How Venezuela's Economy Became a Disaster

Summary

Venezuela, once a thriving nation with the world's largest oil reserves, has become a symbol of economic mismanagement. Despite its potential to leverage its natural wealth for prosperity, the country has suffered a catastrophic economic collapse, losing over 80% of its GDP in less than a decade. Plagued by corruption, hyperinflation, and political instability, Venezuela's story serves as a cautionary tale of the consequences of poor governance and the failure to diversify an economy reliant on a single resource.

Takeaways

• 🌍 Venezuela has the world's largest oil reserves, surpassing even Saudi Arabia.
• 📉 Despite its resource wealth, Venezuela has suffered an economic collapse, losing over 80% of its GDP in less than a decade.
• 🏆 The country could have leveraged its oil wealth to achieve economic prosperity but failed due to mismanagement.
• 🏅 Venezuela's economic misfortunes are not solely due to external factors but are largely a result of internal governance issues.
• 💸 The country's reliance on oil revenues led to a severe economic downturn when oil prices dropped, highlighting a lack of economic diversification.
• 👥 Massive corruption and the emigration of skilled workers have further exacerbated Venezuela's economic and social crises.
• 🏦 The government's populist policies, which included generous welfare programs, were unsustainable and contributed to the economic collapse.
• 📉 Hyperinflation, reaching over 130,000% at one point, has devastated the Venezuelan economy.
• 🏛️ The country's property rights are among the worst globally, deterring foreign investment and contributing to its economic isolation.
• ⚖️ The United States' sanctions on Venezuela, while impactful, are secondary to the country's internal mismanagement as a cause of its economic crisis.

Q & A

Why is Venezuela considered the most mismanaged economy in the world?

Venezuela is considered the most mismanaged economy because despite having the largest oil reserves in the world, it has lost over 80% of its GDP in less than a decade due to poor governance, corruption, and economic mismanagement.

What is the significance of Venezuela's oil reserves in comparison to other countries?

Venezuela's oil reserves are the largest in the world by a significant margin, with Saudi Arabia needing to find an entire USA worth of extra oil to match Venezuela's reserves.

How did Venezuela's economy collapse so dramatically?

Venezuela's economy collapsed due to a combination of factors including mismanagement, corruption, over-reliance on oil revenues, and a lack of diversification, leading to hyperinflation and a significant loss of GDP.

What is the 'Dutch disease' mentioned in the script, and how does it relate to Venezuela?

The 'Dutch disease' refers to the negative impact on a country's manufacturing sector caused by a resource boom, leading to an overvalued currency and reduced competitiveness. In Venezuela, the boom in oil production led to this phenomenon, causing an overreliance on oil exports and neglect of other industries.

What role did PDVSA play in Venezuela's economy?

PDVSA, or Petroleos de Venezuela, S.A., is the state-owned oil and natural gas company that played a central role in Venezuela's economy, accounting for a large portion of its export revenues and government income.

How did the 2004 surge in oil prices affect Venezuela?

The 2004 surge in oil prices initially benefited Venezuela by increasing its oil revenues. However, the government's mismanagement of these funds and overreliance on oil income led to economic instability when oil prices later plummeted.

What were the consequences of Venezuela's nationalization of the oil industry?

The nationalization of the oil industry led to increased government control and revenue from oil, but also resulted in a lack of investment, brain drain, and a decline in the industry's efficiency and output.

How does the script compare Venezuela's economic management to Norway's?

The script contrasts Venezuela's mismanagement of its oil wealth with Norway's prudent economic planning. While Venezuela spent its oil revenues without creating lasting wealth, Norway invested its oil profits into a sovereign wealth fund, ensuring long-term financial stability.

What external factors have contributed to Venezuela's economic crisis?

External factors such as U.S. sanctions, which targeted individuals and entities involved in corruption and human rights abuses, have exacerbated Venezuela's economic crisis, but the script emphasizes that internal mismanagement and corruption are the primary causes.

