URUGUAY IS THE SECOND COUNTRY IN THE DEVELOPMENT AND TRANSPARENCY RANKING

Wednesday 15 May 2013

Uruguay has held for several years a prominent position in the global ranking “Democracy, Markets and Transparency” prepared by CADAL. In 2011 ranked second in Latin America, behind Chile. The year 2012 is not the exception, climbing to the 19th position among 167 countries.

Uruguay is reaping the benefits of years of work, positioning itself before the world as an ideal country where to invest, work and live. This reality answers to a combination of factors that have been maintained and consolidated over time and that have transcended the different governments: social and political stability that sustains, for years, the macroeconomic strength and the favorable business climate.

These three pillars have allowed Uruguay to be consolidated as an attractive and reliable destination for tourism and investments.

Its social and political stability backed by a consolidated democracy and legal certainty are characteristics of Uruguay that have distinguished it throughout its history.

These values have been forged, transcending the political parties governing the country. This shows that in Uruguay there is respect for the institutions and the political parties. And all this is reflected in the indexes.

For several years, Uruguay is the country with a greater political stability in Latin America, according to the Political Stability Index prepared by the World Bank.

Also, there are international standards related to the respect for intellectual property. According to the Global Competitiveness Index 2012-2013, Uruguay is the first country in Latin America that offers the greater protection for property rights and intellectual property. The Uruguayan economy has shown a steady growth in recent years.

The Gross Domestic Product (GDP) grew at an average annual rate of 6% between 2005 and 2011, and in 2012 of 4%, therefore consolidating an interrupted decade of economic growth.

The perspective for the coming years is encouraging, despite the uncertain international context.

But this economic growth has been accompanied by the development of productive cross policies and equity policies that have made the country's productive structure more diversified, with more links between sectors, developing knowledge-intensive activities, and the insertion in fast-growing international markets.

Uruguay has a comprehensive and favorable regulatory framework for the promotion of investment. In addition to the Investment Promotion Act, which provides significant tax benefits for investment, there is a regulation that promotes Free Zones, Free Ports and Airports, industrial parks and other group of tools for sector-specific promotion. In turn, in recent years two laws were passed that aimed at encouraging the investment in infrastructure in the country and which are absolutely necessary to sustain the process of economic growth of Uruguay.

On the one hand, Law of Public-Private Partnership that anticipates the execution of works for road, rail, port, airport infrastructure as well as energy infrastructure, and social infrastructure.

On the other hand, the Social Housing Law, which promotes private investment in social housing through granting large tax exemptions.

This adequate regulatory framework is necessary but not sufficient to build a good business climate.

Uruguay has worked hard to improve all aspects related to economic freedom and the ease for doing business, and this is reflected in the most recognized international rankings. For example, in Doing Business (World Bank) Uruguay climbed, in two years, 18 positions, ranking fifth in Latin America (2012-2013).

It has also improved in the ranking for economic climate in Latin America (Getulio Vargas Foundation). Last but not least, according to the Global Competitiveness Index 2012-2013, Uruguay is a highly competitive country for doing business, ranking 74th in the world rankings and fifth in South America.

All this has allowed Uruguay to position itself as a reliable and attractive destination for foreign investors, which resulted in strong growth of the direct foreign investment flow.

During the last decade, the DFI received increased eightfold, reaching an average investment level of more than USD 2,000 million annually.

By Mariana Ferreira

Manager of the Department of Competitive Intelligence of URUGUAY XXI Investment and Export Promotion Agency.

Excerpt from an article published in the annual report Global Development, Democracy, Markets and Transparency, the Center for the Opening and Development of Latin America (CADAL).