Competitiveness, the Venezuelan way

Much has been made recently of the fact that New Zealand is now more "competitive" than Australia. For example, The New Zealand Institute has said,

For the first time in the history of the WEF’s competitiveness index, New Zealand is ranked higher than Australia. For the first time, Australia is no longer a top 20 economy globally. Out of 144 countries surveyed, New Zealand now ranks 18th (up from 23rd last year). Australia, on the other hand, dropped one rank from 20th to 21st place. Ouch.

If this is happening near the top of the rankings, what's happening at the other end of the scale. What can we learn from looking at the worst ranked counties?

If you look at the bottom end of the rankings you get an indication of the economic legacy of Hugo Chavez in Venezuela. Peter Spence writes in City A.M. that

The latest World Economic Forum global competitiveness report, released today, is even more striking. Out of 148 countries, here's how Venezuela's institutions fare:

148th for property rights
148th for the diversion of public funds due to corruption
148th for judicial independence
148th for the efficiency of the legal framework in settling disputes
148th for the burden of government regulation
148th for the wastefulness of government spending
148th for favoritism in decisions of government officials
148th for the efficiency of the legal framework in challenging regulations
148th for the reliability of police services
147th for the transparency of governmeny policymaking (Haiti is considered marginally worse, with 2.6/7, versus Venezuela's 2.7)

and

Venezuela slipped from the world's 51st most competitive country in 1999, to the 54th in 2000 and 66th in 2001. It now ranks as the 134th most competitive of 148 states.

Now the country is worst in the world for nine out of 21 categories, and in many it's still pretty close to the bottom, close to nations like Lebanon, Chad, Yemen and Haiti.

A county's basic institutions are one factor that matter for its economic well being. If your institution don't function properly, that is if you don't protect property rights, have an honest public sector, an independent judiciary, sensible business regulation etc, then no matter how much oil revenue you have, eventually your economy, and thus people's welfare, will suffer.