Little Economic Freedom in Venezuela: New at Reason

You can’t blame a decline in oil prices for all of Venezuela’s economic woes.

Marian Tupy writes:

Venezuela would have run into trouble eventually anyway, since a succession of economically illiterate governments has destroyed the non-oil sectors of the economy. In 1998, one economist estimates, oil represented 77 percent of Venezuela’s exports. In 2013, it amounted to 96 percent of that country’s exports. 

Contrast that with the performance of Chile. As Chile grew in economic freedom, it became less dependent on mining and exports of natural resources. Other parts of the Chilean economy, including agriculture and services, have blossomed.

In 1970, which is when the Fraser Institute’s Economic Freedom of the World data begins, GDP per capita adjusted for PPP in Venezuela was $19,985. It was $7,535 in Chile. In 2015, it was $17,272 in Venezuela and $23,794 in Chile. Put differently, real incomes in Venezuela shrunk by 14 percent, while increasing by 216 percent in Chile.

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