Venezula

Venezuela’s economic freedom score is 36.1, making its economy the 174th freest in the 2013 Index. Its score has decreased by 2.0 points since last year, reflecting deteriorations in business freedom, labor freedom, and freedom from corruption and an explosive increase in government spending in the run-up to 2012 elections. Venezuela is ranked 28th out of 29 countries in the South and Central America/Caribbean region, and its overall score has recorded one of the 10 largest declines in the 2013 Index.

The foundations of economic freedom in Venezuela continue to deteriorate, severely hampered by structural and institutional problems. With the judicial system increasingly vulnerable to political interference, corruption is prevalent, and the rule of law is weak across the country.

The state’s presence in economic activity has increased through nationalization of industry. Heavily dependent on the oil sector, which accounts for 95 percent of exports, the economy suffers from a lack of dynamism. Inefficient and non-transparent regulatory and judicial frameworks obstruct prospects for long-term development. The lack of access to financing precludes entrepreneurial growth, and the investment regime lacks transparency and remains under tight state control.

Venezuela continues to fall because of quality of the country’s public institutions.

This dismal showing, coupled with severe weaknesses in its markets efficiencyand deterioration in the macroeconomic stability have led the country to featureat the bottom of the region and among the least competitive countries in theworld. Despite being at the forefront in its tertiary education enrolment rate, theoverall quality of the educational system is weak. This, added to a lack of sophisticated businesses and poor innovation potential, critically constrain thecompetitiveness performance of the country.

Background

In 1999, Hugo Chávez won the presidency, vanquished the traditional party system, and launched his Bolivarian...