Overview: Meeting Paraguay’s development ambition

224 Pages·2018·7.67 MB·English

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Paraguay has achieved strong and resilient growth and made progress across a range of development
outcomes since it emerged from a prolonged period of economic and political instability in the early 2000s.
In 2014, the country adopted its fi rst National Development Plan, setting course towards an ambitious vision
of the country’s future. To maintain the pace of economic growth and achieve more inclusive development
Paraguay will need to overcome a number of institutional, economic and social constraints that challenge its M
development model. This fi rst volume of the Multi-dimensional Review of Paraguay analyses the country’s u
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development performance and presents the main constraints to the country’s development. It examines fi ve t
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broad areas, corresponding to the key areas of the Sustainable Development Goals: prosperity, people’s d
well-being, planet, peace and institutions, and partnerships and fi nancing. imen LIFE EVALUATION CONSUMPTION POSSIBILITIES Y
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Consult this publication on line at http://dx.doi.org/10.1787/9789264301900-en ENT HEALTH ENVIRON P
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OECD Development Pathways
Multi-dimensional
Review of Paraguay
VOLUME 1. INITIAL ASSESSMENT
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Please cite this publication as:
OECD (2018), Multi-dimensional Review of Paraguay: Volume 1. Initial Assessment, OECD
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FOREWORD
Foreword
E
conomic growth matters, but is just one facet of development. Policy makers need to reconcile
economic, social, and environmental objectives to ensure that their country’s development path is
sustainable and leads to durable improvements in citizens’ well-being.
OECD Development Pathways is a series that looks at development from the perspective of
the multiple objectives it involves, beyond an exclusive focus on growth. It recognises well-being
as part and parcel of development and helps governments identify the main constraints to more
equitable and sustainable development by undertaking a multi-dimensional country review (MDCR).
To meet their development ambition, governments need to understand the constraints they face and
development comprehensive and well-sequenced strategies that take into account complementarities
and trade-offs across policies. The MDCR methodology combines quantitative economic analysis,
qualitative approaches including foresight, and participatory workshops that involve actors from the
private and public sectors, civil society and academia.
MDCRs are carried out in three distinct phases: initial assessment, in-depth analysis and
recommendations, and from analysis to action. This approach allows for progressively deeper
interaction between the OECD and the country and a mutual learning process about the country’s
specific challenges and opportunities. The Mutual Learning Group for Multi-dimensional Country
Reviews gathers policy makers in development strategy from countries undertaking MDCRs
and members of the OECD Development Centre to support the exchange of experience on shared
development challenges.
Paraguay has embarked in a process to strengthen its ties with the OECD. This contributes to one
of the three axes of its national development plan, which aims to enhance the inclusion of Paraguay
in the global economy. Paraguay became a member of the OECD Development Centre in March 2016
and the Global Forum on Transparency and Exchange of Information for Tax Purposes in June 2016.
As part of this whole-of-government effort, Paraguay is also implementing two OECD reviews –
a Multi-dimensional Country Review and a Public Governance Review – and examining its national
legislation and practices in light of OECD standards.
This report is the first volume of the MDCR of Paraguay. It delivers an overarching assessment of
development in Paraguay and identifies the main constraints to sustainable and equitable development.
The report is organised around the five pillars of the Sustainable Development Goals (Prosperity, People,
Planet, Peace and Institutions and Partnerships). This reflects the ongoing effort to align OECD tools
to the SDGs. It is also a reflection of the relevance of the SDGs for Paraguay. Paraguay’s own National
Development Plan is largely in line with the SDGs.
This report was approved for publication in November 2017 and uses the latest available data
at the time of writing.
MULTI-DIMENSIONAL REVIEW OF PARAGUAY: VOLUME 1. INITIAL ASSESSMENT © OECD 2018 3
ACkNOWLEDGEMENTS
Acknowledgements
M
ulti-dimensional Country Reviews are the result of a collaborative effort of the OECD
and the country under review. Work on the first phase of the MDCR of Paraguay was carried
out jointly by the OECD Development Centre, the OECD Economics Department and the
OECD Statistics Directorate, with support from the Technical Secretariat for Economic and
Social Development Planning of Paraguay (Secretaría Técnica de Planificación del Desarrollo
Económico y Social, STP).
Mario Pezzini, Director of the OECD Development and Special Counsellor to the Secretary-
General on Development, guided the review, with contributions from Martine Durand, OECD
Chief Statistician and Catherine Mann, OECD Chief Economist. The Multi-dimensional Country
Review process is led by Jan Rieländer, Head of the MDCR Unit. Marco Mira d’Ercole, Head
of Household Statistics and Progress Measurement in the OECD Statistics Directorate, and
Patrick Lenain, Assistant Director at the OECD Economics Department, provided supervision.
