Uruguay: Investing in Uruguay
According to UNCTAD's World Investment Report 2023, inflows of FDI to Uruguay reached USD 3.8 billion in 2022, compared with USD 2.2 billion one year earlier, the second-highest level after 2013. At the end of the same period, the total stock of FDI was estimated at USD 36.1 billion, around 50.3% of the country’s GDP. According to data from the Central Bank, the main investing countries are Spain (20% of the total stock), Argentina (14.2%), Switzerland (11.8%), Singapore (6.7%), Chile (5.4%), and Brazil (4.8%). In terms of sectors, the ones receiving the majority of the stock are financial and insurance activities (27.8%), manufacturing (25.8%), wholesale and retail trade (13.6%), real estate (13.2%), and agriculture (12.2%). Official governmental figures show that in the period January-September 2023, FDI to Uruguay increased to USD 4.1 billion, compared to USD 2.2 billion in the same period one year earlier.
Uruguay appeals to foreign investors because of its favorable investment environment, primarily driven by its adherence to the rule of law, minimal political risk, stable macroeconomic conditions, advantageous geographical positioning, and enticing investment incentives. Foreign investors enjoy the same rights and fiscal incentives as local investors. FDI is free from any restrictions and is not subject to any declaration. Moreover, there is no limit regarding the transfer of profits or the repatriation of capital. Uruguay is a member of MIGA, the Multilateral Investment Guarantee Agency of the World Bank.
Uruguay is keen on attracting FDI and has an investment promotion agency, Uruguay XXI. Uruguay is a regional hub with a strategic location to access the rest of the region. Also, as a member of Mercosur and having free trade agreements with other Latin American countries, Uruguay provides access to a market of more than 400 million people. Other strengths of Uruguay include the highest literacy rate in Latin America (98% of the population) and modern infrastructure. However, there are also some challenges, such as limited flexibility in setting wages, strict hiring and firing practices, a small population, and vulnerability to the economic situation of its neighbors - mainly Brazil and Argentina. Uruguay ranks 63rd among the 132 economies on the Global Innovation Index 2023 and 27th out of 184 countries on the latest Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | 753 | 2,241 | 3,839 |
FDI Stock (million USD) | 30,439 | 31,084 | 36,183 |
Number of Greenfield Investments* | 16 | 22 | 25 |
Value of Greenfield Investments (million USD) | 156 | 1,131 | 934 |
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Uruguay | Latin America & Caribbean | United States | Germany |
Index of Transaction Transparency* | 3.0 | 4.1 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 4.0 | 5.2 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 8.0 | 6.7 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
The main assets of Uruguay are:
The main weak points of the country are:
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Latest Update: November 2024