What is the 'petro-curse' mentioned in the script, and how does it apply to Venezuela?

The 'petro-curse' refers to the negative economic and political consequences that can result from a country's overreliance on oil revenues. Venezuela is an example of a country where the petro-curse took hold due to poor governance and lack of economic diversification.

What are some of the social and economic indicators that reflect Venezuela's current situation?

Venezuela's current situation is reflected in indicators such as hyperinflation, high crime rates, food insecurity, a shrinking population due to emigration, and a lack of foreign investment, all of which contribute to its status as one of the most impoverished and dangerous economies in the world.

Outlines

00:00

📉 Venezuela's Economic Collapse

Venezuela, once a country with the world's largest oil reserves, has become the most mismanaged economy globally. Despite its vast natural resource wealth, which theoretically could have propelled it into economic prosperity, Venezuela has suffered a catastrophic economic collapse, losing over 80% of its GDP in less than a decade. The country's economy is now characterized by danger, poverty, and isolation. The mismanagement is so severe that international economic agencies have stopped collecting data on it. The government's inability to secure investments and manpower to extract its oil reserves has exacerbated the situation. Venezuela's recent political actions, such as threatening to annex neighboring Guiana and holding controversial elections, have further isolated it on the global stage.

05:04

🛢️ The Rise and Fall of Venezuela's Oil Economy

Venezuela's economy has been historically dependent on oil, with the country's modern prosperity tied to the industry. The discovery of oil in the 19th century and the subsequent nationalization of the industry through PDVSA in the 1970s led to significant revenue. However, the country's overreliance on oil exports made it vulnerable to price fluctuations. In the early 2000s, Venezuela experienced an economic boom due to high oil prices, but this was short-lived due to mismanagement. The government's populist policies, which included generous welfare systems, were unsustainable and led to a massive deficit. Corruption at all levels of government siphoned off oil revenues, and the country's economic strategy failed to account for the volatility of oil prices. By 2020, Venezuela's oil revenues had plummeted by 93%, and the country faced hyperinflation and a severe decline in living standards.

10:06

🌐 Internal and External Factors in Venezuela's Crisis

Venezuela's economic crisis is a result of both internal mismanagement and external pressures. The country's historical dependence on western corporations and lack of investment in independent capabilities left it vulnerable. Since 2005, the United States has imposed sanctions on Venezuela due to human rights abuses and corruption, further exacerbating the economic situation. Venezuela's property rights are among the worst globally, deterring foreign investment. The country has also experienced a significant brain drain, with skilled workers leaving due to political instability and lack of opportunities. The government's attempts to maintain power through controversial actions, such as military threats and elections, have further isolated the country and deterred potential investors. Without major reforms, Venezuela's economic future remains bleak.

15:07

📉 Venezuela's Economic Ranking and Challenges

Venezuela's economic ranking is dismal, with an average score of 1.6 out of 10, placing it last alongside Lebanon. The country's GDP, while significant on paper, does not reflect the reality of its struggling population. With a rapidly shrinking population and a GDP per capita that is a fraction of the global average, Venezuela's economic stability is severely compromised. The country's growth has been negative, with an 80% loss in economic output since 2012. Venezuela's industry is non-diversified, with an overemphasis on oil that has led to the neglect of other sectors. The country's inability to capitalize on its oil wealth, coupled with a lack of foresight in planning and investment, has resulted in a long-term economic catastrophe that will impact its people for decades to come.

Keywords

💡Mismanagement

Mismanagement refers to the poor handling of resources, decision-making, or operations, typically leading to inefficiency or failure. In the context of the video, Venezuela is described as the 'single most mismanaged economy in the world,' highlighting how the country's vast oil reserves were not effectively utilized to ensure economic prosperity. The video discusses how mismanagement, including corruption and poor policy decisions, led to a dramatic decline in Venezuela's GDP and overall economic stability.

