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Natural Resource Abundance and Food Insecurity – an Interrelationship? the Venezuelan Case Study

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Natural Resource Abundance and Food Insecurity – an Interrelationship? the Venezuelan Case Study Natural resource abundance and food insecurity – An interrelationship? The Venezuelan case study Submitted: July 2017 Glasgow Student Number – 2225811f Charles Student Number – 22690481 Presented in partial fulfilment of the requirements for the Degree of M.Sc. International Security, Intelligence and Strategic Studies Word count: 22,924 Supervisors: Dr. Donna Yates & Mgr. Tomáš Kučera, Ph.D. University of Glasgow (2225811f) & Univerzita Karlova (22690481) Final Dissertation – Natural Resource Abundance and Food Insecurity Contents Abstract ...................................................................................................................................... 5 Abbreviations ............................................................................................................................. 6 List of Diagrams and Tables ...................................................................................................... 7 1. Introduction ......................................................................................................................... 9 2. Literature review ............................................................................................................... 11 3. Methodology ..................................................................................................................... 23 a) Feature 1 – Institutional quality .................................................................................... 24 b) Feature 2 – Abundance, dependence and corruption .................................................... 26 c) Feature 3 – Dependence, corruption and economic decline .......................................... 28 d) Feature 4 – Economic decline and food insecurity ....................................................... 31 e) Discussion of model ...................................................................................................... 39 4. Background of Venezuela ................................................................................................. 41 5. Application of framework on Venezuela .......................................................................... 45 a) Feature 1 – Venezuela’s institutional quality ................................................................ 45 b) Feature 2 – Increased natural resource dependence and corruption .............................. 49 c) Feature 3 – Venezuela’s economic decline ................................................................... 53 d) Feature 4 – Dimensions of food insecurity in Venezuela ............................................. 61 e) Evaluation of model ...................................................................................................... 70 6. Conclusion and Observations ........................................................................................... 77 Bibliography ............................................................................................................................. 81 Page 3 of 93 University of Glasgow (2225811f) & Univerzita Karlova (22690481) Final Dissertation – Natural Resource Abundance and Food Insecurity Abstract This dissertation analyses the connection between natural resource abundance and food insecurity. Through a thorough literature review a model establishing the link between the two areas of research was created. Natural resource abundance can lead to food insecurity, if the country has low institutional quality before a resource boom. The combination of resource abundance and lack of quality institutions can then contribute to a dependence on natural resources and increased corruption. These can lead to economic decline. Accepting FAO’s dimensions of food insecurity, economic decline thus causes a decrease in the availability of, access to, utilisation and stability of food, all which lead to food insecurity. This model was then tested for its applicability on the current food crisis in Venezuela, a country with one of the highest proven oil reserves worldwide. The application showed that while economic decline played a vital role in how natural resource abundance led to food insecurity in the Latin American country, other connections are also important. This dissertation finishes with the observation that even though economic decline is one of the greatest problems Venezuela is currently facing, the political instability must first be solved before any other steps can be taken for the sake of improving food security in the country. Page 5 of 93 University of Glasgow (2225811f) & Univerzita Karlova (22690481) Final Dissertation – Natural Resource Abundance and Food Insecurity Abbreviations BCV Banco Central de Venezuela (Central Bank of Venezuela) CIA Central Intelligence Agency CLAP Comités Locales de Abastecimiento y Producción (Local committees for supply and production) CNE Consejo Nacional Electoral (National Electoral Council) CPI Corruption Perceptions Index FAO Food and Agriculture Organisation FAD Food Availability Decline FED Food Entitlement Decline FONDEN Fondo Nacional para el Desarrollo Nacional (National Development Fund) GDP Gross Domestic Product GNP Gross National Product IACHR Inter-American Commission on Human Rights IMF International Monetary Fund MUD Mesa de Unidad Democrática (Roundtable of Democratic Unity) OPEC Organisation of Petroleum Exporting Countries PDVAL Productora y Distribuidora Venezolana de Alimentos (Venezuelan producer and distributor of food) PDVSA Petróleos de Venezuela, S.A. PSUV Partido Socialista Unido de Venezuela (United Socialist Party of Venezuela) UN United Nations WJP World Justice Project WTI West Texas Intermediate – grade of crude oil Page 6 of 93 University of Glasgow (2225811f) & Univerzita Karlova (22690481) Final Dissertation – Natural Resource Abundance and Food Insecurity List of Diagrams and Tables Diagram 1 : Food and Nutrition System by Ecker and Breisinger (2012, p. 5), adapted by author ........................................................................................................................................ 35 Diagram 2: Visualisation of connection between natural resource abundance and food insecurity, created by author .................................................................................................... 38 Diagram 3: Visualisation of the new connection between abundance, institutions and political instability in Venezuela, created by author .............................................................................. 53 Diagram 4: Visualisation of sub-steps between natural resource dependence and economic decline in Venezuela, created by author ................................................................................... 55 Diagram 5: Visualisation of sub-steps between corruption and economic decline in Venezuela, created by author ................................................................................................... 57 Diagram 6: Visualisation of the role of foreign policy in economic decline in Venezuela, created by author ...................................................................................................................... 58 Diagram 7: Visualisation of the impact of economic policies in Venezuela, created by author .................................................................................................................................................. 60 Diagram 8: Visualisation of additional factors which influence food availability in Venezuela, created by author ...................................................................................................................... 63 Diagram 9: Visualisation of additional factors which influence access to food in Venezuela, created by author ...................................................................................................................... 66 Diagram 10: Visualisation of factors which influence utilisation of food in Venezuela, created by author ................................................................................................................................... 67 Diagram 11: Adapted model with focus on sub-steps that led to economic decline, in Venezuela, created by author ................................................................................................... 72 Diagram 12: Adapted model with focus on the connection between economic decline and food insecurity, in Venezuela, created by author ..................................................................... 73 Diagram 13: Connections between natural resources and food insecurity which are not economic decline, in Venezuela, created by author ................................................................. 74 Table 1: Venezuela’s institutional quality 2002-2005 (World Bank, 2016) ............................ 45 Table 2: Venezuela’s CPI 2002-2016 (Transparency International, 2016) ............................. 51 Page 7 of 93 University of Glasgow (2225811f) & Univerzita Karlova (22690481) Final Dissertation – Natural Resource Abundance and Food Insecurity 1. Introduction In recent years, Venezuela’s socio-economic situation has deteriorated. Its economy declined by 3.89% in 2014 (World Bank, 2014), 6.2% in 2015 and 10% in 2016 (CIA, 2017). The country’s oil-dependent economy has suffered greatly, mainly through the fall of oil prices from around $100 per barrel in May 2014 to approximately $48 in May 2017 (WTI crude oil) (World Bank, 2017). While the oil price has slowly been recovering, it is still
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