CNN Money reported last night that China – Venezuela’s largest single investor – will no longer be loaning money to the country. The news comes after nearly a decade of reliable Chinese funding.
China has invested $60 billion in Venezuela since 2007; since 2010, the rate of investment has averaged $2.5 billion per year. However, the worsening economic crisis has made repayment doubtful, and Venezuela still owes China $20 billion.
Derek Scissors from the American Enterprise Institute tracks Chinese investments, and he told CNN Money:
The Chinese have allowed the Venezuelans to be stupid. The Chinese don’t want to allow the Venezuelans to be stupid anymore
Mauro Roca from Goldman Sachs told the website:
In the specific case of Venezuela, it’s true that [the Chinese] are not willing to continue acting as the lender of last resort. The country is already in a deep crisis, but things can unravel even more.
Venezuela Ranks 130/138 in Global Competitiveness Report
The Global Competitiveness Report is a yearly publication from the World Economic Forum that measures competitiveness as defined by (emphasis in original):
… the set of institutions, policies, and factors that determine the level of productivity of an economy, which in turn sets the level of prosperity the country can achieve.
The report measures a country’s competitiveness by examining “12 pillars”, which include institutions, infrastructure, higher education and training, and labour market efficiency.
In this year’s report, Venezuela ranks 130 out of 138 countries examined. Venezuela only ranked better than the following countries:
- Sierra Leone
Venezuela was outperformed by the Democratic Republic of Congo (rank: 129), Zimbabwe (rank: 126), and 127 other countries.
The report identifies a set of “most problematic factors for doing business”. For Venezuela, the single greatest problematic factor for doing business is the country’s byzantine foreign currency regulations, followed by inflation, policy and instability, crime and theft, inefficient government bureaucracy and corruption.
Below, a list of the 12 pillars the countries were measured by, along with Venezuela’s rank in each (out of 138 countries):
- Institutions (138)
- Infrastructure (121)
- Macroeconomic Environment (135)
- Health and Primary Education (91)
- Higher Education and Training (53)
- Goods and market efficiency (138)
- Labour market efficiency (138)
- Financial market development (124)
- Technological readiness (107)
- Market size (41)
- Business sophistication (136)
- Innovation (126)
The full report can be found here. Page 360 is dedicated to summarizing Venezuela’s performance.
Student Leader Detained, Searched for Drugs
Prominent student movement leader Hasler Iglesias was detained at the Simon Bolivar International Airport earlier today after National Guard soldiers there suspected him of attempting to smuggle drugs out of the country.
Upon detention, Iglesias was transported to the Dr. Jose Maria Vargas airport where he underwent a chest x-ray, presumably in an attempt to find drugs hidden inside his body. Iglesias was about to board an airplane to Geneva when he was detained.
Authorities called Iglesias’ detention “routine”, suggesting that perhaps there was nothing about his demeanor that suggested that he might be smuggling drugs. The detention lasted two hours, and no drugs were found either inside Iglesias’ body or in his luggage.
Iglesias is the head of the Federacion de Centros Universitarios [Federation of Universities], a large student organization, and is an important player in the anti-government movement.
After being released, Iglesias lamented the fact that instead of actually trying to stop drug smuggling, Venezuelan authorities instead engage in “intimidation against activists and student leaders”.
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