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Uruguay: More than 'Country of the Year'

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Photo: LGBuriola/flickr

Here is a guest post from Paul Pugh, from Thunder Bay, who provided us a couple of years ago with some interesting and encouraging data about Uruguay's incremental successes in building a more inclusive, sustainable economic and social model. In light of The Economist's surprising choice of Uruguay as its first ever "country of the year," we asked Paul to reprise his commentary. Here are his impressions. Thanks Paul!

Wow! The Economist has chosen Uruguay as its 2013 "Country of the Year." I grew up in "el paisito" ("the little country") as those fond of Uruguay know it, so of course, I am pleased at Uruguay's being chosen.

Having lived most of my life in Thunder Bay, I know most Canadians would be hard pressed to say where Uruguay is located. Soccer fans may know that Uruguay has won two World Cups, came in fourth at the last World Cup in South Africa, and is a contender this year. Not bad for a country of less than 3.5 million inhabitants.

Recently, Uruguay achieved international recognition as the first country to regulate production, processing and distribution of marijuana; in other words, a regulatory regime similar to that in place for the alcoholic beverage industry in Ontario. Uruguay also made the news because it faces a huge lawsuit by Philip Morris (backed by the World Bank) for its effective anti-smoking legislation. As of 2012, Uruguayan smoking rates fell below 20 per cent.

Back to The Economist: "the accomplishments that most deserve commendation, we think, are path-breaking reforms that do not merely improve a single nation but, if emulated, might benefit the world." It chose Uruguay as its 2013 "Country of the Year" because of its marijuana legislation and its legalization of gay marriage. Uruguay's President, Jose "Pepe" Mujica also came in for praise: "With unusual frankness for a politician, he referred to the new law as an experiment. He lives in a humble cottage, drives himself to work in a [1976] Volkswagen Beetle, and flies economy class."

Fair enough. However, I believe "el paisito" deserves notice for other things too: Uruguay is on track to have 90 per cent of its electricity produced from renewable sources by 2015 -- hydro, wind, solar and bio-mass; all Uruguayan public primary and secondary students receive a free laptop and Internet access (private school students, about 10 per cent, are not included); education through university is free (private schools excluded); all Uruguayan workers are covered by sectoral collective agreements (including domestic workers, agricultural workers, police and military) incorporating the public pension, public health care and public drug plan (last year, employers complained to the International Labour Organization that Uruguayan labour legislation is unfair). At this point some may ask, "who's running this country?"

The Frente Amplio (Broad Front) has held the presidency and a majority in both chambers of the legislature for two terms (since 2005), with elections for a possible third term at the end of this year. The Frente (FA) was formed in 1971 by the Communist, Socialist, and Christian Democratic parties together with smaller left parties. The parties each maintain their own organizations, but hold joint elections to select a single candidate and run on a single platform. A right-wing military dictatorship (1973 - 1985) banned the FA and all political parties and unions. With the end of the military dictatorship, the Tupamaro guerilla organization renounced armed struggle, created the MPP (Movement for Popular Participation) and joined the FA. The "Tupas" are currently the largest sector in the FA, President "Pepe" Mujica comes from this party.

All right, the FA has implemented some good environmental and social policies, but what about the economy? Socio-economic data suggest that Uruguay has done well with the FA. Real per capita GDP (2005 US$) increased 43.6 per cent from $5,221 in 2005 to $7,498 in 2012 (Data from ECLAC – UN Economic Commission for Latin America and the Carribean 2013). Uruguay avoided the recent "Great Recession" altogether, although real per capital GDP growth decreased to 1.83 per cent in 2010 then increased again. From April 2005 to November 2013, the real wage index (2008 = 100) increased by 41.9 per cent, from 88.43 to 125.5 (Instituto Nacional de Estadisticas – INE (National Institute of Statistics, Uruguay)). The percentage of people living in poverty decreased from 36.6 per cent in 2005 to 13.1 per cent in 2012, and the GINI coefficient (GINI is a measure of inequality: 1 = complete inequality, 0 = complete equality, INE 2014 data) decreased from 0.427 in 2005 to 0.379 in 2012. Uruguay's net external debt (millions US) has gone from $4,761 in 2005 to -$1,527 in 2012 (Banco Central del Uruguay – Central Bank of Uruguay data). This has earned Uruguay "investor" ranking by financial rating agencies, allowing the government to sell bonds at lower rates, but has necessitated provisions to discourage inflows of short-term speculative finance.

Uruguay's FA, like much of South America, is implementing heterodox economic policies in order to achieve its social goals. The structuralist school (Import Substitution Industrialization – ISI, to its neo-liberal detractors, although far more than ISI in reality; see Celso Furtado Development and underdevelopment for a classic exposition of the Structuralist approach) is once again predominant in economic analysis throughout the region (and is once again a leading school of thought within ECLAC, the UN's Economic Commission for Latin America and the Carribean). Traditionally, South American countries competed against each other for markets in Europe and North America, but today, regional integration through MERCOSUR, UNASUR (MERCOSUR: trading/development block of Argentina, Bolivia, Brazil, Paraguay, Venezuela and Uruguay, incorporating social, political and market goals. UNASUR: South American parliamentary union) and other agencies, is encouraging countries to work with regional partners in achieving socio-economic goals. There are many bumps along this road, but it is another break with neo-liberalism.

Uruguay's FA and other South American governments are implementing "reforms that do not merely improve a single nation but, if emulated, might benefit the world." I'm not sure that The Economist is celebrating all this, but we should, and we can learn.

Photo: LGBuriola/flickr

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