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Uruguay: Growth and Structure of the Economy
Country Study > Chapter 3 > The Economy > Growth and Structure of the Economy

GROWTH AND STRUCTURE OF THE ECONOMY


Uruguay's recent economic history can be divided into two starkly contrasting periods. During the first, from the late 1800s until the 1950s, Uruguay achieved remarkable growth and a high standard of living. Expanding livestock exports -- principally beef, mutton, and wool -- accounted for this economic growth. Advanced social welfare programs, which redistributed wealth from the livestock sector to the rest of the economy, raised thestandard of living for a majority of the population and contributed to social harmony. Booming livestock exports funded social programs and a state-led effort to build up new industries in Uruguay, such as domestic consumables (mainly food and beverages) and textiles. Thus, although Uruguay's economy was almost completely dependent on meat and wool exports, the strong earnings from those products helped to diversify the economy. As long as its exports continued to expand and world prices for those exports remained high, Uruguay's economic growth was ensured.

When export earnings faltered in the 1950s, however, the fabric of Uruguay's economy began to unravel. The country entered a decades-long period of economic stagnation. Export earnings first declined when world demand fell during the Great Depression of the 1930s. Prices later recovered somewhat, but a more important limitation on Uruguay's export earnings arose: livestock production reached its limits. Without room for continued expansion of traditional exports, and without a welldeveloped industrial sector, it became increasingly difficult for Uruguay to uphold the social welfare model that it had adopted inmore prosperous times. The memory of those times, when livestock products earned enough to make Uruguay the "Switzerland of South America," made Uruguayans reluctant to completely reshape their economy. To understand that reluctance and its consequences, it is necessary to examine Uruguay's economic history in more detail.

Data as of December 1990




Last Updated: December 1990


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Uruguay was first published in 1990. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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