Evolution of freedom

Since 1995¹The first half of the 1990s was a very turbulent period for Venezuela. Waves of protests and looting led to a state of social and political upheaval, weakening the government and creating the breeding ground for two attempted coups d’état. Later the president was forced out of office by the Supreme Court. Finally, Venezuela experienced its worst historic banking crisis in 1994 (with an estimated bailout cost of twenty percent of gross domestic product). Those elements placed the country, in 1995, at a very low level in all metrics of freedom and prosperity, many of which recovered to levels by 2000. This means that the assessment of changes from 1995 to the present may be somewhat distorted: understating the decline assessment while overstating the improvement in the twenty-first century., Venezuela’s overall Freedom Index score has significantly declined, with a decrease of more than twenty-eight points. Initially, the country’s freedom score was just 1.4 points below the Latin America & the Caribbean regional average, but its scores on all three subindexes have declined and the gap between Venezuela and the regional average now exceed thirty points. The national statistical system has faced a significant setback, with data either disappearing or remaining outdated. Venezuela has outperformed the region on only one indicator—women’s economic freedom, with a significant increase of thirty-five points since 1971, and over eighteen points since 1995, making this evolution a consistent trend in the society.

Venezuela’s poor performance in the twenty-first century can be attributed to the political and ideological project known as “socialism of the twenty-first century,” which aimed to dismantle the institutional framework established during the democratic period, 1958–1998, and replace it with a system rooted in socialist ethics and production mode, with a geopolitical scope, and where individual freedom is no longer a value.

Its economic subindex improved by over eight points from 1995 to 2000, driven by trade freedom, but has since declined. The most significant driver of the decline has been the erosion of property rights, with 1,423 documented cases of expropriations, interventions, occupations, and confiscations . Additionally, the “land rescues” under the 2001 Land Law resulted in the seizure of five million hectares, equivalent to 5 percent of Venezuela’s territory, according to the National Land Institute. From 2014 to 2019, the Organic Law on Fair Prices, enforced by the National Superintendence for the Defense of Socioeconomic Rights, led to 149,811 actions, including inspections, closures, and fines. As a result, the economy stagnated, supply chains were dismantled, and the violation of property rights exacerbated uncertainty, heightened risk perception, discouraged investment, stifled job creation, and deepened poverty.

Since 2020, a series of pseudo-privatizations have occurred, under the Anti-Blockade Law, which allows the suspension of legal provisions, the use of exceptional contracting mechanisms, and the classifying of actions as secret or confidential. Alongside this, an indeterminate number of affected companies and assets have been returned without transparency, and have not adhered to the basic standards of reparation or property rights restitution.

The socialist model currently guiding Venezuela’s policies is marked by excessive populism and state intervention. Economic activity and entrepreneurship are severely hampered by widespread government interference, inconsistent regulatory enforcement, and a heavy bureaucratic burden. The lack of transparency in government decision making, the shrinking of market size, and entrenched cronyism have resulted in a market with little competition and virtually no freedom for investment.

The government’s lack of transparency and accountability and a setback in the official statistical system have been other key factors in undermining economic freedom, making it difficult to base decisions on reliable information and fueling misinformation. This issue is particularly evident in the erosion of information related to the national budget and its management, with clear political intent, allowing the executive between 2006 and 2012, the discretionary and opaque management of large public funds for social programs known as “Misiones,” which failed to produce positive social outcomes.

At the same time, political freedom in Venezuela has drastically declined, with a nearly fifty-five-point drop since 1995 in the political subindex. Initially, Venezuela outperformed the regional average by twelve points but now lags by more than forty points, with the gap widening after 1999. Electoral performance has steadily worsened, with sharp declines between 2012–13 and 2016–17. The presidential election on July 28, 2024, particularly exposed the subordination of the electoral and judiciary branches to the executive, disregarding the popular will and eroding the integrity of elections as a means of democratic alternation.