💡Oil Reserves

Oil reserves are the estimated quantities of all the oil that can be recovered from underground deposits. The video emphasizes that Venezuela has the largest oil reserves of any country, which should have positioned it for economic success. However, despite this advantage, the country's economy has collapsed due to mismanagement, as the script mentions, 'Venezuela has the largest oil reserves of any country in the world by a significant margin.'

💡Dutch Disease

Dutch Disease is an economic condition that occurs when a country or region experiences a sudden influx of foreign currency, typically from the export of raw materials, leading to a high exchange rate and harming other export industries. The video uses this term to describe the situation in Venezuela, where the dominance of the oil industry led to a neglect of other sectors, as indicated by 'which led to a terrible case of Dutch disease, a trend that would remain common into the 21st century.'

💡Petro-state

A petro-state is a country whose economy is heavily dependent on the production and export of oil. The video describes Venezuela as a 'petro-dependent territory' and 'one of the better-known petro-renty estates,' where a significant portion of government revenue comes from oil rents. This dependency has made the country's economy vulnerable to fluctuations in oil prices and has contributed to its economic instability.

💡Hyperinflation

Hyperinflation is an extremely high and typically accelerating rate of inflation, rapidly eroding the real value of the local currency. The video mentions Venezuela's struggle with hyperinflation, stating 'in 2018 inflation skyrocketed to over 130,000%,' which has devastating effects on the economy and the purchasing power of its citizens.

💡Brain Drain

Brain drain refers to the emigration of educated and skilled individuals from a country, typically due to a lack of opportunities or political instability. The video discusses the 'Venezuelan exodus' where 'more than 6.1 million refugees and migrants have left Venezuela,' highlighting the impact of brain drain on the country's ability to manage its resources and rebuild its economy.

💡Sanctions

Sanctions are measures imposed on a country to coerce it to change its policies or behavior, typically by restricting trade or financial transactions. The video mentions that 'the United States has imposed targeted sanctions on Venezuelan individuals and entities,' which have further isolated Venezuela and contributed to its economic crisis.

💡Sovereign Wealth Fund

A sovereign wealth fund is a state-owned investment fund, often established from the surplus of a country's foreign reserves or commodity exports. The video contrasts Venezuela's approach with that of Norway, which 'set up the largest sovereign wealth fund in the entire world,' effectively managing its oil wealth to generate long-lasting benefits for its citizens.

💡Property Rights

Property rights refer to the rights of individuals to own, use, and control property, including the right to transfer or dispose of it. The video points out that Venezuela has 'the worst property rights in the world,' with assets often being seized without compensation, creating an unfavorable environment for foreign investment and contributing to the country's economic decline.

💡Economic Prosperity

Economic prosperity refers to a state of economic growth and stability, often characterized by high employment, high per capita income, and a good standard of living. The video discusses how Venezuela, despite its natural resource wealth, failed to achieve economic prosperity due to mismanagement, as indicated by 'what should have been an easy path of prosperity was squandered.'

💡Misery Index

The Misery Index is an economic measure that combines unemployment, inflation, and bank rate to show a country's economic health. The video states that Venezuela is 'now top of the misery index,' reflecting the severe economic hardships faced by its citizens due to high inflation, unemployment, and a lack of economic opportunities.

Highlights

Venezuela has the world's largest oil reserves, surpassing even Saudi Arabia.

Despite vast natural resource wealth, Venezuela's economy has collapsed, losing over 80% of its GDP in less than a decade.

Venezuela's economic mismanagement has led to it being one of the most dangerous and impoverished nations globally.

The country's isolation and unstable governance hinder access to manpower and investments necessary for oil extraction.

Venezuela's economic situation is not improving, with recent political actions further alienating it from the global community.

Venezuela's history is marked by petro-dependency, with oil revenues heavily influencing its economy and governance.

The country once had a booming oil industry, with production skyrocketing in the 1920s, making it a global leader.

