‘Paraguayan industry has shown its capability, but needs better conditions to take off.’

That’s how Enrique Duarte, president of the Paraguayan Industrial Union (UIP, by its Spanish initials), describes the situation of his country’s manufacturing sector.

With macroeconomic stability, abundant resources and logistical advantages, Paraguay presents itself as a platform with potential to participate in global value chains, according to Duarte. The challenge is in transforming that platform into a diversified, modern, and competitive industry.

Unlike regional neighbors such as Argentina and Brazil, which went through significant cycles of industrial development in the twentieth century, historical and economic circumstances meant that Paraguay’s industry did not begin to develop until the start of the new millennium. For that reason, the process is often described as “incipient.”

Industrial development has been growing at an average of 3% over the last decade, according to Duarte. However, that growth has been hampered by ongoing structural challenges such as a lack of appropriate industrial credit, high levels of informality, and logistical shortcomings.

This industrial process may have come late, but the sector has great expectations. This follows efforts over the last two decades to stabilize the macroeconomy and promote the country internationally, as well as policy coordination between the public and private sectors.

“There was no miracle in the Paraguayan economy. It’s a process that was respected. It was something that took a lot of sacrifice,” Duarte told the Herald.

The 21st century got off to a tumultuous start in Paraguay, with a selective default on public debt and a wave of banking collapses that led to high levels of poverty and the economic exclusion of much of the population. Yet over the last two decades, Paraguay has been consolidating a significant period of macroeconomic stability.

Without further turmoil, the country has laid the foundations for an attractive investment climate, via policies such as an inflation goal scheme, an independent central bank, and (since 2013) a fiscal rule that has limited the public budget deficit to 1.5% of........

© Buenos Aires Herald