Legislative checks on the executive have collapsed by 85 points since 1995. Although there was an apparent improvement between 2014–2016, when the democratic opposition won a qualified majority in the National Assembly, this progress was undone by a Supreme Court decision loyal to the executive, followed by the establishment of a Constituent Assembly that stripped the National Assembly of its powers. The situation seemed to offer some hope in 2018–2019, with the emergence of an interim presidency and mounting international pressure and sanctions on the regime. However, the anticipated political change toward greater freedom never materialized.

The rule of law, as measured by the legal subindex, has eroded, with the score dropping dropped by over twenty-five points in Venezuela since 1995. Initially, scores were above the regional average, but this trend reversed in 1998, leading to the country’s current position below that average. Judicial independence and effectiveness have sharply deteriorated, with significant declines between 1997–2000 and 2003–05, after which they have remained consistently low.

The main drivers for the decline in the rule of law during this century are a) the consolidation of executive supremacy, enabled by the expansion of presidential powers in the 1999 Constitution and the frequent use of decrees and special powers through enabling laws; b) the increasing role of the military in controlling and implementing government policies; and c) the rise in corruption and lack of transparency, bypassing legal accountability standards. The decline has been further compounded by a 73 percent drop in judicial independence between 1995 and 2017. These elements have eroded democratic governance and undermined institutional integrity.

In 2019, the UN Human Rights Council established an Independent International Fact-Finding Mission to investigate human rights violations in Venezuela since 2014. Its latest report issued in September 2024 focused on the post-electoral crisis following the presidential elections of July 28, 2024. The report highlighted a significant intensification of the state’s repressive apparatus, documenting serious human rights violations, including brutal crackdowns on protests, which resulted in twenty-five deaths, hundreds of injuries, and thousands of arrests, including 158 minors. The report detailed arbitrary detentions, forced disappearances, torture, and cruel, inhuman, or degrading treatment, including sexual and gender-based violence, all of which escalated during this period. Additionally, the report noted an increase in harassment and judicial persecution of journalists, nongovernmental organizations, and key civil society actors. This repression worsened following the approval of the Law on the Supervision, Regularization, Action, and Financing of Non-Governmental and Related Organizations (August 2024), which imposed severe restrictions on the operations of these organizations.

From freedom to prosperity

Since 1995, Venezuela’s Prosperity Index score has experienced significant fluctuations, while the regional average has generally improved. Between 2003 and 2012, Venezuela saw a period of growth, followed by a sharp decline, placing it among the lowest-ranked countries in terms of prosperity. This decline demonstrates how undermining the institutional framework that safeguards individual freedom, freedom of expression, and political and economic liberty can devastate a society’s prosperity and the quality of life of its citizens.

The perception of progress in income per capita during the positive period was largely driven by an oil price boom that was managed wastefully. Even before oil prices reversed, the country was left impoverished, with a destroyed middle class, crippling debt, and a lack of basic services such as water, sanitation, electricity, transportation, and telecommunications, as well as of public goods like security, healthcare, and education. Furthermore, Venezuela lost nearly a quarter of its population to migration. Today, its prosperity has fallen below early 2000 levels, reaching a state of low prosperity.

Between 2013 and 2021, Venezuela’s economy contracted by more than 75 percent (as measured by GDP). Despite apparent recovery rates in recent years, the economy remains far too small to meet the population’s needs, and without a robust institutional framework ensuring transparent and fair rules, sustainable growth and improved quality of life remain elusive. Since 2008, Venezuela has suffered from double-digit inflation year-over-year, reaching hyperinflation between 2016 and 2019, which would be overcome by a process of dollarization.

Given the lack of updated and verifiable official economic data²Since 2012 the Ministry of Interior Relations and Justice stopped regularly publishing crime statistics, including homicide, kidnapping and robbery rates. Since 2014 the National Institute of Statistics (INE) stopped publishing poverty and living conditions figures, including information on extreme poverty, access to basic services and the quality of life of Venezuelans, and data on the number of people that left the country. Since 2015 the Central Bank stopped publishing regular data on inflation, core inflation, GDP, and other key economic indicators. PDVSA, the national oil company, stopped publishing detailed reports on oil production. And since 2014 data on foreign trade has not been published. Since 2016 the Ministry of Health stopped publishing its weekly epidemiological bulletin, which included key data on diseases, mortality, and morbidity rates. The last industrial census in Venezuela was conducted in 2001., the World Bank in 2021 unclassified Venezuela, which previously classed as an upper-middle-income country. For the size of the economy at that time, Venezuela could have been classified as a low-income country.

