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Multi-dimensional Review of Uruguay

Volume 1: Initial Assessment

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Uruguay has made remarkable progress over the past decade. Stable macroeconomic policies and a favourable external environment have permitted brisk growth and the financing of social policies. Substantial improvements in several dimensions of human well-being have occurred during this period, alongside considerable reductions in external risks. The conditions ahead, however, may present challenges to maintaining performance. Overcoming these challenges will require finding the appropriate balance between long run objectives and macroeconomic and fiscal stability.

One of the main obstacles to economic growth is the insufficient and inadequate provision of human capital and skills. A number of challenges remain for education, which, together with fiscal policy, are key means of reducing inequalities and sustaining economic growth. In addition, Uruguay needs to address labour shortages to avoid constraints on future growth, especially as exports become more skills-intensive. It is important to orient social policies and expenditures towards the most vulnerable groups.

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Inequalities in Uruguay

OECD Development Centre

Economic growth and recent reforms have reduced poverty and inequality in Uruguay, overcoming the effects of recent economic crises. Despite these improvements, inequalities remain high in several areas. Ex-ante income inequality, one of the lowest in Latin America, is persistent and calls for more effective targeting of policies towards disadvantaged groups. Overall, education quality and access have underperformed in recent years. Disparity in access to and quality of education is a fundamental challenge, particularly in secondary education. Labour markets have performed well, however unemployment remains a problem among youth. Wage differentials by educational attainment have tumbled, due to a re-composition of household incomes. In terms of expenditure, the rise in per capita income and the growing middle class will lead to greater demand for social transfers and higher medical expenses.

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