The review was co-ordinated by Juan Ramón de Laiglesia (OECD Development Centre)
and drafted by Rolando Avendaño (OECD Development Centre), Tim Bulman (OECD
Development Centre), Mabel Gabriel (OECD Economics Department), Santiago González
(OECD Statistics Directorate), and Juan R. de Laiglesia (OECD Development Centre). Deirdre
Culley (OECD Development Centre) managed the workshop “Paraguay: Future, challenges
and global environment” held in Asunción on 23 March 2017 and provided significant inputs
to the report. The review also benefited from contributions made by Juan Carlos Benítez
(Inter-American Development Bank), Céline Colin (OECD Development Centre), Adrien Moutel
(OECD Economics Department), Carine Viac (OECD Development Centre), and koffi Zougbede
(PARIS21, OECD Statistics Directorate). William Herrera (OECD Development Centre), Toma
Savitki (OECD Development Centre) and Astrid Pineda (OECD Development Centre) provided
excellent research assistance.
The team is grateful for insightful comments provided by Martha Baxter (OECD
Development Centre), Jorge Carbonell (OECD Global Relations Secretariat), David Goessmann
(OECD Governance Directorate), José Rene Orozco (OECD Development Centre) and katherine
Scrivens (OECD Statistics Directorate) as well as by participants in the revision sessions held
on 4 and 5 July in Asunción. The report incorporates remarks made during the review of the
report by the Mutual Learning Group for Multi-dimensional Country Reviews on its meeting
held 24 October 2017. The review was led by Marcelo Scaglione (Undersecretary of State
and representative to the OECD, Argentina) and Paulo Areosa Feio (Counsellor, Portuguese
delegation to the OECD). The team is also grateful for boxes and contributions from OECD
colleagues, including Catalina Covacevich (Education and Skills Directorate).
The Multi-dimensional Country Review of Paraguay is made possible by the financial
contribution of the European Union. The team extends its gratitude to the Delegation of the
European Union to Paraguay for its support throughout the process and the insights of its
staff into the development of Paraguay.
4 MULTI-DIMENSIONAL REVIEW OF PARAGUAY: VOLUME 1. INITIAL ASSESSMENT © OECD 2018
ACkNOWLEDGEMENTS
The Review benefited greatly from the support of Minister José Molinas Vega, Executive
Secretary of the Technical Secretariat for Economic and Social Development Planning (STP) of
Paraguay, and his staff. Emiliano Fernández (Deputy Minister of the STP) and his team have
been valuable counterparts throughout the process. The contributions of Claudia Martínez,
Marcos Martínez, and Federico Sosa were particularly valuable for ensuring the pertinence of
the report and continuous interaction between the OECD team and Paraguayan authorities.
The team is also grateful to Florencia Villalba, Director for Territorial Development, for her
efforts to acquaint them with the regions of Paraguay, and to Carlos Alberto Giménez, mayor
of Carayaó, and Carlos Giménez, mayor of Choré, for their hospitality. The team extends its
gratitude to the Directorate-General for Surveys, Censuses and Statistics (DGEEC), and to
Elizabeth Barrios, Director-general of DGEEC and her staff for providing primary data used in
this report and completing the questionnaire used for the assessment of statistical capacity,
and to the Central Bank of Paraguay for providing data and information on their statistical
practices. Other ministries and institutions provided useful inputs and contributions to the
review throughout the production of this report, namely the Ministry of Finance, its State
Secretariat for Tax Administration, its Under-Secretariat for Economy and their staff, the
Ministry of Agriculture, the Ministry of Education and Culture, the Ministry of Foreign Affairs,
the Ministry for Health and Social Well-Being (MSPBS), the Ministry of Industry and Commerce,
the Ministry of Justice, the Ministry of Labour, Employment and Social Security (MTESS),
the Ministry of Public Works (MOPC), the Ministry for Women, the National Anti-Corruption
Secretariat (SENAC), the National Council for Science and Technology (CONACYT), the
National Competition Council (CNC), the National Development Bank (BNF), the National
Directorate for Public Procurement (DNCP), the National Electrical Administration (ANDE),
the National Land and Rural Development Institute (INDERT), the National Secretariat for
Tourism (SENATUR), the National Secretariat for Youth and Adolescence (SNNA), the National
Securities Commission (CNV), the Secretariat for the Environment (SEAM), the Secretariat
for Housing (SENAVITAT), the Secretariat for Public Administration (SFP), the Secretariat for
Social Action (SAS), and the Social Security Institute (IPS).
Other institutions, agencies, international organisations and members of civil society
and academia also provided support though inputs and discussion on the review. The
National Country Strategy Team (ENEP), its co-ordinator, Jacinto Santa María, and its members
are thanked for their inputs and participation in the participatory process of the review. The
review also received valuable insights from the Association of Paraguayan Banks (ASOBAN),
the Association of Small and Medium Enterprises (AMPYME), the Chamber of Paraguayan
Exporters (CAPEX), the Center for Analysis and Diffusion of the Paraguayan Economy (CADEP),
Continental, Gladys Banegas, Investor, Itaú Bank, Martha La Fuente, the National Chamber
of Commerce and Services (CNCSP), the National Workers Confederation (CNT), Oxfam, the
Paraguayan Centre for Information and Resources (CIRD) and the Paraguayan Industrial
Union (UIP), the Corporación Andina de Fomento (CAF), the Inter-American Development
Bank, the International Monetary Fund, the United Nations Development Programme, USAID,
and the World Bank.