Venezuela's oil industry was dominated by foreign companies until nationalization efforts in the 20th century.

Mismanagement and corruption have been rampant, with billions in oil revenues unaccounted for.

Venezuela's social programs, while popular, were unsustainable and contributed to economic instability.

The country's economy was highly dependent on oil prices, leading to a sharp decline when oil revenues fell.

Venezuela's inflation rate reached catastrophic levels, with a 130,000% increase in 2018.

Norway serves as a contrasting example, effectively managing its oil wealth through a sovereign wealth fund and prudent spending rules.

External sanctions from the United States have exacerbated Venezuela's economic crisis but are not the primary cause.

Venezuela's property rights are among the worst globally, deterring foreign investment and contributing to its economic decline.

The country's brain drain, with over 6 million leaving due to instability, has severely impacted its capacity to manage its oil industry.

Venezuela's future looks bleak with no clear plan to diversify its economy or address its economic and political issues.

Venezuela's economic scorecard ranks it among the lowest in the world, reflecting its severe economic challenges.

Transcripts

Venezuela is the single most mismanaged economy in the world, and while that's a big claim with

some stiff competition, there are simply no other countries on earth that have fumbled such a

privileged position quite so badly. Venezuela has the largest oil reserves of any country in the

world by a significant margin. The runner-up, Saudi Arabia, would have to find an entire USA

worth of extra oil just to meet the reserves of this single small South American nation.

Now, we've seen many times on this channel before that natural resource wealth does not

equal economic prosperity. But at this scale of natural resource wealth, the country could have

effectively brute-forced its way into the global upper class. Unfortunately, what should have been

an easy path of prosperity was squandered and from its peak, the country has lost more than 80% of

its GDP in less than a decade. The collapse was so bad that many international economic agencies

just don't collect data on it anymore because the economy was too mismanaged. It would almost

be laughable if it wasn't so tragic. The country is now one of the most dangerous and impoverished

economies in the world. Venezuela, for a variety of reasons that are each worth exploring individually,

has become very isolated from the rest of the world, its people are leaving in droves,

and governance has become so unstable that it can't even get access to the manpower and

investments needed to extract its abundant oil reserves. This is a situation that is not getting

any better. Late last year, the country threatened to annex neighboring Guiana, further alienating

it in the global community, and now, just late last month, the country held a highly controversial

election raising huge question marks about who is really in charge. Venezuela is the national

equivalent of a lottery winner that's too incompetent to even claim their winning ticket,

let alone manage the money once they get it. But if there's more to learn from failure than success,

it's a good place to start. So how did a country with so much going for it end up so poor? Were

these problems coming purely from within, or were there external forces pushing for its demise?

And finally of course, is there any realistic way for the country to turn its economy around?

Once we have done all of that, we can put Venezuela, the most mismanaged economy in the

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For most of the country's history, Venezuela has been a petro-dependent territory. Even the

indigenous people would regularly use oil tars seeping out of the ground to keep fires blazing

throughout the night or waterproof their canoes before the Spanish even made contact. Crippled

after its 19th century liberation, the country not only benefited from the discovery of oil,

it was the one thing that allowed the government to remain stable via state funding or outright

bribery. And for a while, although far from perfect, this worked. Modern Venezuela is one of the

better-known petro-renty estates, receiving a large portion of its revenue from rent paid by

businesses, governments and foreign individuals. Annual production exploded during the 1920s,

from just over a million barrels to 137 million, making Venezuela second only to the United States

in total output by 1929. By 1935, the Venezuelan Bolivar ballooned with oil becoming the top

priority, accounting for 90% of the country's total exports, which led to a terrible case of

Dutch disease, a trend that would remain common into the 21st century. As a result, the country

saw decent growth, although it was based heavily on extracting said oil to fund an otherwise

unsustainable economy. This was also dependent on importing most of what it needed in exchange for

its oil. As oil continued to be extracted, just three foreign companies controlled 98% of the

Venezuelan oil industry, Gulf, Royal Dutch Shell and Standard Oil. The government tried to reform

the oil sector to funnel funds into public coffers. The hydrocarbons law of 1943 was first set up in

that direction, requiring foreign companies to give half of all oil profits to the state,

a move that increased government income sixfold over just five years. And for a while, this worked.