Official socioeconomic data is scarce and irregular, so it is thanks to the National Survey of Living Conditions (ENCOVI) conducted by well-reputed Venezuelan universities that we know that in 2021, 94.5 percent of the population lived in poverty, with extreme poverty affecting two-thirds of the households, due to the combined effects of a collapsed economy and the COVID-19 pandemic. Those figures improved by 2023 when extreme poverty dropped to 59.1 percent and multidimensional poverty to 58 percent, but in rural areas, both indicators remained over 70 percent, so the population is still struggling. This starkly contrasts with the year 2000, when seventy percent of the population belonged to the middle class, and fewer than 25 percent lived in poverty.

The education system has become increasingly substandard, with significant deterioration since 2013. However, the true extent of this decline is difficult to assess due to the manipulation, absence, or lack of updated official statistics, which can lead to misleading information being reported to multilateral organizations. The education crisis is marked by crumbling public school infrastructure, a shortage of underpaid teachers, inadequate educational coverage, high student dropout rates, and a significant reduction in both the reach and consistency of the school feeding program. This downward trend extends to university education, where enrollment dropped by 24 percent between 2008 and 2018, and by 60 percent in the country’s major universities from 2012 to 2024. According to the 2023 ENCOVI report, only 60 percent of students regularly attend school with some degree of normality, while 40 percent have irregular attendance.

The decline in educational quality is further highlighted by an Early Grades Reading Assessment test, where third grade students achieved, on average, only 57.3 percent correct answers. Additionally, seventy-five percent of students scored below 76 percent, with just 25 percent achieving between 76 percent and 100 percent correct answers, underscoring the significant gaps in learning outcomes. The situation deteriorated further during the COVID-19 pandemic, as schools were unprepared for virtual learning. The post-pandemic period brought additional challenges, with many schools being looted, resulting in the loss of supplies, furniture, and electrical wiring and damage to infrastructure. Compounding the crisis is the government’s response to teachers’ demands, which has involved threats, harassment, and surveillance. This hostile environment, coupled with poor working conditions and restricted freedom of speech, has driven many educators to quit their jobs or leave the country altogether, exacerbating the already fragile state of the education system.

In contrast to the improving health outcomes in much of Latin America, Venezuela’s health performance has stagnated and deteriorated. Once outperforming the regional average, the country fell behind in 2009 and is now more than three points below the regional mean. Various indicators reflect the decline in the overall health of the Venezuelan population during the twenty-first century. Life expectancy dropped from around seventy-three to seventy-two years, while the infant mortality rate increased from 17.9 per 1,000 live births in 2000 to 21.1 per 1,000 by 2017. Maternal mortality surged to 125 per 100,000 live births by 2015³Venezuelan Ministry of Health data, although official statistics have been irregular since then.. By 2020, nearly one-third of Venezuelans were food insecure, and the 2017 ENCOVI survey found that 64.3 percent of the population had lost weight due to food shortages. Additionally, once-controlled communicable diseases such as malaria, tuberculosis, and diphtheria resurfaced, with malaria cases rising from 35,500 in 2009 to over 400,000 by 2017. By 2018, over 80 percent of hospitals reported shortages of basic medicines, and many healthcare facilities lacked electricity and clean water.

This situation stems from a combination of factors: lack of investment in public services worsening healthcare; infrastructure collapsing due to corruption, poor maintenance, and a lack of new investments; ineffective public policies; the exodus of healthcare workers and skilled professionals because of low salaries and poor working conditions; widespread shortages of food and medicine; rising poverty; and persistent inflation and hyperinflation. These issues result from the model imposed at the beginning of the century, which dismantled the institutional framework, curtailing liberty and economic opportunities.

