Uruguay’s Fitting Recognition
Here is a guest post from Paul Pugh, from Thunder Bay, whoÂ provided usÂ 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.Â 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.Â Here are his impressions.Â Thanks Paul!
Uruguay: More Than “Country of the Year”
By Paul Pugh
Wow! The Economist has chosen Uruguay as its 2013 â€œCountry of the Yearâ€. I grew up in â€œel paisitoâ€ (â€œthe little countryâ€) as those fond of Uruguay know it, so of course, I am pleased at Uruguayâ€™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%.
Back to The Economist: â€œthe 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 worldâ€. It chose Uruguay as its 2013 â€œCountry of the Yearâ€ because of its marijuana legislation and its legalization of gay marriage. Uruguayâ€™s President, Jose â€œPepeâ€ Mujica also came in for praise: â€œWith 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  Volkswagen Beetle, and flies economy class.â€
Fair enough. However, I believe â€œel paisitoâ€ deserves notice for other things too: Uruguay is on track to have 90% 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%, 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 â€œwhoâ€™s running this country?â€
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 â€œTupasâ€ are currently the largest sector in the FA, President â€œPepeâ€ 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% from $5,221 in 2005 to $7,498 in 2012 (1). Uruguay avoided the recent â€œGreat Recessionâ€ altogether, although real per capital GDP growth decreased to 1.83% in 2010 then increased again. From April 2005 to November 2013, the real wage index (2008 = 100) increased by 41.9%, from 88.43 to 125.5 (2). The percentage of people living in poverty decreased from 36.6% in 2005 to 13.1% in 2012, and the GINI coefficient (3) decreased from 0.427 in 2005 to 0.379 in 2012. Uruguayâ€™s net external debt (millions US) has gone from $4,761 in 2005 to -$1,527 in 2012 (4). This has earned Uruguay â€œinvestorâ€ 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.
Uruguayâ€™s FA, like much of South America, is implementing heterodox economic policies in order to achieve its social goals. The structuralist school (5) 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 (6) 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.
Uruguayâ€™s FA and other South American governments are implementing â€œreforms that do not merely improve a single nation but, if emulated, might benefit the worldâ€. Iâ€™m not sure that The Economist is celebrating all this, but we should, and we can learn.
1 Data from ECLAC â€“ UN Economic Commission for Latin America and the Carribean 2013
2 Instituto Nacional de Estadisticas â€“ INE (National Institute of Statistics, Uruguay)
3 GINI is a measure of inequality: 1 = complete inequality, 0 = complete equality, INE 2014 data
4 Banco Central del Uruguay – Central Bank of Uruguay data
5 Import Substitution Industrialization â€“ 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.
6 MERCOSUR: trading/development block of Argentina, Bolivia, Brazil, Paraguay, Venezuela and Uruguay, incorporating social, political and market goals. UNASUR: South American parliamentary union.