International integration, investment and services in Uruguay

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.