Uruguay Essay

Uruguay, officially known as the Oriental Republic of Uruguay, is the second-smallest country in South America, with an area of 68,036 square miles. Brazil forms its eastern and northeastern border, while Argentina bounds it on the west and northwest. In the south, Uruguay possesses slightly over 400 miles of Atlantic coastline. Its population, as estimated in 2008, is 3,477,778 people. The majority, nearly 90 percent, are of European ancestry with the remainder claiming to be of African or Indian descent.

Uruguay was originally occupied by the Spanish early in the first half of the 16th century. Because there were no gold or silver deposits, major settlement would not occur until the beginning of the 18th century. At the beginning of the 17th century, however, the Spanish introduced cattle to the region, beginning what would become and remain an essential part of the Uruguayan economy.

In 1493, the year after Columbus’s first landing, Pope Alexander VI divided the New World between Spain and Portugal. The region, although Spanish, was claimed by the Portuguese in Brazil. That factor would influence Uruguay’s history into the 19th century. Even now, there are many speakers of Brazilian Portuguese in Uruguay. In addition, Uruguay found itself dragged into the Napoleonic Wars. As the British were fighting against Spain—then one of Napoleon’s allies—they occupied the capital city of Montevideo in 1807 with 10,000 troops before moving on to Rio de Janeiro.

In 1816, Uruguay declared independence from Spain, and was then promptly invaded by Brazil. That occupation would last until 1825, and full independence, as the result of a deal brokered by the British, would come three years later. Through most of the 19th century, after its revolution and liberation from Spain, Uruguay was engaged in both internal and external conflicts. There was a 12-year civil war, a war with Paraguay in the 1860s, and small-scale border conflicts with Brazil.

Despite the political and military unrest, immigration, mostly from Spain, Italy, France, Germany, and Russia, resulted in a large population growth, accompanied by economic growth, largely based on its agricultural exports. Through the second half of the 19th century, the country’s standard of living was high, according to some sources, higher than in the United States. The government from the 19th century, well into the 20th century, focused on creating a welfare state. With a strong economy, Uruguay was able to do this with little difficulty until the middle of the 20th century. That level of support for social programs could not be sustained, however. As the century progressed, an increase in the country’s debt and the failure of the economy to keep pace with the requirements of a welfare state caused a decrease in services.

In common with many Latin American nations, Uruguay was, for a time (1973–85), under the rule of a military dictatorship. This era saw severe political repression and many Uruguayans emigrated. An estimated 600,000 left the country for Europe, the United States, Canada, and Australia. With the voluntary departure of the military, a civilian government came to power in early 1985. From that time until 2005, the governments were mainly dominated by the Red (Colorado) Party, a centrist-rightist party. Since 2005, in common with several South American governments, Uruguay has been governed by a leftist party, who won by a very narrow majority.

Economic Challenges

Economically, Uruguay is currently a very mixed picture with improvements over the past few years. There have been severe economic problems dating back to 1999, although the nation itself has a history of dependable industries, a very well-educated population (98 percent literacy rate), and an improving infrastructure. The economic problems, beginning in the late 1990s that were exacerbated by problems in neighboring Argentina, have decreased. Up until that time, the economy in the 1990s had been growing at a rate of 5 percent yearly. The problems Uruguay faced have been an indicator of the way in which Latin American economies affect each other. Argentina’s economic problems caused the withdrawal in 2002 of large amounts of Argentine funds that had been deposited in Uruguayan banks. The loss of this capital decreased the value of the Uruguayan peso. The decline of the Uruguayan economy at this was reflected in the nation’s gross domestic product (GDP) decreasing by 20 percent.

In 2004, the situation began to improve. Uruguay received assistance from the International Monetary Fund (IMF) and has succeeded in making repayments as well as adjusting its economy to follow IMF guide- lines. The peso is now stronger and prices for Uruguayan exports have risen. The estimated GDP for the country is $37.19 billion, with an inflation rate of 8.1 percent, and unemployment at 9.2 percent. Foreign investment, principally through the creation of a paper mill that began operations in 2007, has also occurred.

In the early 2000s, tourism was dramatically hurt, in large part as a result of the economic problems in neighboring Argentina. The tourist industry has begun to recover, however, with the government’s Ministry of Tourism emphasizing resorts such as Punta del Este as tourist destinations. Most of the tourists are currently from Chile, Brazil, and Argentina. Uruguay has, in large part because of its stability and low cost of living, become a destination for retiring Americans to live.


  1. Robert Jackson Alexander, A History of Organized Labor in Uruguay and Paraguay (Praeger, 2005);
  2. Charles D. Ameringer, The Socialist Impulse: Latin America in the Twentieth Century (University Press of Florida, 2009);
  3. Carlos Casacuberta and Nestor Gandelman, Protection, Openness, and Factor Adjustment: Evidence From the Manufacturing Sector in Uruguay (World Bank, Development Research Group, Trade Team, 2006);
  4. CIA, “Uruguay,” World Factbook, www.cia.gov (cited March 2009);
  5. Embassy of Uruguay, Economic and Commercial Department, www.uruwashi.org (cited March 2009);
  6. Fernando M. Gonçalves, The Optimal Level of Foreign Reserves in Financial Dollarized Economies: The Case of Uruguay (International Monetary Fund, Western Hemisphere Department, 2007);
  7. Marco Piñon et al., Macroeconomic Implications of Financial Dollarization: The Case of Uruguay (International Monetary Fund, 2008);
  8. Joel P. Trachtman and Chantal Thomas, Developing Countries in the WTO Legal System (Oxford University Press, 2009).

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