In our last article, we referred to what we called the route for innovation, in which we outlined the elements that must be taken into account to develop public policies that lead to turn Venezuela into an innovative nation, where the first place to consider It is occupied by the institutional framework, understood as such, the political, regulatory and business environment, in which creative and entrepreneurial initiative must be cultivated, which then translates into a continuous fruitful harvest of intangible assets, creative products, services, and creativity in the digital environment, which is the subject that we develop below and in which we take as a reference, the guidelines considered for this purpose by the Global Innovation Index (IGI), which is the reference publication on the matter, in which by the way and unfortunately, our country has not participated since 2017.

When we listen any reference to the institutional framework, the idea generally arises in the collective imagination that it simply refers to the functioning of public bodies; however, the evaluation of this variable goes much further, and its assessment includes several aspects that we intuitively know are necessary for any business initiative to flow, develop and become viable.

Thus, we find the first element of evaluation of the institutional framework, which is the political environment, which is not at all linked to the ideological or partisan, but rather to the measurement of edges as objective and concrete as those related to probability and severity of political, legal, operational or security risks that affect business operations and any business initiative; continuing with the evaluation of government efficiency or effectiveness, where the key is to identify the perceptions about the quality of public services, of public servants, and the degree of their independence from political pressures, the quality of the formulation and policy implementation, and the credibility of the government’s commitment to such policies. Here in this section, we insist, beyond any consideration related to the prevailing political doctrine or government system, which is irrelevant with regard to these lines, it is evident that the country is in a very bad position, and as a result, that much must be done to change the reality and perception of what is undoubtedly considered an unfavorable political environment for creative initiatives.

The second factor to consider is the so-called regulatory environment or framework, where we find the eternal dichotomy between the law and its enforcement; and where, on the one hand, the quality of existing regulations is evaluated, understanding as such the capacity of the government to design, implement and execute regulations that promote and allow the development of private initiative; and on the other, its observance, or in other words, the effective application and respect of said regulations; where we could affirm that although on the one hand, in general the country has a legal structure quite acceptable, with notable exceptions such as having an outdated legislation on intellectual property rights; its observance or predominance of the rule of law, is far from being even minimally exhibitable as positive, where there is more than abundant evidence about the compromise of something as elementary as property rights, or the efficient functioning of the courts and law enforcement agencies, or the existence of a very wide discretion of the public officers, which translates in synthesis into an almost absolute absence of legal certainty.

The third element to qualify the institutional framework of innovation, perhaps deals with what could be the consequences or results of the failures or success of the previous two, and refers to the degree of ease or difficulty to do business, which essentially is based on the World’s Bank index and where Venezuela occupies the third-to-last place in the index, (188 out of 190 jurisdictions evaluated), only surpassed by two African nations, Eritrea and Somalia, in addition to being preceded by Libya and Yemen.

To determine how easy or not it is to do business in a given jurisdiction, the World Bank looks at various indicators, such as, for example and among others, the procedures to establish a company, access to electricity service, availability of public records, access to credit, protection of minority investors, fiscal aspects and import and export customs mechanisms. Here, whoever bets on the formality of an undertaking, knows very well how complex it can be with everything that the existing regulations demand and the discretion of regulators in all instances, so the place we occupy in the referred index is not surprising.

Although the above could be clearly visualized as catastrophic, recognizing and identifying the problems, it is a first step so that from there the route can be built to progressively ascend in the indicators that allow progress in that creative territory, and that is why there are studies and evaluations that lead to indexes and rankings. In Venezuela, creators and entrepreneurs have been doing their part, assuming without complexes that they are developing their initiatives in adverse conditions, so in that sense they are agents of change, but the final impulse required, what motivates these lines, which is the institutional framework that demands innovation, must come precisely from the institutions and the actors that lead them, and that is the pending task.

Cástor González-Escobar | Partner at GR LEX AMERICAS

Free translation of the Op-Ed originally published in Spanish in, and