URUGUAY WAS ONCE KNOWN as the "Switzerland of South America" as a result of its relative governmental stability, advanced level of economic development, and social peace. Indeed, in the creation of a welfare state, it was far ahead of Switzerland during the first half of the twentieth century. Starting in the 1950s, however, Uruguay's economy began to stagnate, and the oncevaunted welfare state became increasingly poor. Commentators talked of the "Latin Americanization" of Uruguay as it descended from the ranks of the developed nations to the level of the Third World. Political and social unrest eventually culminated in the military coup of 1973; by then the case for seeing Uruguay as very different from the rest of Latin America was largely undermined.
During the sixty-year period from 1870 to 1930, foreign immigrants flooded into Uruguay, mainly from Spain and Italy, to improve their standard of living. A historical study of social and economic development ranked Uruguay fourth among all independent nations in the world in the 1880s. In 1990 Uruguay's levels of education and nutrition were still among the highest in Latin America, as well as its per capita ownership of radios, televisions, and telephones and its newspaper readership.
However, four decades of economic stagnation had seriously eroded Uruguay's lead in terms of per capita gross domestic product ( GDP). Historically, only Argentina rivaled it in Latin America in terms of this crucial economic indicator. By the middle of the twentieth century, Uruguay had been overtaken by Venezuela in terms of per capita GDP, and in 1970 Chile had almost caught up. By 1980 so had Brazil, Costa Rica, Panama, and Mexico.
A study published by the United Nations Development Programme (UNDP) in 1990 attempted to rank 130 countries of the world by their level of social (rather than purely economic) development. Switzerland was the richest nation as measured by per capita GDP, adjusted for purchasing power parities. Using the same indicator, Uruguay was ranked forty-fifth, underlining how far it had fallen economically. Nevertheless, Uruguay ranked far higher on a composite indicator of social progress dubbed by the UNDP the "Human Development Index." The index took into account life expectancy and level of literacy, as well as adjusted per capita GDP. By this measure, Uruguay ranked twenty-ninth, immediately above Hungary. Only two Latin American countries scored higher on this index: Costa Rica (ranking twenty-eighth) and Chile (ranking twenty-fourth). In comparison, the United States ranked nineteenth. Japan had the highest Human Development Index of all.
In sum, Uruguayan society in 1990 presented a contradictory picture of advanced social indicators and declining economic status. In many ways, it remained unlike other Latin American and Third World countries.
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