Historical review of the introduction of the agro-export economic model to Paraguay

Abstract

In this paper, we outline the historical development of the current economic model in Paraguay. Through a bibliographic review, we identify in the last decades of the nineteenth century the grounds that were laid for a system based on agro-exports, coupled with a strong foreign presence, which has characterized Paraguay until today. We observe also that Paraguay’s limited economic diversification has been buffered by periods of favorable international conditions that helped maintain the country’s macro-economic balance, such as the trading prices of its main export commodities and the building of hydro-electric dams with Argentina and Brazil, which have been important sources of income since the 1970s. However, the lack of strategic planning aimed at promoting greater productive independence with the potential for wealth redistribution can be perceived in the persistent weakness of the State. Based on this analysis, we argue that the Paraguayan current economic system is linked to special interests groups with considerable political influence, which makes it unlikely that government-led changes will be seen in the foreseeable future.