Paraguay, formally the Republic of Paraguay (Spanish: Repblica del Paraguay; Guarani: Tet Paraguái), is a landlocked nation in central South America. It is bounded on the south and southwest by Argentina, on the east and northeast by Brazil, and on the northwest by Bolivia. Paraguay is located on both sides of the Paraguay River, which flows north to south across the nation. Due to its central position in South America, it is sometimes referred to as the South American Heart (“Heart of South America”). Paraguay is one of two landlocked nations outside of Afro-Eurasia (the other being Bolivia). Paraguay is the Americas’ smallest landlocked nation.
The indigenous Guaran had inhabited Paraguay for at least a millennium prior to the Spanish conquest in the 16th century. Christianity and Spanish culture were brought to the area through Spanish immigrants and Jesuit missions. Paraguay was a Spanish Empire territory on the outside, with few metropolitan centers and inhabitants. Following its independence from Spain in 1811, Paraguay was governed by a succession of dictators that mostly pursued isolationist and protectionist policies.
Following the catastrophic Paraguayan Conflict (1864–1870), the nation lost between 60% and 70% of its people to war and illness, as well as about 140,000 square kilometers (54,054 square miles), or almost one-quarter of its land, to Argentina and Brazil.
Throughout the twentieth century, Paraguay endured a series of authoritarian regimes, culminating in Alfredo Stroessner’s 1954–1989 military dictatorship. He was deposed in an internal military coup, and for the first time in 1993, open multi-party elections were arranged and conducted. A year later, Paraguay co-founded Mercosur with Argentina, Brazil, and Uruguay.
As of 2009, Paraguay’s population was projected to be about 6.5 million, with the majority residing in the country’s southeast area. Asunción, the capital and biggest city, is home to almost a third of Paraguay’s population. In contrast to the majority of Latin American countries, Paraguay’s indigenous language and culture, Guaran, continue to be very prominent. Residents identify primarily as mestizo in each census, indicating years of intermarriage between the various ethnic groups. Guaran, along with Spanish, is recognized as an official language in the nation, and both are extensively spoken.
With a total area of 406,752 km², Paraguay is divided by the Paraguay River into two well differentiated natural regions: the Eastern or Oriental region and the Western or Chaco region, each with its own fauna, flora and special characteristics.
Although Paraguay is a landlocked country, it is irrigated by numerous rivers, streams and lakes, all of which are part of the Rio de la Plata basin. The two most important rivers are the Río Paraguay, which divides the country in two, and the Río Paraná, which forms the border with the state of Paraná in Brazil and the provinces of Corrientes and Misiones in Argentina.
Overall, Paraguay is a fairly flat country; while its western neighbours, Argentina and Bolivia, have mountains above 6,000 metres, Paraguay’s highest point is Cerro Tres Kandú, at 842 metres.
The population of Paraguay is unevenly distributed across the country, with the vast majority of the population living in the eastern region, near the capital and largest city, Asunción, which accounts for 10% of the country’s population. Less than 2% of the population lives in the Gran Chaco region, which includes the departments of Alto Paraguay, Boquerón and Presidente Hayes and represents about 60% of the territory. About 56% of Paraguayans live in urban areas, making Paraguay one of the least urbanised countries in South America.
For most of its history, Paraguay has received immigrants due to its low population density, especially after the demographic collapse that resulted from the Paraguayan War. Small groups of people of Italian, German, Russian, Japanese, Korean, Chinese, Arab, Ukrainian, Polish, Jewish, Brazilian and Argentinean origin also settled in Paraguay. Many of these communities have retained their language and culture, especially the Brazilians, who are the largest and most prominent immigrant group, numbering about 400,000. Many Brazilian Paraguayans are of German, Italian and Polish origin. There are an estimated 63,000 Afro-Paraguayans, representing 1% of the population.
There is no official data on the ethnic composition of the Paraguayan population, as the Paraguayan Office of Statistics, Surveys and Censuses does not ask questions on race and ethnicity in the censuses, but does ask questions on the indigenous population. According to the 2002 census, indigenous people represented 1.7% of the total population of Paraguay.
Traditionally, the majority of the Paraguayan population is considered mixed (mestizo in Spanish). HLA-DRB1 polymorphism studies have shown that the genetic distances between Paraguayans and Spanish populations are closer than between Paraguayans and Guaranies. Overall, these results suggest the predominance of the Spanish genome in the Paraguayan population. According to the CIA World Factbook, Paraguay has a population of 6,669,086, of which 95% are mestizos (mixed Europeans and Amerindians) and 5% are designated as “others”, which includes members of indigenous tribal groups. They are divided into 17 different ethnolinguistic groups, many of which are poorly documented. Paraguay has one of the largest German communities in South America, with about 25,000 German-speaking Mennonites living in the Paraguayan Chaco. German settlers founded several towns such as Hohenau, Filadelfia, Neuland, Obligado and Nueva Germania. Several websites promoting German immigration to Paraguay state that 5-7% of the population is of German origin, including 150,000 people of German-Brazilian origin.
