Venezuela shows the biggest global drop in the 2014 Prosperity Index

Prosperity is more than just material wealth. It is also the joy of everyday life and the prospect of being able to build an even better one in the future. Under this premise, The Legatum Institute –a London based public policy think-tank- created the Prosperity Index six years ago.

The Prosperity Index benchmarks countries using 89 variables spread across eight distinct categories of wealth and well-being: Economy, Entrepreneurship & Opportunity, Governance, Education, Health, Personal Freedom, Social Capital and Safety & Security.

In the 2014 Prosperity Index rank of 142 countries, Venezuela came in 100th place, a whopping 22 place drop in only a year –by far the biggest yearly fall for any country in the region and the world-. When compared with the 22 Latin American and Caribbean countries included in the rank, Venezuela has the 3rd worst spot, only ahead of Honduras (105th place) and Haiti (135th place).

ProsperityIndex_Vzla_2013-2014Venezuela gets its best score in the “Education” category, coming in the 52nd place in the global ranking and 2nd best in the region, after Argentina (44th place).

Of the Venezuelans surveyed, 74% say that children get the opportunity to learn and grow in the country, which is consistent with the country’s high enrollment rates: 92.2% in primary education (regional average is 90.5%), 85.4% in secondary education (regional average is 79.9%) and 78.1% in tertiary education (regional average is 39.9%). Enrollment rates in tertiary education are pretty high due to the creation of new universities (like Universidad Bolivariana) and certain social programs (such as the Misión Sucre). Though these initiatives increased access to the system, there is reasonable doubt about the quality of the education and its results in terms of the employability of the graduates. With enrollment rates that surpass the regional average, the years of secondary and tertiary education completed by the Venezuelan labor force are still lower than the regional average. But perhaps the strongest evidence comes from students themselves.

In the “Health” category, Venezuela comes in 74th place in the global rank and in 11th place in the regional rank.

The Legatum Institute data shows that Venezuelans have a health-adjusted life expectancy of 66 years -1.4 years over the regional average-; that only 19% of the population think they have health problems that prevent them from doing things people their age normally can do; and 34% experience worrying during a lot of the day yesterday. However, Venezuela has health indicators comparable to those of 20 or 30 years ago, or of countries with a much lower per capita income. While the shortage of medicines and medical supplies has been a conjunctural problem of the past two years, the deterioration in public health has been brewing for several years. The current model has been inefficient and inequitable, with a real impact on the most vulnerable populations. In other words, the country’s health system is in the midst of a crisis. Venezuela will probably drop some more places in the 2015 health rank.

Venezuela gets the 7th worst spot in the region in terms of “Entrepreneurship & Opportunity” (87th place) and 4th worst place in the “Economy” category (104th place – a 44 place drop in only one year).

Compared to the regional average, Venezuela underperforms in items like inflation (it’s currently 6 times higher than the regional average), size and volatility of foreign investment (which fell 54% in the first semester of 2014), and hi-tech exports as percentage of manufactured exports. And while 80% of people in Colombia, Panama and Paraguay answer “yes” when asked “are you satisfied with your standard of living, all the things you can buy and do?”, only 56% of Venezuelans say “yes”, which leaves the country in the bottom three for this particular item, only after Jamaica (44%) and Haiti (21%). And even though 86.9% of Venezuelans think they can get ahead by working hard, Venezuela is ranked by the World Bank as having the worst regulatory environment to start a business in the region and the 8th worst in the world.

Venezuela gets the 3rd worst spot in the region in both “Safety & Security” (116th place) and “Personal Freedom” (108th place – a 24 place drop in only one year).

Only 19.2% of Venezuelans surveyed claimed that they feel safe walking alone at nights in the areas where they live, 22.5% said they had property stolen over the past year and 19.3% said they had been assaulted or mugged during the same period. But lack of safety is not just a matter of perception: according to the last available homicide rate of 219 countries included in the 2014 UNODC study, Venezuela has a rate of 53.7 per 100,000 habitants. Only 12 countries (7.5%) have a rate over 30.

Of the Venezuelans surveyed, 64.3% are satisfied with the freedom to choose what to do with their lives. However, when considering civil liberties –like freedom of expression and belief, associational and organizational rights, rule of law, and personal autonomy– Venezuela gets the 2nd lowest score (0.17/1) in the region, only before Haiti (0.16/1). It should also be said that, after Brazil and Mexico, Colombia and Venezuela have the highest levels of state-sponsored political violence and repression. This seemed pretty evident during the months of protests and guarimbas in the first semester of 2014, specially after more than 3,000 cases of arbitrary arrests and 153 cases of tortures –all of which the NGO Foro Penal will present before the United Nations-.

Venezuela gets its worst score in the “Governance” category (134th place), getting the 9th worst spot in the global rank and 2nd worst one in the regional rank.

Venezuela underperforms the regional average in almost all of the studied variables, including government effectiveness and separation of powers. Also, only 36.1% of Venezuelans have confidence in the military, 33.7% in the Judicial System and 40.2% in the “honesty of elections”.

