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Overview of Uruguay's Economic History and Development Trends

This presentation provides a comprehensive overview of the economic history of Uruguay from 1900 to the present, highlighting key phases such as rapid development (1900-1930), stagnation (1950-1970), and the military government era (1973-1985). It discusses the impact of trade policies, including the establishment of Mercosur and various free trade agreements, on Uruguay's economy. It analyzes government fiscal policies, monetary strategies, and social welfare systems, and examines external relations with neighboring countries. A deep dive into demographic and economic statistics is also provided.

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Overview of Uruguay's Economic History and Development Trends

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  1. Country Presentation: National Overview Eastern Republic of Uruguay República Oriental del Uruguay Scott Swisher

  2. Geography / Demographics

  3. Demographics

  4. Economic Statistics

  5. Economic Statistics, Cont.

  6. Economic Statistics, Cont. 2

  7. Economic History • 1900-1930: Rapid development • Beef, wool exports • Advanced welfare state • 1950-1970: Stagnation • Public sector dominance • High tariff barriers, ISI • 1973-1985: Military government • High fiscal deficits, extensive borrowing • Deregulation, privatization • Export promotion

  8. Regional Free Trade Areas (FTAs) • Mercosur (Southern Common Market) • 1985 Agentina-Brazil PICE agreement • 1991 Treaty of Asunción • 1994 Protocol of Ouro Preto • Union of South American Nations (Unasur) • Cusco Declaration • Mercosur + Andean Community = Unasur • Single currency, single market, etc. • Organization of American States (OAS) • Founded 5 May 1948 • Drafting of FTAA

  9. Fiscal Policy • Large-scale SOEs • 1985-1995: end of transportation, insurance SOEs • Popular resistance against privatization • Telecommunications, water, electricity, energy • 1985: Restoration of civilian government • IMF strategies, “Washington Consensus” • Inflation/unemployment problems • Free-trade areas, FDI • Debt control since 1988 • Limited success • Renegotiation, forgiveness, restructuring

  10. Gov’t Revenue/Expense (LCU) 1995-2005 Revenue/Expense (billions of UYU) Time (years)

  11. Gov’t Balance (LCU) 1995-2005 Gov’t Balance (billions of UYU) Time (years)

  12. Gov’t Balance (% of GDP) 1990-2005 Gov’t Balance (% of GDP) Time (years)

  13. Gov’t Debt (% of GDP) 1995-2005 Gov’t Debt (% of GDP) Time (years)

  14. Monetary Policy • LCU: Uruguayan peso (UYU) • History of depreciation • Revaluations in response to hyperinflation • Dollar as de facto currency • >90% of private savings is Dollar-denominated • Selectively used as unit of exchange • Central Bank of Uruguay (Banco Central del Uruguay) • Precursor, BROU (Banco de la República Oriental del Uruguay) • Founded 1967 • Dollarization hinders monetary policy

  15. Exchange Rate Policy • 1973-1985: “Crawling peg” • “Tablita” – table of future values • Pegged to the USD • 1985-2002: “Sliding range” • Gov’t will intervene to maintain range of values • So-called “dirty float” • 2002-present: Free floating exchange rate • Hopes for de-Dollarization • LCU appreciation agitates exporters • Sensitivity to ER fluctuations

  16. Pre-1990: Welfare state Extensive SOEs Reliance on public sector Protection of workers Post-1990: Privatization Private pension plans Popular resistance SOEs still about 18% of GDP Social security system Sparse union legislation National retirement age Ministry of Health Free medical care Relatively low mortality rate Water utility is SOE Education/culture secretary Promotion of cultural activity Maintenance of venues Ministry of Housing Provision of public housing Combat urban slums Social Policy

  17. External Relations • Geographic position between Argentina and Brazil • Uruguay as a “buffer zone” historically • Covariance with neighboring economies • Dependence on trade with neighbors • Cause of 1999-2002 economic crisis • Relative size of Uruguayan economy • Commitment to FTAs • Active partner in Mercosur/Unasur/OAS • Need for export markets, FDI • ALADI membership • Positive relationship with investors • Democracy, pluralism, neutrality, multilateralism

  18. References • Bértola, L. (2003). An overview of the economic history of Uruguay since the 1870s. Retrieved May 13, 2007, from http://eh.net/encyclopedia/article/Bertola.Uruguay.final • Encyclopedia Britannica. (2007). Uruguay. Retrieved May 13, 2007, from http://search.eb.com/eb/article-9108768 • Encyclopedia of the Nations. (2001). Uruguay. Retrieved May 13, 2007, from http://nationsencyclopedia.com/economies/Americas/Uruguay.html • Gocurrency.com. (2004). What is the uruguayan peso (UYU)?. Retrieved May 13, 2007, from http://www.gocurrency.com/countries/uruguay.htm • Hudson, Rex A. and Sandra W. Meditz. (1992). Uruguay: A country study. Retrieved May 13, 2007, from http://countrystudies.us/uruguay/ • Instituto Nacional de Estadistica - Uruguay. (2007). Anuario estadístico 2006. Retrieved May 13, 2007, from Instituto Nacional de Estadistica - Uruguay • Ministerio de Economía y Finanzas. (2007). Información económica. Retrieved May 13, 2007, from http://www.mef.gub.uy/indicadores.php • The CIA. (2007). CIA world factbook: Uruguay. Retrieved May 13, 2007, from https://www.cia.gov/cia/publications/factbook/geos/uy.html • The Economist: Economist Intelligence Unit. (2007). Uruguay country report. Retrieved May 13, 2007, from http://store.eiu.com/country/UY.html?ref=country_list • The International Monetary Fund. (2007). Uruguay and the IMF. Retrieved May 13, 2007, from http://www.internationalmonetaryfund.com/external/country/ury/index.htm • The World Bank. (2007). Uruguay data. Retrieved May 13, 2007, from http://www.worldbank.org/uy • The World Bank. (2007). World development indicators online. Retrieved May 13, 2007, from http://devdata.worldbank.org/dataonline/

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