Caracas, October 11, 2007 (venezuelanalysis.com) - Nobel Prize

winning economist and former vice-president of the World Bank, Joseph Stiglitz, praised Venezuela's economic

growth and "positive policies in health

and education" during a visit to Caracas on Wednesday.

"Venezuela's

economic growth has been very impressive in the last few years," Stiglitz said

during his speech at a forum on Strategies for Emerging Markets sponsored by

the Bank of Venezuela.

Venezuela,

the fourth largest exporter of crude oil to the United

States, has experienced the highest economic growth rate

in Latin America in recent years, with fifteen

successive quarters of expansion and looks set to close the year with 8-9%

growth. Despite the high rate of growth, high public spending and increased

consumer demand have contributed to inflationary pressures, pushing inflation

up to 15.3%, also the highest in Latin America.

However, Stiglitz, who won the Nobel Prize for economics in 2001, argued that relatively

high inflation isn't necessarily harmful to the economy.

He added that while Venezuela's

economic growth has largely been driven by high oil prices, unlike other oil

producing countries, Venezuela

has taken advantage of the boom in world oil prices to implement policies that

benefit its citizens and promote economic development.

"Venezuelan President Hugo Chavez appears to have had

success in bringing health and education to the people in the poor

neighborhoods of Caracas,

to those who previously saw few benefits of the countries oil wealth," he said.

In his latest book "Making Globalization Work," Stiglitz

argues that left governments such as in Venezuela, "have frequently been

castigated and called ‘populist' because they promote the distribution of

benefits of education and health to the poor."

"It is not only important to have sustainable growth,"

Stiglitz continued during his speech, "but to ensure the best distribution of

economic growth, for the benefit of all citizens."

Although Stiglitz praised Venezuela's

"positive policies" in areas of health and education and policies to promote

economic diversification, he assured that Venezuela still faces the challenge

of overcoming structural problems associated with an economy overwhelmingly

geared towards oil production.

In terms of economic development Stiglitz argued it was not

good for the Central Bank to have "excessive" autonomy. Chavez's proposed

constitutional reforms, if approved in December, will remove the autonomy of

the country's Central Bank.

However, Stiglitz claimed, developing nations must strike a

balance between public and private control of the market.

"The key to success is to find the correct equilibrium

between the private sector and the government, which is different for each

nation," he said.

Stiglitz also welcomed Venezuela's

initiative to create the Bank of the South; due to be founded in Caracas on November 3, saying it would benefit the

countries of South America and boost

development.

"One of the

advantages of having a Bank of the South is that it would reflect the

perspectives of those in the South," said Stiglitz, whereas, he argued,

the World Bank and International Monetary Fund often impose conditions that

"hinder the development effectiveness."

Stiglitz also

criticized the "Washington Consensus" of implementing neo-liberal policies in

Latin America, in particular the US

free trade agreements with Colombia

and other countries, saying they failed to bring benefits to the peoples of

those countries.

The Washington

Consensus "is undermining the Andean cooperation, and it is part of the

American strategy of divide and conquer, a strategy trying to get as much of

the benefits for American companies," and little for developing countries,

he said.

Stiglitz also met with Venezuelan President Hugo Chavez in

Miraflores, where they exchanged points of view on the global economic

situation, economic indicators and the behavior of world markets.

*Stiglitz quotes translated from Spanish