United Nations: Chávez’s Nationalizations Are Killing Foreign Investments

May 7, 2010

A report released this week by the United Nations Economic Commission for Latin America and the Caribbean (ECLA) cites watertight evidence that the policies of President Hugo Chávez are wreaking havoc on Venezuela’s economy by discouraging foreign investments into the country. The ECLA report concludes that, in 2009 alone,  Chávez’s systematic nationalization of major industries has caused a negative inflow of $3.1 billion in foreign investment dollars in Venezuela.

Venezuela is the only Latin American country to see its foreign direct investments dip into negative territory, according to the ECLA analysis. Foreign investments now account for less of a percentage of Venezuela’s GDP than any other nation in North or South America.

The study highlights some of the nationalizations that have produced the sobering statistics: “Although the country announced major investment projects, chiefly in the petroleum sector, these were not enough to offset outflows resulting from, among other variables, nationalizations, such as that of the Argentine steel corporation Ternium Sidor, the local affiliate of Banco Santander, two Japanese steel corporations and the Mexican corporation Tubos de Acero de México, S.A.”

The ECLA study predicts that Venezuela’s foreign investment numbers, already scraping the bottom of the barrel, will sadly continue down its current path.