Nationalization Activities Which Take Place In Venezuela And Bolivia (Essay Sample)

Nationalization activities in Venezuela and Bolivia Name Institutional affiliation Nationalization refers to the process where the government expropriates the assets of a private entity with or without breaking of an agreement between the government and the said entity. It usually involves the government taking charge of privately controlled assets. A couple of countries around the globe have decided to nationalize their national resources with the main aim of ensuring that the resources are appropriately distributed among the citizens. Venezuela and Bolivia are among the states that have adopted the nationalization strategy, which has seen a number of industries and companies coming under the full control of the government (US Department of State, 2016). Most of the modern companies that invest in foreign companies usually enter into contractual production sharing agreement as well as risk service agreements (Hall and Lozada, 2014). Under these agreements, the governments usually retain absolute sovereignty over the natural resources. Nationalization of industries as well as companies often leaves foreign businesses with very little options, with most of them deciding to opt out of the host countries. However, there are certain standards that have to be met for the nationalization process to be deemed as fair and appropriate (Reuters, 2016). The paper presents a discussion of whether the nationalization process in Venezuela and Bolivia is in line with the international standards. Both Venezuela and Bolivia have moved on with their efforts to nationalize a number of sectors in their economies including the agricultural sector, the mining sector as well as the oil and petroleum sector. Bolivia’s nationalization efforts have mainly focuses on the hydrocarbon and mining industries. In his first year as the head of Bolivia, president Morales ensured that the hydrocarbons industry became nationalized through a decree (Reuters, 2016). This process allowed the government to be in charge of the macroeconomic policies as well as redistribution of the revenues gained from the industry. The decision to privatize the industry has proved to be quite beneficial to the poorest portion of the Bolivians who are now able to enjoy the proceeds from the industry. In Venezuela, the nationalization efforts have focused on the gas and oil sector, agriculture, finance, telecommunication, mining as well as the transportation sectors. Most of these nationalization activities have seen the Venezuelan government taking major stakes in the various sectors, a move that has seen many private corporations leaving the nation (Hall and Lozada, 2014). The takeovers by both the Venezuela and Bolivian government followed the international standards which require the government to compensate the corporations before taking control of the industry or the firm. Similarly the international standards give the host countries full control of their natural resources, meaning that the host countries can either chose to compensate or not to compensate foreign corporations following the nationalization of the sector in which the corpora...