Uruguay: Better social conditions for an expanding economy

How the South American nation achieved social welfare without socialism

Uruguay: Better social conditions for an expanding economy

Leer en Español: Uruguay: Mejores condiciones sociales para una economía en expansión

Uruguayan’s economic model is one step ahead of the rest of South America. The egalitarian economy is seeing a surge in its agro-industrial sector which increased 16% in 2017 due to new deals with China and the lowest unemployment rate since November 2016 with a 7.6%.

Both factors provide a safe USD 21,090 GDP per capita, the largest in the region.

The Oriental Republic of Uruguay has a clear strategy for development. Regarding its productive functioning, the 3.5 million economy relies on a strong service economy which counts for 67.7% of its GDP while the remaining 32.3% of their gross domestic product comes from their service industry, food industry, and agriculture.

Uruguay exports soybeans, cellulose, rice, wheat, wood, dairy products, wool, and beef while main imports include refined and crude oil, vehicles and their parts, and cellphones. Maintaining sustainable sources of income provides the Uruguayan economy a chance to include more citizens in the economy per year.

The South American nation’s main interest is to keep expanding its middle class, which is already the subcontinent's largest, and granting it access to education in order to support a stable democracy. The economist noted Uruguay as the only fully democratic nation in the region

The free market economy led by Tabaré Vásquez has also shown great resilience to external shocks such as the slowdown of traditional trade partners Brazil and Argentina by responding with an aggressive market expansion away from Mercosur, South America’s Common Market into the Asian markets.

The great disruption Uruguay makes from the rest of South America is the fact the nation puts its people first. The World Bank favors the country’s 4.8% growth trend from 2006 to 2015 as a result of the reduction of moderate poverty in the country yielding 22.8% in the same period.

Uruguayan’s extreme poverty is of 0.3%, South American average is 37.7%.

The next challenge for the southern hemisphere’s economy is to balance its trade balance which is currently negative by an average of USD 1 billion. In order to do so, import replacement with local production in the energy sector is being carried on.

In 2014, a total of 90% of the country’s electric production came from clean energy; by 2015 its share reached 95%. 80% of the total energetic production comes from hydropower, a competitive advantage of Uruguay which is being examined.

Uruguay has great expectations for the future, Jose Miguel Insulza’s National Energy Policy outlines a medium-term goal of “achieving optimal use of renewable and natural gas energy mix by 2020” and “saving [about] USD 10 million by 2030 through energy efficiency”.

 

Latin American Post | David Eduardo Rodríguez Acevedo

Copy edited by Susana Cicchetto

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