Despite the attractiveness of the country due to its petroleum manna, the size of its national market and the wealth of natural resources, the FDI flow towards Venezuela has decreased in the last years due to the country's political and economic instability. According to UNCTAD's World Investment Report 2022, the country recorded a decrease in FDI inflows in 2021, reaching USD -761 million, compared to USD -456 million in 2020. Furthermore, the total stock of FDI was estimated at USD 21.1 billion in 2021. As for Greenfield Investments, they amounted to USD 5 million in 2021, a significant drop from the total recorded in previous years USD 774 million in 2019 and USD 43 million in 2020). The climate of uncertainty arising from the “Bolivarian” reforms (violation of the private property rights, currency control, increasing regulation, nationalisations, etc.), the inefficiency of the port system, and the fall of petroleum prices (96% of currency entries) are all obstacles to investment. Venezuela’s government keeps balancing regional and revolutionary policies, without closing the door to foreign investments which it is in dire need of. Nevertheless, “Bolivarian” socialism put in place by the government, mostly interventionist, does not allow the flow of FDI to develop and fulfil the country’s potential. A law of 2014 on foreign investments reduces the statutory rights of foreign investors compared to the previous regime.
According to the Economist Business Environment, Venezuela ranks 82 out of the 82 countries reviewed for their investment climate. That's because while Venezuela has the world's largest oil reserves and a strategic geographical location, the country also has the highest inflation rate in the world, endemic corruption, high levels of poverty and violence, economic and political instability, government intervention, and a restrictive legal framework. Additionally, the judiciary is highly politicised and is often influenced by the executive branch, and even though Venezuela’s legal system is open to FDI, it is manipulated by the executive branch. For that reason, FDI in Venezuela has been significantly lower in recent years in comparison to the majority of Latin American nations. Furthermore, numerous multinational companies (including United States’ General Mills, General Motors, Kimberly-Clark, Exxon Mobil, Bridgestone Firestone, Kellogg’s, United Airlines, and Delta Airlines) left the country in recent years, to sell their assets at a low price or gave them up completely. Around 150 multinational companies maintain their presence waiting for an upturn. They have interrupted or reduced their production and laid-off workers while continuing to provide them with a minimum wage and, in numerous cases, meals.
|Foreign Direct Investment
|FDI Inward Flow (million USD)
|FDI Stock (million USD)
|Number of Greenfield Investments*
|Value of Greenfield Investments (million USD)
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Apart from the extremely tense political and social situation, Venezuela's economy can rely on certain strengths:
The country's economic situation is clear: the World Bank's Doing Business ranks 188th out of 190 countries ranked for the quality of its business environment.
The Constitutional Law of Productive Foreign Investment is in place since 2017, this norm aims to regulate everything related to foreign investment in the country and to promote a productive and diversified contribution of foreign origin that participates in the development of the existing productive potential in the country.
The country's agency promoting foreign investment provides information about the permits necessary to business establishment.
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Latest Update: December 2023