Monday, 18 January 2010

How not to run an economy

The Wall Street Journal reports that Venezuela Nationalizes French Retail Chain,
President Hugo Chavez ordered Sunday the seizure of a French-owned retail chain on accusations that it raised prices after Venezuela devalued the currency by half.
So much for PPP.
The Venezuelan leader said that a new law could be needed to carry out the nationalization. "I'm waiting for the new law to begin the expropriation process," he said. "There's no going back," he added.
Separately, Mr. Chavez also ordered the nationalization of a large shopping-mall recently built in a downtown district in Caracas. The stores controlled by Exito and the shopping mall will be used to build up Comerso, a new government-run retail chain which seeks to sell its products at "socialist" prices, according to the president.

During his 11 years in power Mr. Chavez has nationalized large swaths of the Venezuelan economy, including a Spanish-owned bank and an Argentine-controlled steel-mill.
I'm guessing foreign investment isn't at the top of Hugo Chavez's list of must haves for economic development. I'm also guessing that Robert Higg's idea of regime uncertainty isn't something Chavez is too concerned about. One wonders what effect all this will have on private investment, both foreign and local, in Venezuela.

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