Economy

Paraguay is mainly a developing economy. Most of the country's workers are employed in agriculture and the service industries.

Services industries make up about 55 per cent of Paraguay's economy and 45 per cent of the country's work force. Many Paraguayans work for government agencies, restaurants, hotels, stores, health care facilities, banks, schools, communication, and transportation.

Agriculture and forestry employ another 45 per cent of the workforce, accounts for about 30 per cent of the gross domestic product, and provides more than 90 per cent of the country's exports. Large estates and ranches owned by relatively few Paraguayans account for roughly three-fourths of the agricultural land. The rest of the farming area provides a bare subsistence for the vast majority of the farmers, many of whom are squatters on the land. Except on the larger holdings, modern farm machinery and techniques are little used.

Most of the farm acreage is grazing land, used to raise beef cattle and other livestock. Only about 6 per cent of Paraguay's total area is cultivated land. Among the chief crops are cassava, sugarcane, corn, soybeans, bananas, cotton, wheat, rice, and beans. Cotton and soybeans are major exports.

In the mid-1970's more than half of Paraguay was forested. Since then, the forests have been rapidly depleted, mainly through commercial harvesting and clearing for agriculture. In the early 1990's only a third of the country remained forested. Government efforts to control the lumber industry have been largely unsuccessful, and deforestation continues to be a problem.

For many years manufacturing has been mainly in small plants producing processed foods, beverages, and common household and consumer goods. The development of more complex types of manufacturing is just beginning, aided by heavy investment and financial assistance from abroad. Foreign investment in Paraguay has been strongly encouraged by the government.

Of particular importance is the development of hydroelectric power, primarily in partnership with Brazil and Argentina. Itaipu Dam, a Brazilian-Paraguayan project on the Paraná River, has the largest generating capacity of any hydroelectric installation in the world.

Transportation is poorly developed in Paraguay. All-weather roads, which include a branch of the Pan American Highway and the Trans-Chaco Highway, connect the major cities. Few other roads are paved; most are dirt and gravel. Railway transportation is poorly developed; the only major trunk line is a railway between Asunción, the capital, and Encarnación. Much traffic moves on the Paraguay and Paraná rivers. Major ports include Asunción on the Paraguay River and Encarnación and Ciudad del Este on the Paraná. Air service, domestic and international, is largely through the air terminal at Asunción.

Paraguay's basic currency unit is the guaraní.