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VENEZUELA
Economic Freedom Score
25
World Rank:
176
Regional Rank:
28
Least
free 0
enezuela’s economic freedom score is 34.3, making its
V
economy the 176th freest in the 2015 Index. Its score has
decreased by 2.0 points since last year, reflecting declines in
50
75
Most
100 free
34.3
Freedom Trend
40
half of the 10 economic freedoms including labor freedom,
monetary freedom, investment freedom, and business freedom. Venezuela is ranked 28th out of 29 countries in the
South and Central America/Caribbean region, and its overall
score is far below the world and regional averages.
Over the past five years, economic freedom in Venezuela
has declined by 3.3 points, primarily due to deteriorations
in the management of government spending, labor freedom,
business freedom, and investment freedom. Recording the
fifth largest score drop of any country graded, Venezuela
has registered its lowest economic freedom score ever in the
2015 Index.
Venezuela’s economic collapse has been preceded by blatant
disregard for the basic foundations of the rule of law and limited government. The administration of Nicolás Maduro has
pushed government finances to the brink despite some of the
world’s largest petroleum reserves. Price controls and import
barriers have expanded the informal sector. With monetary
stability severely eroded by high inflation, the livelihood of
the poor and middle class has deteriorated severely.
BACKGROUND: In 2014, 15 years after the “21st-century
socialist revolution” began, Venezuela was rocked by antigovernment student-led protests in which over 40 Venezuelans were killed, many by government security forces or their
proxies. Hugo Chávez’s legacy of free-spending social programs and socialist economic policies has led to skyrocketing
inflation. There have been significant reductions in civil liberties and economic freedom. Under Chávez’s successor, Nicolás Maduro, the economy has collapsed, and personal security
is at an all-time low. In mid-2014, Venezuela announced plans
to raise the retail price of gasoline, currently the lowest in the
world at 5 cents a gallon, but such reforms fall far short of
what is needed to ameliorate an unsustainable financial and
political situation.
How Do We Measure Economic Freedom?
See page 475 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
39
38
37
36
35
34
33
2011
2012
2013
2014
2015
Country Comparisons
34.3
Country
World
Average
60.4
Regional
Average
59.7
Free
Economies
84.6
0
20
40
60
80
100
Quick Facts
Population: 30.0 million
GDP (PPP): $407.9 billion
1.0% growth in 2013
5-year compound annual growth 1.2%
$13,605 per capita
Unemployment: 7.6%
Inflation (CPI): 40.7%
FDI Inflow: $7.0 billion
Public Debt: 49.8% of GDP
2013 data unless otherwise noted.
Data compiled as of September 2014.
457
VENEZUELA (continued)
THE TEN ECONOMIC FREEDOMS
Score
RULE OF
LAW
Country
World Average
Property Rights 5.0
Freedom from Corruption 20.0
0
20
40
60
80
Rank
1–Year
Change
179th
168th
0
+3.5
100
Political power is concentrated in the executive, with many opportunities for corruption. Capital controls, for example, allow officials to purchase U.S. dollars at a fixed peg and then sell them
on the black market for as much as a 1,100 percent profit. The government has expropriated
nearly 1,300 businesses since 2002. The dysfunctional judiciary is completely controlled by
the executive.
Fiscal Freedom 75.0
GOVERNMENT
Government Spending 52.0
SIZE
117th
127th
0
20
40
60
80
–0.3
+0.2
100
Venezuela’s top individual and corporate income tax rates are 34 percent. Other taxes include
a value-added tax. The overall tax burden amounts to 13.6 percent of the domestic economy.
Government expenditures, bolstered by oil revenues, are equivalent to 40 percent of domestic
production, and public debt is equal to 50 percent of the domestic economy.
REGULATORY
EFFICIENCY
Business Freedom 41.6
Labor Freedom 24.2
Monetary Freedom 42.8
170th
180th
182nd
0
20
40
60
80
–1.8
–9.5
–6.9
100
The overall freedom to engage in entrepreneurial activity is constrained by government control
and inconsistent enforcement of regulations. Most contracts are awarded without competition.
The labor market remains stagnant and controlled by the state. President Maduro has used
dictatorial emergency decree powers to fight rampant inflation with price controls instead of
addressing such causes as money printing and a fixed currency.
OPEN
MARKETS
Trade Freedom 62.8
Investment Freedom 0.0
Financial Freedom 20.0
158th
176th
163rd
0
20
40
60
80
+0.1
–5.0
0
100
Venezuela’s average tariff rate is 8.6 percent. Non-tariff barriers limit competition from foreign
companies and agricultural producers. Private investment remains hampered by state interference in the economy, and hostility to foreign investment, coupled with threats of expropriation,
persists. The financial sector is tightly controlled by the state and often allocates credit based
on political expediency.
Long-Term Score Change (since 1995)
RULE OF LAW
Property Rights
Freedom from
Corruption
458
–45.0
+10.0
GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending
–5.0
–24.1
REGULATORY
EFFICIENCY
OPEN MARKETS
Business Freedom –43.4
Labor Freedom
–8.1
Monetary Freedom –9.2
Trade Freedom
–2.2
Investment Freedom –50.0
Financial Freedom
–50.0
2015 Index of Economic Freedom