In the 1950s, Venezuela took a seat at the table of economic superpowers. At the time,

they were the fourth richest country in the world. By the 1960s, Venezuela's petro-state status

loomed so large that it joined Saudi Arabia, Kuwait, Iran and Iraq, co-founding the Organization of

the Petroleum Exporting Countries, commonly referred to as OPEC. This was a masterful move in the

realm of exports because it allowed them and the countries that followed, like the UAE, Qatar and

Libya, to determine pricing by controlling output to keep prices high. This was technically price

fixing through monopolistic market power, but neither of these factors really became an issue

because they are sovereign entities unlike a corporation that is at least in theory beholden

to the laws of the countries they operate in. Venezuela, as well as the other countries listed,

then nationalized their oil industries. For Venezuela, this nationalized body is Petrolius

Venezuela SA or PDVSA for short. This whole dynamic was put into overdrive when Venezuela

continued to discover oil deposits that took it from a modest oil state to the single largest

oil state in the world. From the early 2000s, this caused a boom in the economy with gross

domestic product peaking at US$372 billion in 2012. This was fueled almost entirely by these

prized exports. GDP after all is consumption plus investments plus government spending plus net

exports. So how did a country with so much going for it end up so poor? Well, a lot of it can be

summed up with a single word, mismanagement. An example of this would be the government's

activity proceeding and following the surge in oil prices in 2004. The International Energy Agency

says that this increase was due to strong demand growth in Asia and North America. It also didn't

hurt that an unfolding war in the Middle East disrupted the supply chains of other major global

suppliers. Venezuela made moves to put it in a beneficial position to take advantage of this

surge. New leadership in 1999 sought to introduce new oil fields, which had become quite stagnant

in the 1970s, setting quotas and taking a hard stance against corruption and bureaucracy. They

also gutted the PDVSA after an industry strike in 2002, replacing thousands of workers with people

who would embrace the new objective. This left Venezuela flush with cash and the government,

at least on the surface, tried to improve living standards with it through very generous welfare

systems. Healthcare, food subsidies and education acting as key representative pillars to show the

world and its people signs of strong leadership. With enviable social assistance and rapid decreases

in poverty, Venezuela started to look like an economic success story, especially in the eyes

of its people, which was the primary goal of Venezuela's government, considering faith in

these institutions was shattered over the last 50 years. With horizon oil prices and massive

welfare projects in the early 2000s, the country looked like it was about to become the greatest

progressive success story in modern Latin America. But there was a big problem. It never really

worked, or at the very least, it wasn't sustainable. Of course, when done right, strong

exports can sometimes insulate an economy from something like the 2008 financial crisis. Oil

also typically has a low elasticity of both supply and demand, with a complex and costly

process of initially setting up oil extraction and the fact that people don't have much choice of

what to put in their cars respectively. Venezuela didn't really suffer from the cost of setting

up extraction infrastructure either. Their nation practically floats on petroleum, meaning that they

didn't have to invest into offshore or advanced drilling. They could effectively just stick a straw

in the ground and crude would shoot out of it. What really tipped the scales was spending, and

more specifically, how this money was spent. Corruption is a massive problem at all levels,

from small bribes to local law enforcement, all the way up to the national government,

and with so much money up for grabs, there was an incentive to line people's pockets.