Additionally, Venezuela has experienced significant environmental degradation, jeopardizing the prospects for future generations. The massive and uncontrolled exploitation of the Orinoco Mining Arc, which encroaches on Indigenous territories and Areas Under Special Administration Regime with government knowledge and authorization, has drawn serious concerns from social, environmental, and human rights organizations since 2016 regarding its harmful implications for Indigenous communities and biodiversity. This mining project has led to significant destruction in the Amazon region in Venezuela, with illegal mining operations deforesting 1,000 hectares of Canaima National Park and damaging 2,227 hectares in Yapacana National Park. Moreover, mercury pollution has affected the Ventuari, Caura, Caroní, Cuyuní, and Orinoco rivers.

Petróleos de Venezuela, the national oil company, has also neglected environmental and safety protocols, increasing accidents, including spills in sensitive ecosystems such as the Orinoco River and Lake Maracaibo. The Global Gas Flaring Tracker from the World Bank indicates that Venezuela’s flaring intensity quadrupled between 2012 and 2021, with the amount of gas flared in 2022 exceeding the amount of gas recovered for productive purposes. This practice contributes to higher emissions of harmful gases, placing Venezuela fifth globally in gas flaring.

Several indicators highlight the environmental harm in Venezuela. Global Forest Watch tracks increased deforestation, the Living Planet Index reveals a decline in biodiversity, the Water Quality Index assesses levels of water pollution, and the Environmental Performance Index (EPI), and the Global Carbon Atlas, reflects the environmental stress caused by fossil fuel extraction and energy mismanagement. The Air Quality Index (EPI-Yale) indicates issues related to inadequate industrial regulation and vehicular emissions, the Waste Management Index (EPI) shows a decline in waste management capacity, with improper disposal of solid and hazardous waste, and the Environmental Vulnerability Index highlights high vulnerability due to poor natural resource management. These indicators collectively demonstrate the country’s ecological deterioration across multiple dimensions. This troubling environmental situation stems from a lack of rule of law, corruption, and influence peddling, leading to the indiscriminate depletion of natural resources and the contamination of the environment to the detriment of future generations.

The path forward

Venezuela’s current situation is critical: Citing the nation’s institutional and social fragility, the International Monetary Fund placed it on its List of Fragile and Conflict-Affected States. The International Monetary Fund has alluded to a government that is either unable or unwilling to fulfill essential state functions such as providing security, justice, and basic services to the majority of its population, with weak institutions, nonexistent governance, and high poverty levels.

This crisis is the result of nearly twenty-five years of the socialism of the twenty-first century model, which has eroded the progress made in the previous century. From the outset, various levels and forms of resistance to this model have emerged, yet the regime has maintained its grip on power through various means, increasingly revealing its authoritarian nature over time. Despite these challenges, the population has demonstrated remarkable resilience, remaining active and committed to pursuing political change that could reverse the current situation by leveraging its available natural, human, and financial resources.

Thus, this moment can be seen as a crossroads, a tipping point, a moment of bifurcation, with the potential to shape the future. The political driver at play will serve as the catalyst for two vastly different scenarios.

1) Scenario 1: Oppression and poverty. This scenario envisions the end of Venezuela’s liberal democratic republic model, resulting in the entrenchment of tyranny and the subordination of all powers to the executive. Venezuela could become a significant node in the multidimensional networks of illegality.

If the popular will, as expressed in the 2024 presidential elections, is disregarded, the country may plunge deeper into a society marked by diminished freedom and prosperity. Venezuela is unlikely to reintegrate into global financial flows, facing obstacles in renegotiating its debt with multilateral organizations and receiving the necessary support to address its complex humanitarian crisis.

In this context, recurrent macroeconomic imbalances are expected, leading to increased economic volatility and a shortened investment horizon, which would elevate risk premiums. Maintaining policies to stabilize the exchange rate and control inflation would become increasingly difficult, with restrictions on credit and foreign currency inflows. That will widen the gap between official and parallel exchange rates, fostering the debasement of the national currency and deepening dollarization.

To manage these macroeconomic challenges, fiscal and parafiscal pressures on the private sector would intensify, making production less profitable and riskier, promoting informal economic activity, reducing domestic supply, and reigniting inflationary pressures.

