Within the framework of the Strategy on Development, the OECD launched the first Multi-dimensional Country Review (MDCR) in 2013, a new series that looks at economic development along the lines of inclusive growth, examining patterns of growth that are equitable, sustainable and improve the overall well-being of citizens. The series aims to identify key constraints to broad-based development, and to formulate appropriate policy recommendations accordingly.

In recent years, Uruguay has made remarkable progress in strengthening its macroeconomic management and implementing an ambitious agenda of social reforms. For over a decade, economic growth has been solid and the remnants of the economic crisis in the early 2000s have been mitigated. Stable macroeconomic policies and a favourable external environment have contributed to these accomplishments. Uruguay’s progress is also reflected in improvements across various dimensions of well-being. As one of the few high-income countries in Latin America, and with the lowest levels of poverty and income inequality on the continent, Uruguay currently benefits from above-average outcomes in areas such as life satisfaction, environmental quality, health, trust, perception of government and air quality. At the same time, there are impending challenges stemming from the country’s vulnerability to external shocks, its undiversified economic structure, and its limitations in the provision of human capital and infrastructure.

In recent years, Uruguay has made remarkable progress in strengthening its macroeconomic management and improving its people’s well-being. The recovery from the Argentinian and Uruguayan crisis in 2001-02 saw the country begin its most extended period of economic growth. For most of the 2001-10 decade, stable macroeconomic policies and the favourable external environment allowed for solid growth and counteracted the devastating effects of the crisis. This is reflected in improvements in different dimensions of well-being. The country’s achievements are remarkable both by regional and OECD standards. As one of the few high-income countries in Latin America, and with the lowest levels of poverty and income inequality on the continent, Uruguay scores highly in areas such as life satisfaction, environmental quality, health, trust, perception of government and air quality (). Nevertheless, some challenges remain, including unequal access to education (particularly secondary), youth unemployment and social exclusion.

Uruguay has consistently pursued an investor-friendly regime, making remarkable progress in attracting FDI and achieving sustained productivity growth. The uncertainty in regional markets, however, and the changing nature of global demand pose new challenges for its international integration strategy. This chapter outlines steps that Uruguay could take to harness new opportunities in global value chains (GVCs) and to diversify to markets with fast-growing economies, particularly Asia. Uruguay should continue to pursue efforts to position itself as an exporter of business services, for reduced sensitivity to distance to final markets and economic downturns. Its regulatory profile in domestic backbone services, however, remains relatively restrictive, hampering competitiveness and the ability to capture segments of GVCs. In addition, Uruguay could make better use of international trade and investment agreements by forging modern, behind-the-border disciplines. In this regard, the chapter provides some guidance on how to develop GVC-friendly Regional Trade Agreements. Given the widening remit of this “deep integration” agenda, institutional co-ordination could be improved to maximise the effectiveness of its policy efforts.

Uruguay has an infrastructure gap in the condition and management of its transport sector. In terms of planning, the country lacks a clear strategy, such as a National Transport Plan. Accordingly, project programming is difficult as there is no clear agreement on prioritisation. In terms of infrastructure delivery and operations, the country appears to be focusing on PPPs to close the gap. Due to prudential constraints, Uruguay needs first to adopt a holistic view on how its infrastructure sector should be planned and organised before considering private participation. Infrastructure projects developed as PPPs need to be aligned with a National Transport Plan. Also, the prioritisation and procurement decisions should be carried out by separate entities to avoid potential bias. Uruguay should enforce and strengthen the current regulations, avoiding off balance sheet PPP execution. Clearer regulations should be set for PPPs’ contract renegotiation. At present, PPPs should only be considered where there is a critical and clear present need.

Although Uruguay’s provision of basic education is strong, inequalities in the access to and quality of education, particularly within secondary schooling, remain a critical challenge. Currently, the insufficient provision of human capital and skills in Uruguay is considered one of the country’s main obstacles to growth and social inclusion. This chapter discusses these challenges and suggests measures to improve support both for the students, such as mechanisms to identify students in need of support and standardised examinations to allow for a better understanding of students’ needs, and also for the teaching profession, including measures to improve work-time flexibility, school leadership, autonomy and job-safety. Public higher education in Uruguay faces similar equity challenges, with access rates being in stark contrast to success rates. To improve overall performance, Uruguay should introduce greater autonomy to and mobility between higher education institutions, increase support for students and involve the private sector to provide students with a more technical, labour market-oriented training.