Venezuela: Investir na Venezuela
Despite the attractiveness of the country due to its petroleum wealth, the size of its national market, and the abundance of natural resources, the flow of foreign direct investment (FDI) towards Venezuela has decreased in recent years due to the country's political and economic instability. According to UNCTAD's World Investment Report 2023, the country recorded FDI inflows worth USD 941 million in 2022, compared to a negative flow of USD 996 million one year earlier. At the end of the same period, the total stock of FDI was estimated at USD 21.94 billion, around 23.6% of the country’s GDP. The climate of uncertainty arising from the “Bolivarian” reforms (violation of private property rights, currency control, increasing regulation, nationalizations, etc.), the inefficiency of the port system, and the fall of petroleum prices (accounting for 96% of currency entries) are all obstacles to investment. Venezuela’s government balances regional and revolutionary policies, without closing the door to foreign investments, which it is in dire need of. Nevertheless, “Bolivarian” socialism implemented by the government, mostly interventionist, does not allow the flow of FDI to develop and fulfill the country’s potential. A 2014 law on foreign investments reduces the statutory rights of foreign investors compared to the previous regime.
While Venezuela possesses the world's largest oil reserves and a strategic geographical location, the country also suffers from the highest inflation rate in the world, endemic corruption, high levels of poverty and violence, economic and political instability, government intervention, and a restrictive legal framework. Additionally, the judiciary is highly politicized and is often influenced by the executive branch, and even though Venezuela’s legal system is open to FDI, it is manipulated by the executive branch. For that reason, FDI in Venezuela has been significantly lower in recent years compared to the majority of Latin American nations. Furthermore, numerous multinational companies (including United States’ General Mills, General Motors, Kimberly-Clark, Exxon Mobil, Bridgestone Firestone, Kellogg’s, United Airlines, and Delta Airlines) left the country in recent years, either selling their assets at a low price or giving them up completely. Around 150 multinational companies maintain their presence, waiting for an upturn. They have interrupted or reduced their production and laid-off workers while continuing to provide them with a minimum wage and, in numerous cases, meals. Venezuela's poor business climate is evident from its ranking in international indexes: it ranks 177th among the 180 economies on the Corruption Perception Index 2023 and 174th out of 184 countries on the latest Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | -456 | -996 | 941 |
FDI Stock (million USD) | 21,935 | 21,008 | 21,949 |
Number of Greenfield Investments* | 2 | 1 | 1 |
Value of Greenfield Investments (million USD) | 45 | 5 | 33 |
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Venezuela | Latin America & Caribbean | Estados Unidos | Alemanha |
Index of Transaction Transparency* | 3.0 | 4.1 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 2.0 | 5.2 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 3.0 | 6.7 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Apart from the extremely tense political and social situation, Venezuela's economy can rely on certain strengths:
The country's economic situation is clear: the World Bank's Doing Business ranks 188th out of 190 countries ranked for the quality of its business environment.
The Constitutional Law of Productive Foreign Investment is in place since 2017, this norm aims to regulate everything related to foreign investment in the country and to promote a productive and diversified contribution of foreign origin that participates in the development of the existing productive potential in the country.
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