Lessons from Venezuela in tough economic times

 But it is only natural to want to explain away as an anomaly a country where the currency trades at 120 times the official exchange rate, yet filling up a sport utility vehicle costs less than a bottle of water. The whole region may be suffering from the same downturn in commodity prices, but Venezuela appears too different to be relevant. There is no disputing the fact that Venezuelan economic performance has been exceptionally poor for several decades. Since 1975, the country’s per capita output grew at an annual average of just 0.2 per cent a year, well below the average emerging market growth of 3.6 per cent. What is often forgotten is that this prolonged period of economic underperformance began in the late 1970s, two decades before the election of Hugo Chávez to the presidency in 1998. This suggests that there are deep structural causes to Venezuela’s economic problems that go beyond the policies of recent administrations. More…