Economy and Industry in Paraguay

A farmer sitting on a pickup Paraguay is mainly an agricultural country. About 80 % of the useable land for agriculture is property of only 1 % of the population. Therefor large land holdings hold great yields for the benefit of a very small group of people. The land is cultivated or used as grassland for cattle breeding or dairy farming. The underground economy is very strong. All in all the economically level is extremely low in comparison with the global economy. The per capita income stagnates on the level of 1980. In the last 10 years the gross domestic product fell and the unemployment rate is 25 %. Social insurances are poorly developed. The (anyways quite small) middle class is constantly shrinking. Responsible for all these fatal developments are considered the following points:

unreliable politics
corruption
lack of reforms in structure
great national dept
lack of infrastructure

A good source of income for Paraguay at the moment is the second largest hydroelectric power plant in the world “Itaipú“. It is one of the modern Seven Wonders of the World and produces 99,88 % of all used electrical power in Paraguay. Energy surplus is sold to other countries (Brazil). In 1975 was the start of construction and in 1991 the last of 18 turbines was activated. The power plant and the reservoir is located at the border to Brasil. The embankment dam ponds the river Parana on an area of 1.350 km² and the dam is 7.760m long and 196m high. The turbines yield about 14.500 megawatt.

Cattle with calves. Cattle breeding is the main part of the Paraguayan agriculture, especially because of the constantly high request of south American beef. Besides of animal husbandry the land is used for plantation of corn, soy beans, wheat, peanuts, cotton and other crop. The most important export products are soy beans, wheat, and cotton.
Because of the great dimension of the country in relation to the population density and cheap the lot prices, farms and ranches (Estancias) often stretch over thousands of hectares. Areas which are for Europeans of incredible size. Cheap manpower allows a lucrative cultivation of land.

Since years the industrial sector (leather/textiles) and its agriculture and forestry has been regressive. The Mennonites with their systematical agricultural production represent a great part of this sector. With about 15.000 people they form a small ethnic minority in the country.
About 100 years ago they immigrated to Paraguay because religious persecution, after they tried their luck in Prussia and Russia. The “Gran Chaco” (north of the country) now is their homeland. In their colonies called “Fernheim”, “Neuland”, or “Menno” they live in village communities as their ancestor did about 200 years ago in Russia.

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