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The Uruguayan Experience with Liberalization and Stabilization, 1974-1981

Published online by Cambridge University Press:  02 January 2018

James Hanson
Affiliation:
World Bank, Washington, DC
Jaime de Melo
Affiliation:
World Bank, Washington, DC

Extract

After a period of economic stagnation that lasted from the late 1950s to the mid-1970s, Uruguayan economic growth took off. Between 1974 and 1981 real GDP growth averaged 3.8% per annum (p.a.) versus .7% p. a. between 1956 and 1974. Yet, in 1974 Uruguayan prospects appeared rather dismal—inflation was high and accelerating, the fiscal deficit amounted to 4.5% of GDP, international reserves were largely exhausted, the debt service ratio exceeded 40%, the terms of trade were falling as a result of the oil price rise, and the EEC had just cut off imports of Uruguayan beef. How Uruguay achieved a dramatic turnaround in the face of these poor initial conditions is an interesting case study in the role of stabilization cum liberalization programs.

Type
Research Article
Copyright
Copyright © University of Miami 1983

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