Paraguay

This paper studies the potential drivers of governments’ approval rates in 18 Latin American countries using Internet search query data from Google Trends and traditional data sources. It employs monthly panel data between January 2006 and December 2015. The analysis tests several specifications including traditional explanatory variables of governments’ approval rates – i.e. inflation, unemployment rate, GDP growth, output gap – and subjective explanatory variables – e.g. perception of corruption and insecurity. For the latter, it uses Internet search query data to proxy citizens’ main social concerns, which are expected to drive governments’ approval rates. The results show that the perception of corruption and insecurity, and complaints about public services have a statistically significant association with governments’ approval rates. This paper also discusses the potential of Internet search query data as a tool for policy makers to understand better citizens’ perceptions, since it provides highly anonymous and high-frequency series in real-time.

Paraguay is endowed with vast natural wealth in terms of biodiversity, energy, water sources and fertile land. This chapter examines the country’s performance in environmental outcomes as well as their impact on citizens’ well-being. Paraguay performs well in several environmental indicators, given its clean energy mix, low air pollution, and low greenhouse gas and carbon emissions. However, Paraguay’s territorial and development model is gradually increasing environmental pressure. Access to clean water, electricity and waste management are still not available for a large part of the population. Deforestation, explained by the current expansion of the agriculture and livestock sectors, remains one of the most urgent areas for environmental sustainability. Paraguay also faces challenges in land management and administration, which is linked to the concentration of land ownership and the rural-to-urban migratory flows. The chapter analyses the main constraints in Paraguay’s institutional framework and the capabilities to address these challenges in the future.

To sustain and further improvements in living standards and well-being, Paraguay will need to review its social protection policies and transform them into a coherent system for all. This chapter analyses social protection in Paraguay and provides policy recommendations to foster coherence, equity and an integrated system. Social protection is split along the line of informality, leaving parts of society unprotected. Formal dependent workers are covered by social security, whose fragmentation results in unequitable provisions. The high degree of self-employment limits the reach of social security, while informality and evasion further reduce its coverage. Means-tested social assistance needs to be better targeted and scaled up to fully address the needs of the population not covered by social security. Key bottlenecks to expand social protection to the whole population are its governance, insufficient financial resources for social assistance and the inclusion of independent workers into social security. Independent workers’ low and unstable incomes, as well as the system’s design itself are barriers to the inclusion of independent workers.

This chapter first analyses Paraguay’s macroeconomic performance, looking into the drivers of recent economic growth as well as recent developments in economic and trade diversification. Second, the inflation-targeting regime and the fiscal framework are discussed. Third, the chapter examines the levels of both capital and public investment, discussing some of the main challenges regarding budget management and execution, particularly for infrastructure investment projects and as investment contribution to growth. Finally, it looks into remaining challenges faced by Paraguay to further boost productivity and competition such as innovation, skills mismatch, infrastructure and the institutional framework.

Paraguay has made substantial progress in various dimensions of its education system in recent years as highlighted in Volume I of the Multidimensional Review of Paraguay. However, major challenges remain and reforms are unfinished. Access to the education system has expanded markedly, but is still a challenge in pre-primary and secondary education and for some socioeconomic groups. Schooling has improved, but learning outcomes are poor. And the relevance of the education and skills provided by the system is questionable, as illustrated by the problematic transition from school to work, with many young people leaving the education system too early to enter inactivity or informality. This chapter analyses these challenges in depth, and provides recommendations to improve the education and skills system in Paraguay in order to foster inclusiveness and employability.