a very small country without any natural resources. They also barely have enough space to have as much infrastructure as other countries do. This is another reason why Singapore has very expensive tax and comprises other features like COE for cars which is extremely expensive. If Venezuela was able to have a free market economy, they would be selling the products at prices pri ces which will be b e very attractive to the consumers, especially es pecially to the petroleum p etroleum sector. This Th is will then make the consumers buy even more and may be a way to get out of the state that they are in now. Other things could be done in Venezuela like having a more expensive tax, but this would have to be gradual as there will be a lot of people who will wil l not even be able to pay for the cheap amount of tax that they are paying now. COE could be added to Venezuela or have a more expensive cost but as said earlier, this cannot be immediately implemented as there will be people who cannot afford to pay for such prices. Venezuela can also be safer than Singapore in some ways. Singapore makes their money and profit off trade as the trading dock in Singapore is the busiest port in the world having to handle 23.2 million units in 2005 and is still at a very high rate. If Singapore somehow loses their reputation for their port or people stop trading with Singapore for reasons like a large malfunction and the port cannot work, this will lose Singapore millions of dollars and they will plunge into a large amount of debt or loss of money. Whereas for Venezuela, they have many reserves for oil and this is very good for them as they will have backups and these are natural resources meaning that they will have a lot stored and could retrieve these things a lot more easily and faster than if something were to happen to the port in Singapore. Comparing the educational system and healthcare, it looks like Singapore is a lot more well developed. Singapore has a much more complicated schooling system but is very efficient. 4.9% of the GDP is used on healthcare, this is less compared to Venezuela but including the amount that Singapore makes relative to the size of Singapore, Singapore would need less and therefore works better for Singapore. Taxation is also a way that Singapore is good at to make money compared to Venezuela. Singapore has a progressive tax system which is better and I would recommend that for Venezuela because people in Venezuela would not be able to pay as a fixed amount of tax and it is unequal for rich people and poor people.
As a conclusion, I think that Singapore has a much better political and economical system compared to Venezuela and we can tell this by the statistics we have accumulated above. Singapore is using their system in a really smart way and this will help them profit a lot of money. However, if Venezuela has their economic system similar to Singapore’s, I think that they would be able to make a lot more money, especially because they have a great oil reserve for themselves.
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