The most desirable jobs in the country became government jobs funded by oil revenues because

they had the means to embezzle it with ease. Billions of dollars in official account transfers

remain unaccounted for to this day, and that's to say nothing of the more mundane corruption

happening at an individual level. Australian 2006 revealed that a select group of Venezuelan

bankers profited from the acquisition of Argentinian bonds by the Venezuelan government at the expense

of the national treasury. Then there are these aforementioned social programs that look great

on the surface. The government policies were essentially very populist and involved basically

giving oil money away to keep the favour of the people. Of course this isn't bad by itself,

after all those natural resources do belong to the people, but it made the country very dependent

on oil prices, especially when it had to adhere to OPEC quotas. This meant that when times were

good and oil prices remained high, Venezuela managed to brute force its GDP up until 2014.

But this changed dramatically when a few things started going wrong very quickly.

After rising for more than a decade, oil revenues fell by 93% between 2012 and 2020,

during the same period per capita income declined by 72%. By 2014 inflation had reached 69%,

the highest in the world at the time, and in 2018 inflation skyrocketed to over 130,000%.

As of 2023 it's still at 190%. Relying almost completely on oil was always going to present

challenges, but the nation's problems had more to do with how the Venezuelan government handled

and continues to handle what should have been a golden opportunity. Of course this is where we

bring up Norway, the gold standard in managing oil wealth. Both countries possess government-owned

oil industries, but the key difference is that Norway has used its oil to generate long-lasting

wealth, while Venezuela did the macroeconomic equivalent of winning the lottery, only to spend

it all on a mansion and fancy cars. Norway still uses its oil revenues to fund generous social

programs, but the only difference is that they put it into an investment fund first. Instead of using

oil profits to line pockets and give its populace immediate fleeting satisfaction, Norway set up

the largest sovereign wealth fund in the entire world. Today it's worth $1.6 trillion, which

translates as $295,000 per Norwegian citizen. Norway also imposed a rule that any spending

from the oil fund can only be as high as the expected return, known as Norway's 3% rule.

This means that the country isn't technically spending their non-renewable oil revenues,

they're actually spending their conservative investment returns. It also has restrictions

where the fund can't invest in what the country sees as immoral, which ironically includes fossil

fuels. Now compare that to Venezuela. With no restrictions like the 3% rule, the Venezuelan

government might have been able to give a lot of money back to the people in a short amount of time,

but the cost of winning public and regional approval created a crippling deficit. Finally,

choosing a personal wealth fund that only benefits a few unsavory groups instead of a

sovereign wealth fund that benefits everyone long after the oil revenue drives up creates

an extremely unfair balance of wealth and power. And that's really the cause of a lot of Venezuela's

struggle, how power is distributed and how power is used. Both countries had similar aims when it

came to handling the oil industry. They wanted to use the resources to make the government rich

while doing their best to set up systems that kept the people happy. However, while Norway embraced

patient planning and strict protocol, the Venezuelan oil industry, although nationalised,

lacked the foresight to create regulatory measures that would result in lasting success.

So this begs the question, were these problems purely coming from within, or were their external

forces pushing for its demise? Historically, Venezuela did fall into the trap of giving

a bit too much power to western corporations instead of seeking collaboration that trained

their citizens to work independently, something that Norway observed all over the world,

which encouraged them to keep foreign participants at an arms length. But this only plays a small

role in the economic crisis Venezuela faces today. Since 2005, the United States has imposed

targeted sanctions on Venezuelan individuals and entities that have engaged in criminal,

anti-democratic or crop practices in response to increased human rights abuses and corruption

by the government in power since 2013. A prevalent and feasible argument is that the USA has pushed

these sanctions on Venezuela over other countries because it's a major threat to its domestic

oil industry. But the impact of these sanctions is merely a cherry on top of the mounting series

of domestic failures that fall solely on the lap of Venezuelan governance. And there are a number

of examples that can paint a better picture. The starters, the country has the worst property

rights in the world, with assets often being seized with no compensation. This is terrifying

to foreign companies that have mostly since pulled out of the country because even with all that

oil wealth, it's too risky to do business there. It's like getting gold from under smog. Sure,

there is a lot of money to be made, but there are other safer places to get the same stuff.

