On April 14 Venezuelans will go to the polls to elect a new president to succeed the late President Hugo Chavez. While Chavez may be gone, he leaves behind a profoundly changed country that has a new name – the Bolivarian Republic of Venezuela – but is now a place where most people, if they didn’t already vote with their feet and leave, are far worse off than they were when he first took office.
When Chavez took power in 1999, the Venezuelan economy was rated at 54 points out of 100 according to The Heritage Foundation/Wall Street Journal’s annual Index of Economic Freedom. That was good enough to land the country among the ranks of the world’s “somewhat free” economies. Today Venezuela’s economy is rated at only 36 points. This nearly 20-point plunge is the most severe recorded over that period. Venezuela’s score in the 2013 Index makes its economy the 174th freest in the world out of 177 countries. That means Venezuela is now one of the most repressed economies in the globe along with North Korea and Zimbabwe. Regionally, Venezuela is ranked 28th out of 29 countries in Latin America, just ahead of Cuba.
The country’s next government will be faced with extensive 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 needs urgent reforms, but institutional change takes time, effort, determination, and, above all, dedicated reformers. Join us in the run-up period to this important election for a wide-ranging discussion of the challenges facing Venezuelans.