Venezuela is ranked as the most autocratic –or least democratic- country in Latin America and the Caribbean and gets the worst score in terms of rule of law, regulation quality and the ability to participate in political processes. There is one element in which Venezuela does better than every other country in the region: 61.4% of people say they are satisfied with efforts done to deal with the poor in the country. The regional average for this survey question is 38.2%. However, Venezuela’s economy is ailing and this is showing up in the poverty statistics.

Last but not least: The Legatum Institute considers a “Social Capital” category that measures social cohesion and engagement, and community and family networks. Venezuela comes in 94th place in the global rank (a 26 place drop in only one year) and has the 6th worst regional rank. Apparently, 44% of Venezuelans can rely on friends and family, but only 10% donate money to charities, only 8% do voluntary work and only 3% help strangers in need. This shows really low social cohesion. But in Venezuela’s case we might have to look at this from a different perspective. After 19 elections in just 15 years, the Venezuelan social cohesion is really an electoral one.

25 thoughts on “Venezuela shows the biggest global drop in the 2014 Prosperity Index

  1. Ask Prof Steve Hanke and he will personally tell you that Venezuela is not in hyperinflation. Steve Hanke will tell you that only when inflation in Venezuela reaches 50% per month would Venezuela be in hyperinflation. So, according to Prof Steve Hanke, the author of the index, Venezuela is doing well on the inflation front. I mean, 4% monthly inflation is far, far away from 50% per month, that is about 13 000% annual inflation. So, Venezuela is at least doing very well on the inflation front: a low monthly inflation country, according to Prof Steve Hanke.

    He would also advise Venezuela to dollarize, i.e., to stabilize but not grow.

    He is completely obstinate about accepting the need to change his life-long held view on hyperinflation.

    Fact is: Venezuela has been in hyperinflation, i.e., 100% cumulative inflation for three years, since November, 2009. Hanke will never accept that.


  2. None of this is a surprise! I think the problem is clearly due to bad government policy. However, it might be arguable whether these horrible policies were deliberately intended to cause this horrific economic wasteland, or whether it was just a necessary byproduct of a reckless single-minded ideological strategy. One which intended something more desirable. Regardless, any public expression pointing out these shortcomings can be dangerous, and the absence of free speech, the hegemony of free press, has created a slippery slope where there is nothing to put the brakes onto bad policy! I’ve been following this blog for more than 8 years, and we all knew this situation was going to happen. From the start, the economic policies were wrong-headed and were unsustainable. The question always was when and how the public would figure it out, and when and how we get out of this trap!


  3. The downward spiral continues. The only question is when it will plop. How long will the people stand for such incompetence and corruption? Is it days or years?


    • Think Zimbabwe! (or Cuba)….

      People will stand for it for as long as the hegemon has enough force to impose itself, In Venezuela’s case as long as it has the oil revenue by the pan handle, and continues to erode the nation’s fighting strengths, it has a good chance of being at it for a long time.


    • Plop? I think it already has more or less. At least it has in the form of consumer costs and basic goods shortages and public health! Apparently, those are not significant compared to prices at the pump and payments on sovereign bonds. Apparently, what the regime fears most is another 1989 caracazo. The student-led protests did get enough broad support empathy across the socioeconomic spectrum. My best guess is when the demonstrations are more inclusive, the revolution will either bend or break. Let’s watch!


  4. “It should also be said that, after Brazil and Mexico, Colombia and Venezuela have the highest levels of state-sponsored political violence and repression.”

    I tried to understand what this indicator is about in the site, but all I could find was this simple explanation:

    “This is a measure of state-sponsored political violence and repression within a country, Countries reporting a higher level of disappearances, torture and political violence are rated as more insecure according to this variable.”

    I also found that the data collected backing this indicator for all countries listed had been gathered in 2012, so to bring the “the months of protests and guarimbas in the first semester of 2014” as a mean of explaining the Venezuelan figure is not really accurate. As you can see in:!/country/ven

    Like most of you, I watch very closely what’s going on in Latin America and I’m sure that there’s no chance in hell that state-sponsored political violence and repression in Colombia, Brazil or Mexico are similar or higher than what has been happening in Venezuela. There’s no equivalent of a jailed Leopoldo Lopez, judge Afiuni and Simonovis in these countries, nor twitter users being arrested for complaining about Maduro, nor students being raped with assault rifles in prisons, nor thousands seeking political asylum in nearby countries to escape the government’s ire. Who is the Mexican, Brazilian or Colombian equivalent of a Basil Dacosta, Génesis Carmona or Geraldine Moreno?

    Not even in Ecuador and Bolivia the government’ political repression and violence have reached such bizarre levels. To relativize the state-sponsored crimes going on in Venezuela is an absurd that only helps Maduro’s propaganda machine.


    • “Who is the Mexican, Brazilian or Colombian equivalent of a Basil Dacosta, Génesis Carmona or Geraldine Moreno? ”

      Do you know 43 students were recently kidnapped by local police in Mexico, and are currently suspected dead “desaparecido” style? While looking for these 43 students, several mass graves have been found.