Now, it could extract its own oil and it does have a state oil company, but even that kind of

sucks because it's run out of smart people to actually run it. Braindrain doesn't even come

close to describing the Venezuelan exodus. More than 6.1 million refugees and migrants have left

Venezuela as a result of the political turmoil, socioeconomic instability and ongoing humanitarian

crisis. Well-educated people have left the country because there are far better opportunities

elsewhere that are less dependent on getting a cushy government job where they could have their

assets seized at any time or be the victim of political or criminal violence. Either way,

the government has been fumbling and since it's lost a lot of its skilled workers and can't get

international investment, it's struggling to even drill oil, the one lifeline it had. The country is

now top of the misery index, crime is rampant and inflation is amongst the highest in the world.

The government desperately trying to hold onto power is only making things worse by doing things

like invading gyana after they discovered oil and running universally criticised elections.

And without major changes, who in their right mind would want to live, work or invest in such a

country? So is there any realistic way for Venezuela to turn its economy around? Well, in light of

recent developments, the future looks bleak or more accurately desolate. Recently the government

has made efforts to change the constitution, further stripping the rights of its citizenry from

democratic collaboration. This will undoubtedly encourage western powers to heighten sanctions

until the crisis is resolved. With no more oil income to benefit the impoverished people and no

clear game plan to diversify and overcome arguably one of the worst economic classes in history,

Venezuela is a nation without much of a silver lining. The country without a shadow of a doubt

stands as the most prominent example of what happens when the petro-curse takes hold without

anyone in power capable of channeling it into something more sustainable. Venezuela's leadership

literally had every chance to turn this resource into a wellspring of riches. If they had handled

this wealth like Norway or even the US or Canada, it could have properly educated their labor force,

invested the wealth into something that appreciates in value or even created practical

infrastructure to support other industries. But they did none of these things and now it's not

only the economy but the people that will suffer for decades to come. Okay, now it's time to put

Venezuela on the economics explained leaderboard. Before we get into it, we have to give the

patent a big disclaimer that the World Bank actually stopped collecting macroeconomic data on

Venezuela in 2014 because the country is simply too unstable to monitor effectively, so for this

list we'll be using estimates from the IMF which realistically should be very similar anyway.

Starting as always with size, Venezuela has a GDP of 102 billion US dollars making it the 69th

nice largest economy in the world and it gets a 5 out of 10. This is spread out over a rapidly

shrinking population of 28.3 million which means the country has a GDP per capita of $3867. This

is approximately a quarter of the global average in the most resource rich country on the planet.

This puts it in line with nations like Bolivia, Sri Lanka and Palestine. It gets a 2 out of 10.

Stability and confidence is of course tragically bad. Between rampant corruption,

squandered resources, the world's worst property rights and mass population exodus,

global sanctions, hostile posturing with its direct neighbour, hyperinflation, food insecurity,

extremely high levels of criminal activity and now one of the most condemned elections in modern

history, it's not great and it gets a 1 out of 10 only because it's not actively fighting a civil

war yet. Growth has been one of the worst of any major economy in the world over the last decade.

Since 2012, the country has lost over 80% of its economic output. It went from a middle income

global power to a desperately impoverished cautionary tale. It gets a zero out of 10.

Finally, industry. It has the world's largest oil reserves but it doesn't have the industrial

capacity to even pump it out of the ground in exchange for cash. One of the easiest money

glitches ever and it couldn't even enter the cheat code correctly. It also doesn't have other

domestic industries because everything got crushed by the dominance of the oil industry

until it itself got crushed by complete economic ineptitude. Zero out of 10.

Altogether, that gives Venezuela an average score of 1.6 out of 10,

putting it into equal last place with Lebanon, a significantly smaller economy that didn't

have many of the advantages that Venezuela did. If you're curious to see what's gone wrong over

there, we made an entire video on Lebanon's economic collapse which you should be able to click

to on your screen now. Thanks for watching, mate. Bye.