Paraguay, officially the Republic of Paraguay (Spanish: República del Paraguay; Guarani: Tetã Paraguái), is a landlocked country in central South America, bordered by Argentina to the south and southwest, Brazil to the east and northeast, and Bolivia to the northwest. Paraguay is located on both banks of the Paraguay River, which runs through the centre of the country from north to south. Because of its central location in South America, it is sometimes called the Corazón de Sudamérica (“Heart of South America”). Paraguay is one of two landlocked countries (the other being Bolivia) outside of Afro-Eurasia. Paraguay is the smallest landlocked country in the Americas.
The indigenous Guaraníes lived in Paraguay for at least a thousand years before the Spanish conquered the region in the 16th century. Spanish settlers and Jesuit missions brought Christianity and Spanish culture to the region. Paraguay was a peripheral colony of the Spanish Empire, with few urban centres and settlers. After its independence from Spain in 1811, Paraguay was ruled by a series of dictators who generally followed isolationist and protectionist policies.
After the disastrous Paraguayan War (1864-1870), the country lost 60-70% of its population to war and disease and about 140,000 square kilometres, or a quarter of its territory, to Argentina and Brazil.
In the 20th century, Paraguay experienced a series of authoritarian governments, culminating in the regime of Alfredo Stroessner, who led the longest military dictatorship in South America from 1954 to 1989. He was overthrown by an internal military coup, and free, multiparty elections were organised and held for the first time in 1993. A year later, Paraguay, together with Argentina, Brazil and Uruguay, founded Mercosur, a regional economic cooperation.
In 2009, the population of Paraguay was estimated at around 6.5 million, most of which is concentrated in the south-eastern region of the country. The capital and largest city is Asunción, which is home to almost one third of Paraguay’s population. Unlike most Latin American nations, Paraguay’s indigenous language and culture, Guaraní, remains very influential. In all censuses, residents overwhelmingly identify themselves as mestizo, reflecting years of intermingling between different ethnic groups. Guaraní is recognised as an official language along with Spanish, and both languages are widely spoken in the country.
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.