New Paper Explains Falling Poverty Rates in Venezuela, Corrects Misreporting

For Immediate Release:  May 24, 2006

Contact: Ira Arlook, 202-721-0111
             Mark Weisbrot, 202-746-7264

Over the past year, the statement that poverty in Venezuela has increased under the government of President Hugo Chávez has appeared in scores of major newspapers, on major television and radio programs, and even journals such as Foreign Affairs¹ and Foreign Policy.² These statements have only rarely been contested or corrected. [See Appendix to the paper for samples of this misreporting on poverty in Venezuela].

An Issue Brief released by the Center for Economic and Policy Research looks at the numbers and concludes:

• The household poverty rate was reduced by nearly 5 percentage points, or 11.4 percent, from 42.8 percent in the first half of 1999 (when President Chavez took office) to 37.9 percent in the second half of 2005.  Since the economy has continued to grow rapidly this year (first quarter growth came in at 9.4 percent), the poverty rate is almost certainly significantly lower today.
  
  
• There is no evidence that the Venezuelan National Institute of Statistics has changed its methodology, so these numbers are directly comparable. The most recent figures are about what would be expected as a result of the rapid economic recovery.
  
  
• Most of the erroneous reporting on this issue results from using numbers gathered in the first quarter of 2004. These numbers reflect sharp increase in the poverty rate caused by the severe economic downturn of 2002-2003.
  
  
• Since the preliminary poverty numbers for 2005 were released in September 2005, it is not clear why the out-of-date, early 2004 numbers have continued to be widely used. The early 2004 numbers quickly became out of date because of the rapid growth of the Venezuelan economy in 2004 (17.9 percent) and 2005 (9.4 percent), which pulled millions of people out of poverty.
  
  
• The reduction in poverty noted above, since 1999, measures only cash income. This, however, does not really capture the changes in the living standards of the poor in Venezuela, since there have been major changes in non-cash benefits and services in the last few years - for example health care is now provided to an estimated 54 percent of the population. The paper looks briefly at the impact of these changes.
  
  

The full paper is available here.

¹ Castañeda, Jorge G., "Latin America's Left Turn," Foreign Affairs, May/June 2006.

² Corrales, Javier, "Hugo Boss," Foreign Policy, January/February 2006.