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VENEZUELA
Economic Freedom Score
25
World Rank:
176
Regional Rank:
28
Least
free
enezuela’s economy is in decline. Unwise governV
ment spending and fiscal deficits have affected the
daily lives of Venezuelans as a shortage of basic con-
50
75
Most
0
100 free
33.7
Freedom Trend
42
sumer goods has become more widespread. President
Nicolás Maduro has issued decrees that erode the rights
of foreign investors and increase the government’s control of the economy. Many U.S. and multinational firms
have shut down operations in Venezuela because of rigid
labor regulations.
ECONOMIC FREEDOM SNAPSHOT
• 2016 Economic Freedom Score: 33.7 (down 0.6 point)
• Economic Freedom Status: Repressed
• Global Ranking: 176th
• Regional Ranking: 28th in the South and Central America/
Caribbean Region
• Notable Successes: None
• Concerns: Rule of Law, Regulatory Efficiency, and Open Markets
• Overall Score Change Since 2012: –4.4
Oil represents nearly all of Venezuela’s exports and contributes about half of its annual income. Lack of economic
diversification leaves Venezuela extremely vulnerable to
declining world oil prices. The Maduro administration
has pushed government spending to the brink, resulting
in higher inflation and public debt.
BACKGROUND: Venezuelans enjoy few civil liberties and
little economic freedom, and crime rates are high. Nicolás
Maduro, who became president in 2013 following the death
of Hugo Chávez, faces renewed social unrest. He has tried to
shift blame for shortages created by price controls, subsidies,
rigid labor regulations, and other deeply flawed economic policies onto what remains of Venezuela’s private sector. Access
to U.S. dollars is highly restricted, and the business climate is
hostile. In 2015, the government made the first withdrawals
of Special Drawing Rights from the International Monetary
Fund since 1997. Venezuela’s international reserves continue
to fall, and a debt default is not out of the question.
How Do We Measure Economic Freedom?
See page 467 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
40
38
36
34
32
30
2012
2013
2014
2015
2016
Country Comparisons
33.7
Country
World
Average
60.7
Regional
Average
59.8
Free
Economies
83.9
0
20
40
60
80
100
Quick Facts
Population: 30.5 million
GDP (PPP): $538.9 billion
–4.0% growth in 2014
5-year compound annual growth 1.1%
$17,695 per capita
Unemployment: 8.6%
Inflation (CPI): 62.2%
FDI Inflow: $320.0 million
Public Debt: 45.6% of GDP
2014 data unless otherwise noted.
Data compiled as of September 2015.
449
VENEZUELA (continued)
THE TEN ECONOMIC FREEDOMS
Score
RULE OF
LAW
Property Rights
Freedom from Corruption
Country
World Average
5.0
19.0
0
20
40
60
80
Rank
1–Year
Change
179th
170th
0
–1.0
100
Corruption is pervasive. Smuggling has become extremely lucrative because of state subsidies
and price controls; gasoline smuggling alone costs the government several billion dollars per
year. Spiraling rates of violent crime prompt large numbers of skilled workers to emigrate,
which will affect the economy’s long-term performance. Expropriations, weak public-sector
institutions, and lack of judicial independence undermine property rights.
Fiscal Freedom 74.9
GOVERNMENT
Government Spending 56.7
SIZE
116th
121st
0
20
40
60
80
–0.1
+4.7
100
The top personal income and corporate tax rates are 34 percent. Other taxes include a valueadded tax. The overall tax burden is estimated to equal 13.9 percent of total domestic income.
Budget deficits have fluctuated depending on changes in the price of oil. Government spending amounts to 38 percent of GDP, and public debt is equivalent to about 45 percent of total
domestic output.
REGULATORY
EFFICIENCY
Business Freedom
Labor Freedom
Monetary Freedom
45.3
29.5
33.8
169th
181st
182nd
0
20
40
60
80
+3.7
+5.3
–9.0
100
Regulatory encroachment on private businesses continues. There is little transparency in decision-making, and most contracts are awarded without competition. The labor market remains
controlled by the state. Thanks to huge subsidies and enormous oil reserves, Venezuela has the
cheapest fuel in the world; a fill-up costs only a few U.S. pennies at black-market exchange rates.
OPEN
MARKETS
Trade Freedom
Investment Freedom
Financial Freedom
63.2
0.0
10.0
157th
177th
174th
0
20
40
60
80
+0.4
0
–10.0
100
Venezuela’s average tariff rate is 8.4 percent. Imports of several agricultural products are
restricted. State-owned enterprises distort the economy. A November 2014 presidential decree
reduced the rights of foreign investors. Hostility to foreign investment and threats of expropriation persist. The financial sector is tightly controlled by the state, and credit is often allocated
on the basis of political expediency.
Long-Term Score Change (since 1995)
RULE OF LAW
Property Rights
Freedom from
Corruption
450
–45.0
+9.0
GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending
–5.1
–19.4
REGULATORY
EFFICIENCY
OPEN MARKETS
Business Freedom –39.7
Labor Freedom
–2.8
Monetary Freedom –18.2
Trade Freedom
–1.8
Investment Freedom –50.0
Financial Freedom
–60.0
2016 Index of Economic Freedom