Country Presentation: National Overview

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Country Presentation National Overview
Eastern Republic of Uruguay República Oriental
del Uruguay

• Scott Swisher

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Geography / Demographics
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Demographics
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Economic Statistics
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Economic Statistics, Cont.
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Economic Statistics, Cont. 2
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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

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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

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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

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Govt Revenue/Expense (LCU) 1995-2005
Revenue/Expense (billions of UYU)
Time (years)
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Govt Balance (LCU) 1995-2005
Govt Balance (billions of UYU)
Time (years)
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Govt Balance ( of GDP) 1990-2005
Govt Balance ( of GDP)
Time (years)
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Govt Debt ( of GDP) 1995-2005
Govt Debt ( of GDP)
Time (years)
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Monetary Policy

• LCU Uruguayan peso (UYU)
• History of depreciation
• Revaluations in response to hyperinflation
• Dollar as de facto currency
• gt90 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

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Exchange Rate Policy

• 1973-1985 Crawling peg
• Tablita table of future values
• Pegged to the USD
• 1985-2002 Sliding range
• Govt 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

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Social Policy

• 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

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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

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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//nationsencyclo
  pedia.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/c
  ia/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?re
  fcountry_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/