Uruguay has well-functioning democratic institutions and relatively little corruption. In 2021, Uruguay was ranked 18 out of 180 countries by Transparency International due to the low levels of perceived corruption.
Uruguay has a strong banking sector that adheres to the latest international financial-sector standards. It is strategically located in the region and politically and economically stable. The current administration maintains open trade policies and good macroeconomic policies. Elections took place in October 2019 and after 15 years the government changed from a center-left government to a center-right coalition led by the now President Luis Lacalle Pou. President Lacalle Pou leads the Partido Nacional political party which is known for relatively pro-market economic policies. The government is a coalition, including several other parties. In his first few months in office, President Lacalle Pou created incentives for the construction sector, clean energy, and research & development. One of Uruguay’s major competitive advantages are its beneficial trade regimes such as Free Port/Airport, Bonded Warehouses, and Free Trade Zones (FTZ). Uruguay’s proximity to larger markets gives the country the ability to serve as a regional distribution hub for both services and logistics. Products can enter Uruguay under these regimes without paying any tariffs or taxes and, in the case of FTZs, goods can undergo minor product transformation, packaging, and storage for an indefinite period prior to sale. These goods are only taxed once they depart the FTZ. The free trade regime has been in place for more than twenty years, and these zones are responsible for an estimated 30 percent of total exports annually. Importantly, Uruguay’s FTZ regime has spanned both left and right-leaning governments and both sides of the political spectrum consider Uruguay’s relative stability and FTZ regime a strategic advantage in the region.