Losing Ground in the Employment Challenge: The Case of Paraguay

Most developing countries face significant and sometimesdramatic challenges in generating stable jobs that providereasonable incomes and decent working conditions. For developingcountries that have undergone lengthy periods ofeconomic stagnation, these challenges are especially acute,and popular dissatisfaction correspondingly marked.Paraguay is a case in point. It is unlikely that any employmentpolicy” could lead to a major improvement inthe quality of labor market outcomes unless designed andimplemented in a sophisticated and coherent way. Suchan approach has been infrequent in developing countriesin 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 theresult of a number of structural weaknesses described in thisvolume. Its current crisis is also the accumulated legacy ofover a quarter century of economic stagnation and politicalfailure fl owing from those weaknesses. The new reformistadministration of President Fernando Lugo has raisedhopes that the future might be better than the past.This study aims to contribute to improved policy makingby analyzing the source of the problems and providingpolicy recommendations. The chapters describe the potentialcontribution of various policy areas in the face of adauntingly negative track record and identify a number ofsteps that have to be taken if success is to be achieved. Theyput into perspective the reforms that have been undertakento date by the country’s previous administration.Paraguay’s experience offers insight into the problemsfaced by other developing countries in today’s global economy.The central message is that policy improvements must bemade in a number of areas and implemented in a coordinatedfashion for there to be any reasonable hope of success.