Identify structural problems in Uruguay. Did the MDG Agenda help to solve them?

Case study: Identify structural problems in Uruguay. Did the MDG Agenda help to solve them? Will the SDG Agenda help?

Identify structural problems in Uruguay. Did the MDG Agenda help to solve them?

Case study: Identify structural problems in Uruguay. Did the MDG Agenda help to solve them? Will the SDG Agenda help?

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Governments face increasingly complex challenges that defy single solutions. In many cases, what worked in the past may no longer suffice. To address this, UNDP is exploring emerging, integrated approaches that are better aligned with the development needs of governments and citizens.

In Uruguay, prompted by a major new foreign investment in the pulp industry, we’re working with the government to test this approach.

In July 2019, Uruguay and the Finnish multinational UPM signed a US$3.3 billion agreement to build a greenfield eucalyptus pulp mill near Paso de los Toros. Some investment will go toward upgrading a port facility and railway tracks, for which Uruguay has taken out a US$1 billion loan. Three forestry areas in northern Uruguay are also under development.

Depending on whom you ask — investors, activists, or government officials — you’ll find a range of views on the potential benefits of this investment. Some say it will increase economic output by 1.5 percent, raise the annual value of exports by roughly 12 percent as pulp overtakes beef and soybeans, and employ more than 6,000 people during construction. Others say it will produce only 400 new permanent jobs, damage the environment. Also, yield too few social and economic benefits to justify concessions to its private sector partner.

Inarguably, though, the UPM deal reinforces Uruguay’s longstanding economic model. Based on extractive, commodity-led growth, foreign direct investment, and the export of primary products. And that’s risky.

Addressing these challenges is a strategic bet for the government. As it seeks to create conditions for long-term development based on diversification, local knowledge, and sound environmental policies.

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