Christianity, especially Roman Catholicism, is the dominant religion in Paraguay. According to the 2002 census, 89.9% of the population is Catholic, 6.2% is evangelical Protestant, 1.1% identifies with other Christian sects and 0.6% practices indigenous religions. A US State Department report on religious freedom cites Roman Catholicism, Evangelical Protestantism, Traditional Protestantism, Judaism (Orthodox, Conservative and Reform), Mormonism and the Baha’i faith as important religious groups. It also mentions a large Muslim community in Alto Paraná (due to immigration from the Middle East, especially from Lebanon) and a large Mennonite community in Boquerón.
Paraguay’s macroeconomy has some unique characteristics. It is characterised by a historically low inflation rate – 5% on average (in 2013 the inflation rate was 3.7%), international reserves amounting to 20% of GDP, and a public external debt twice as high. In addition, the country benefits from 8,700 MW of clean, renewable energy production (current domestic demand is 2,300 MW).
Between 1970 and 2013, the country had the highest economic growth in South America, with an average rate of 7.2% per year.
In 2010 and 2013, Paraguay had the highest economic growth in South America, with GDP growth rates of 14.5% and 13.6%, respectively.
Paraguay is the world’s fourth largest producer of soybeans, second largest producer of stevia, second largest producer of tungsten oil, sixth largest exporter of maize, tenth largest exporter of wheat and eighth largest exporter of beef.
The market economy is characterised by a large informal sector that includes the re-export of imported consumer goods to neighbouring countries and the activities of thousands of micro-enterprises and urban street vendors. Nevertheless, the Paraguayan economy has diversified considerably over the past decade, with the energy, auto parts and clothing sectors being the most dynamic.
The country also has the third largest free trade zone in the world: Ciudad del Este, behind Miami and Hong Kong. A large part of the population, especially in rural areas, lives from agricultural activity, often on a subsistence basis. The large informal sector makes it difficult to obtain accurate economic data. The economy grew rapidly between 2003 and 2013, as increased global demand for commodities, combined with high prices and favourable weather conditions, supported the expansion of Paraguay’s commodity exports.
In 2012, the government of Paraguay introduced the MERCOSUR (FOCEM) system to stimulate the economy and job growth through a partnership with Brazil and Argentina.
Industry and manufacturing
Paraguay’s mineral industry generates about 25% of the country’s gross domestic product (GDP) and employs about 31% of the workforce. The production of cement, iron ore and steel is widespread in Paraguay’s industrial sector. Industrial growth has been driven by the maquiladora industry, with large industrial complexes located in the eastern part of the country. Paraguay has created many incentives to attract industries to the country. One of these is the “Maquila Law”, which allows companies to set up in Paraguay with minimal tax rates.
In the pharmaceutical sector, Paraguayan companies now cover 70% of domestic consumption and have started to export medicines. Paraguay is rapidly supplanting foreign suppliers to meet the country’s pharmaceutical needs. Strong growth has also been observed in the production of edible oils, clothing, organic sugar, meat processing and steel.
In 2003, manufacturing accounted for 13.6% of GDP and the sector employed about 11% of the working population in 2000. The main manufacturing sector in Paraguay is the food and beverage industry. Wood products, paper products, hides and furs and non-metallic minerals also contribute to the production figures. The steady growth of manufacturing GDP in the 1990s (1.2% per year) laid the groundwork for 2002 and 2003, when the annual growth rate rose to 2.5%.
According to various estimates, 30-50% of the population is poor. In rural areas, 41.20% of people do not have a monthly income to meet their basic needs, while in urban centres the figure is 27.6%. The richest 10% of the population have 43.8% of the national income, while the poorest 10% have 0.5%. The economic recession has exacerbated income inequality, particularly in rural areas, where the Gini coefficient rose from 0.56 in 1995 to 0.66 in 1999.
Recent data (2009) show that 35% of the Paraguayan population is poor, of which 19% live in extreme poverty. Moreover, 71% of them live in rural areas of the country.
Similarly, the concentration of rural land in Paraguay is one of the highest in the world: 10% of the population controls 66% of the land, while 30% of the rural population is landless. Immediately after the fall of Stroessner in 1989, by mid-1990, some 19,000 rural families occupied hundreds of thousands of hectares of unused land that had previously belonged to the dictator and his supporters, but many of the rural poor remained landless. This inequality led to great tension between the landless and the landowners.