      Do you also know about about all the peasants the Colombian army had killed, passing them as guerrilla fighters, in order to collect bonus, get more time off and several other perks? This scandal is known as the “Falsos positivos”.

      I have no idea what’s driving Brazil’s numbers. Maybe it’s big agriculture cracking down on the unlanded peasants, or pushing tribes from their lands in order to seize them.


      • Navarro, the indicator is clear, it’s about state-sponsored violence and political repression. As far as I know, there’s still no conclusive evidence that these 43 students have been killed by any governamental institution in Mexico, yet we know that most of these 42 killed in the Venezuelan protests this year had been killed by Venezuelan government’s forces.

        And the Colombian army does not kill Colombian citizens in our days, some could bring the AUC in the past, but this para-military force had been disbanded for a decade or more. In Brazil, big agriculture is 100% private and does not harm anyone, just produces food, and even if it were committing genocides and all sort of atrocities left and right, it would still not configure as a “state-sponsored violence and political repression” for the obvious reason of, well, not being linked with the government in any way.

        I will send an email to Institute to understand the logic behind considering Colombia, Mexico and Brazil as countries which possess governments more oppressive or as opressive as the Venezuelan one. What is untrue, doesn’t make any sense, and ends up helping Cabello, Maduro et caterva. Because it legitimates the government in Venezuela by pretending that it is “just as rogue as any other in the region”. What is 100% false! I believe that the only comparable country regarding state-sponsored repression in the region is Cuba.


        • State sponsored political violence and repression in Mexico is pervasive, only it no longer is monopolized by the PRI or federal authorities. Like the cartels themselves, the political hegemony in Mexico has fragmented but you still see evidence of ties of varying degrees of closeness between state and federal authorities and criminal gangs. Guerrero state is a notorious example.


        • there is a big difference between misdeeds by isolated forces of order acting on their own in a situation of chaos or violent confrontation and misdeeds carried out on instructions from the top most authorities as a matter of policy to quell the exercise of civil or political rights and freedoms . In the former case there is no direct privity of guilt on the part of the authorities , in the second case there is . !!

          When some Colombian soldier in some isolated jungle kills an innocent person to add them to their count of enemy killed he is not acting on orders from the Colombian Minister of Defense , he is acting on his own , The minister can be blamed if he is lax in punishing the soldier once the crime is discovered , but not for the actions of the soldier acting on his own initiative.


          • Of course, the peasants getting killed care not whether it’s through an explicit order from the Minister of Defense, or just the initiative of a local officer who knows he will never get in trouble.


            • The key factor is that the perpetrator of the crime knows that ‘he will not get into trouble’ because his bosses tacitly abett his crime by not punishing it . By looking the other way authorities became complicit in the crimes of their underlings . However if they do actively punish the crimes of their subordinates and act to prevent them , then there is really no blame attaching to the crimes these commit without their encouragement or knowledge.


        • – “As far as I know, there’s still no conclusive evidence that these 43 students have been killed by any governamental institution in Mexico”

          If the local police from Iguala kidnap students under orders of the mayor of the town of Iguala to prevent them from doing a political demonstration, and then they hand them over to drug gangs who are suspect of having killed them, that’s state sponsored violence. The mayor and the police force are part of the state. “State sponsored” doesn’t mean it was carried out exclusively by the national government; regional governments or local governments should also qualify.

          – “And the Colombian army does not kill Colombian citizens in our days”

          Well I don’t know what’s your definition of “our days”. But my definition of “our days” includes 2008, the year the scandal broke out, the commander of the Colombian Army resigned, and president Uribe ordered the cases be handled by civilian courts.“False_positives”_scandal


  5. Venezuela is ranked as the most autocratic –or least democratic- country in Latin America and the Caribbean…

    Worse than Cuba? That makes no sense at all.

    Something else I dislke about this list is that everything is stated in terms of ordinal position. For example, much is made of Venezuela’s 22 place drop. But this could reflect Venezuela’s relative position on the scale. If index values follow a normal distribution, then a small change in an index near the middle would result in larger ordinal changes, while larger changes near one end could produce small ordinal changes.

    The value difference between #3 and #7 of 100 is very likely to be greater than between #45 and #55.

    So the important question is not the rank changes, but the index value changes.


    • “Worse than Cuba? That makes no sense at all.”
      I think we can keep our slide rulers holstered on this one.


    • Cuba is never included in these reports. Reports like this are based on research and surveys that are done in these countries, and the Castro brothers would never allow outsiders into Cuba to do these studies. Instead, Cuba has a state-controlled statistics agency that always says everything is fine, everyone is happy, blah, blah blah…. So, excluding Cuba, Venezuela is worse than any other country in the Americas.


    • I also found that assertion confusing. If, for some reason, Cuba doesn’t qualify (lack of data, in-your-face-communism, disqualification because of the embargo, etc) they should disclose that and qualify statements (Venezuela is ranked as the most autocratic –or least democratic- country in Latin America and the Caribbean, minus Cuba, that didn’t enter this study because ….)


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