Country Presentation: National Overview

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

4. Geography / Demographics

5. Demographics

6. Economic Statistics

7. Economic Statistics, Cont.

8. Economic Statistics, Cont. 2

9. 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

10. 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

11. 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

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

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

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

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

16. 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

17. 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

18. 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

19. 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

20. 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/