The prevailing situation would hinder the ability to address social needs, exacerbating poverty and exclusion. As popular dissatisfaction rises, the government is likely to respond with increased repression, leading to a heightened militarization of public spaces and severe human rights violations. This dynamic would contribute to the further erosion or outright extinction of the rule of law, undermining freedoms of expression and association, as well as civil, political, and economic rights.

Such conditions would foster opacity in public fund management, heightening corruption and enabling arbitrary public policies and decision-making processes. An ongoing source of income may come from continued licenses for oil resource exploitation or from actors unconcerned about the reputational risks of engaging with a sanctioned state, which would likely result in lower prices for oil sales.

In this tyrannical scenario, characterized by a lack of freedom and a bleak future, a significant new wave of migration could emerge, predominantly involving very low-income groups. This influx would put pressure on neighboring and destination countries, potentially fueling anti-migration policies and discriminatory attitudes.
The consolidation of a tyrannical regime would facilitate the exploitation of Venezuela’s valuable natural resources to support illicit networks, transforming the country into a hub of regional, hemispheric, and global instability.

2) Scenario 2: Freedom and prosperity. This scenario envisions the reestablishment of Venezuela as a liberal democratic republic, anchored in Western values of freedom, individual dignity, and prosperity. Under this vision, Venezuela could reclaim its stabilizing role in the western hemisphere.

If the democratic alternative—which won the presidential elections on July 28, 2024 and transparently demonstrated its results to the world—gets into power, it will pave the way for a positive future. This could not only enhance freedoms and respect for political, civil, and human rights but also improve the quality of life and spur economic growth.

The recovery would be guided by a proposed plan called Venezuela: Land of Grace—Freedom, Democracy, and Prosperity, advanced by the team supporting the political leader Maria Corina Machado, and built on three foundational pillars: (a) free development of individuals: recognizing the intrinsic dignity and creative potential of free individuals; (b) a state at the service of the citizen: protecting life, liberty, and property, ensuring access to justice and public security through independent branches of government, with a focus on efficiency, transparency, and public-private partnerships in managing services as well as education, healthcare, and security; and (c) free market economy: unlocking the country’s potential by transforming its abundant resources into wealth through citizens’ efforts, fostering entrepreneurship, and stimulating economic growth.

With these pillars in place, a myriad of opportunities could arise to restore citizens’ quality of life in an ambiance of freedom and peace. A robust institutional framework and a stable macroeconomic environment could attract investments across various productive sectors, enhancing domestic supply, creating jobs, and improving living conditions for households. Full support from multilateral organizations, following the renegotiation of defaulted external debt, could guide the nation toward overcoming the humanitarian crisis and significantly reducing poverty levels.

Venezuela could emerge as an energy hub due to its vast reserves of hydrocarbons and renewable energy resources, bolstered by private investments, reclaiming its status as a major player in oil and gas production and refining, and resuming its role as reliable supplier within the western hemisphere. In this scenario, Venezuela could contribute to reducing global geopolitical tensions, combating illegality, and promoting freedom and peace.

Sary Levy-Carciente is a research scientist at the Adam Smith Center for Economic Freedom, Florida International University; former president of the National Academy of Economic Sciences (Venezuela); and dean of the faculty of Economic and Social Sciences (Central University of Venezuela). LevyCarciente is a Fullbright fellow at the Center for Polymer Studies, Boston University; and visiting researcher at the Department of Economics, UMASS. Levy-Carciente is the author of the International Property Rights Index (Property Rights Alliance) and the Index of Bureaucracy (Florida International University).

Trackers and Data Visualizations

Jun 15, 2023

Freedom and Prosperity Indexes

The indexes rank 164 countries around the world according to their levels of freedom and prosperity. Use our site to explore twenty-eight years of data, compare countries and regions, and examine the sub-indexes and indicators that comprise our indexes.

The Freedom and Prosperity Center aims to increase the prosperity of the poor and marginalized in developing countries and to explore the nature of the relationship between freedom and prosperity in both developing and developed nations.

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Image: Supporters celebrate after the electoral authority announced that Venezuelan President Nicolas Maduro has won a third term, during the presidential election, in Caracas, Venezuela July 29, 2024. REUTERS/Alexandre Meneghini