Losing Ground in the Employment Challenge - The Case of Paraguay

Most developing countries face significant and sometimes dramatic challenges in generating stable jobs that provide reasonable incomes and decent working conditions. For developing countries that have undergone lengthy periods of economic stagnation, these challenges are especially acute, and popular dissatisfaction correspondingly marked.Paraguay is a case in point. It is unlikely that any "employment policy" could lead to a major improvement in the quality of labor market outcomes unless designed and implemented in a sophisticated and coherent way. Such an approach has been infrequent in developing countries in general, and especially so in those that, like Paraguay, also suffer severe institutional weaknesses of governance. Paraguay's past failure in employment creation is mainly the result of a number of structural weaknesses described in this volume. Its current crisis is also the accumulated legacy of over a quarter century of economic stagnation and political failure fl owing from those weaknesses. The new reformist administration of President Fernando Lugo has raised hopes that the future might be better than the past.This study aims to contribute to improved policy making by analyzing the source of the problems and providing policy recommendations. The chapters describe the potential contribution of various policy areas in the face of a dauntingly negative track record and identify a number of steps that have to be taken if success is to be achieved. They put into perspective the reforms that have been undertaken to date by the country's previous administration.Paraguay's experience offers insight into the problems faced by other developing countries in today's global economy. The central message is that policy improvements must be made in a number of areas and implemented in a coordinated fashion for there to be any reasonable hope of success.Table of ContentIllustrationsList of ContributorsAcknowledgmentsIntroduction -Albert Berry1 Elements of an Employment Strategy for Paraguay -Albert Berry2 Labor Market Functioning in Paraguay -Guillermo Garcia-Huidobro3 The Role of Agriculture -Albert Berry4 Farm Size-Productivity Relationships in Paraguay's Agricultural Sector -Ricardo Toledo5 Potential and Future of Paraguayan Family Farming -Luis A. Galeano6 Industry and MSMEs in Paraguay: Their Potential for the Creation of Remunerative Employment -Albert Berry7 Patterns of Productivity Enhancement in Small and Medium Enterprises: "Higher-Order" Upgrading -Nichola Lowe8 Growth and Technological Modernization -Jorge Katz, Melissa Birch, and Nimia Torres9 The Challenge to the Educational and Training System in Paraguay -Ernesto Schiefelbein10 Macroeconomic Policy -Albert Berry and Dionisio Borda11 The Role of International Trade in Growth and Employment Generation in Paraguay -Fernando Masi and Francisco Ruiz Diaz12 Paraguay's Financial System and Employment Creation -Albert Berry with Jorge Schreiner13 Political Economy of Policymaking in Paraguay -Andrew Nickson14 Recent Reforms: Results and Challenges -Dionisio Borda15 Recommendations -Albert BerryIndex