Economic Freedom: Cuba and Venezuela worst
The Latin American countries closely allied with Venezuela are among the
least-free economies in Latin America, a new survey shows. Cuba,
Venezuela, Bolivia and Ecuador are among the five least-free economies
in the region, according to the 2007 Index of Economic Freedom from the
Heritage Foundation and The Wall Street Journal.
"The recent rise of populists like Evo Morales (Bolivia) and Hugo Chavez
(Venezuela) threatens to widen the freedom gap in the Americas even
more," Index authors Tim Kane, Kim Holmes and Mary Anastasia O'Grady
said in a statement.
Following on the heels of controversial nationalization plans in
Venezuela, a new survey finds the South American country to have the
second-least free economy in Latin America after Cuba. Venezuela's
economy is less free than that of Syria, while Cuba ranks behind
countries like Iran and Zimbabwe in economic freedom, according to the
2007 Index of Economic Freedom from the Heritage Foundation and The Wall
"As a staunchly socialist nation, Venezuela is weak in labor freedom,
financial freedom, investment freedom, monetary freedom, freedom from
government, property rights, and freedom from corruption," Heritage says
in its report on the index results. "Since his initial election in 1998,
President Hugo Chávez has engaged in a military buildup, adopted
draconian libel laws to constrain the media, hobbled opponents through
electoral manipulation, imposed foreign exchange controls on the private
sector, and politicized the state oil industry, which dominates the
On January 8, Chavez announced plans to nationalize the
telecommunications and electricity sectors, a measure that will affect
telecom operator CANTV and electricity company EDC, the top private
employers in Venezuela. That follows a wave of expropriations in recent
"It … looks increasingly unlikely that investors in CANTV will get a
fair price for their assets and will be allowed to participate in fair
and open negotiations with the government," Global Insight says in a
commentary today. "Recent comments by Chavez suggesting that he believes
that CANTV has been spying on him on behalf of the United States do not
bode well for the prospects of a fair settlement with investors."
Verizon owns 28.5 percent of CANTV and had planned to sell its stake to
a Mexican joint venture of America Movil and Telmex for $625 million in
a deal that would have been among the top 40 mergers and acquisitions in
Latin America last year. However, the deal was repeatedly delayed due to
a lack of regulatory approval.
BOLIVIA AND ECUADOR
Bolivia has fallen dramatically on the ranking, from 67 last year to 112
this year. In Latin America, it went from having the 8th-freest economy
to having the fourth-least free economy behind Haiti, Venezuela and Cuba.
"Bolivia suffers from low scores in investment freedom, property rights,
labor freedom, and freedom from corruption," Heritage says. "Pervasive
corruption and significant regulation are major hurdles for foreign
investment, as is possible nationalization of the energy sector. Rule of
law is weak, and private property can be subject to bureaucratic
interference, forced transactions, and even expropriation. Restrictive
labor laws further cloud the business climate."
Meanwhile, Ecuador ends up in 108th place on the ranking. That means
Ecuador's economy is less free than countries like Tanzania and
Mozambique. "Ecuador scores particularly poorly in its investment
freedom, property rights, labor freedom, freedom from corruption, and
business freedom," Heritage says. Meanwhile, Cuba has the overall most
repressed economy in the Americas.
"Business freedom, investment freedom, financial freedom, property
rights, freedom from corruption, and labor freedom are all weak,"
Heritage says. "In theory, Communist nations dictate central economic
policy, and Cuba aims to fulfill this in practice."
Compared to a year earlier, 19 countries in the region received lower
scores while 10 others received higher ratings for economic freedom.
Only Chile dropped into a lower category, falling from "free" to "mostly
free." Two climbed: Honduras from "mostly unfree" to "moderately free"
and Haiti from a "repressed" to a "mostly unfree" rating of its economy.
"Though its overall record is impressive, Chile could improve in
business freedom and trade freedom," Heritage says. "Bankruptcy
procedures can be cumbersome, although regulatory licensing is easy.
Non-tariff barriers are also a problem, as the government restricts