The team is grateful for Stephen Jessel for editing the manuscript and to the
OECD Development Centre’s Communications and Publications Unit, especially Delphine
Grandrieux, Aida Buendía, Elizabeth Nash and Vanda Lintott, for their support in editing,
laying out and producing the report. 
* This publication was produced with the financial support of the European Union. Its contents are the sole
responsibility of the OECD Development Centre and do not necessarily reflect the views of the European Union.
MULTI-DIMENSIONAL REVIEW OF PARAGUAY: VOLUME 1. INITIAL ASSESSMENT © OECD 2018 5

TABLE OF CONTENTS
Table of contents
Abbreviations and acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Editorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Facts and figures of Paraguay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Chapter 1. Overview: Meeting Paraguay’s development ambition. . . . . . . . . . . . . . . . . 29
Paraguay’s recent development performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Paraguay’s development ambition: The National Development Plan . . . . . . . . . . . . 34
The MDCR assists Paraguay in meeting its development goals . . . . . . . . . . . . . . . . . 35
How’s life in Paraguay? An overview of the OECD well-being framework. . . . . . . . . 37
Assessment and key constraints to development in Paraguay. . . . . . . . . . . . . . . . . . 43
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Annex 1.A1. Stories from a successful Paraguay in 2030 . . . . . . . . . . . . . . . . . . . . . . 54
Chapter 2. Towards shared prosperity in Paraguay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Paraguay’s macroeconomic performance has been robust but is highly
dependent on a few agricultural products and trading partners. . . . . . . . . . . . . . . . 58
The fiscal framework is sound but tax collection and capital investment should
be improved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Efforts to further expand public investment should be strengthened . . . . . . . . . . . 75
Sustaining development and long-term growth would require strengthening
productivity and competitiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Chapter 3. People: Improving citizen well-being in Paraguay. . . . . . . . . . . . . . . . . . . . . 101
Paraguay’s growth performance has led to improvements in incomes
but inequality remains large . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Employment and labour outcomes: The challenge of informality
and job quality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Education outcomes have improved but reforms are unfinished . . . . . . . . . . . . . . . 120
The social protection system is highly fragmented and limits the efficiency
of social service delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
MULTI-DIMENSIONAL REVIEW OF PARAGUAY: VOLUME 1. INITIAL ASSESSMENT © OECD 2018 7
TABLE OF CONTENTS
Chapter 4. Towards sustainable environment in Paraguay. . . . . . . . . . . . . . . . . . . . . . . 139
The move from the countryside: Recent trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Main environmental outcomes in Paraguay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Environmental capabilities in Paraguay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Chapter 5. Paving the way to sustainable development, peace, justice and strong
institutions in Paraguay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Government capacity in Paraguay is comparatively limited. . . . . . . . . . . . . . . . . . . . 168
Developing strong institutions is key for achieving sustainable development . . . . 169
Paraguay has advanced towards the development of a comprehensive and
coherent integrity system, ensuring its effectiveness remains a big challenge. . . . 178
To fully reap the benefits of open government it is required to pro-actively
support citizen engagement and the re-use of public information. . . . . . . . . . . . . . 182
Bringing people on board is essential for spreading out the benefits
of development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
More and better statistical evidence is required to inform the development
of policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Chapter 6. Partnerships: Resourcing Paraguay’s development agenda . . . . . . . . . . . . 195
Paraguay’s financial flows are low compared to those of benchmark
economies and they are below those of OECD economies . . . . . . . . . . . . . . . . . . . . . 196
Public financing flows suggest there is room to improve the level
and composition of the taxation system. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
Private financing flows are still low, but start to consolidate in the form
of external investment and a sound financial sector. . . . . . . . . . . . . . . . . . . . . . . . . . 205
The financial system should be further developed and become
more inclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Tables
1.1. key constraints to development in Paraguay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2.1. Capital expenditure multipliers are substantially higher than those
of current expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
2.2. kilometres of asphalted roads are relatively low . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.1. Many complaints are submitted but few investigations are opened. . . . . . . . . . 180
Figures
1.1. GDP and GDP per capita growth in Paraguay (1960-2016) . . . . . . . . . . . . . . . . . . . 31
1.2. Public expenditure classified as social in Paraguay (2003-16). . . . . . . . . . . . . . . . 32
1.3. Rural and urban population in Paraguay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
1.4. OECD well-being framework for developing countries . . . . . . . . . . . . . . . . . . . . . 38
8 MULTI-DIMENSIONAL REVIEW OF PARAGUAY: VOLUME 1. INITIAL ASSESSMENT © OECD 2018