The Prospective Role of a Paraguayan Agency for International Cooperation
by Prof. Marcelo Echague Pastore | Universidad Americana – Paraguay | Fulbright Visiting Scholar at Indiana State University (2023-2024)
Having missed a couple of “take-off” opportunities in the past, this small developing country located in the middle of South America has been able to sustain more than two decades of real economic growth so far (i.e. a yearly GDP expansion of 4% on average since 2003), based on solid macroeconomic foundations and a relatively stable political arena.
This has logically resulted in several socioeconomic gains for the Paraguayan population, including lower poverty levels (50% in 2002 Vs. 20% in 2024 according to official sources), inequality (income Gini coefficient of 0.57 in 2002 Vs. 0.44 in 2024) and unemployment rates (16.4% in 2002 Vs. 4.6% in 2024), as well as a larger industrial base, a more diversified production matrix, a wider spectrum of export destinations and larger capital inflows, in light of the investment grade status awarded by Moody’s Ratings in 2024 ꟷamong other positive outcomes.
In spite of the latter, some serious risks and challenges are still hindering Paraguay’s promising development path, making it plausible for the country to eventually fall into a middle-income trap. Widespread corruption (ranked #149 out of 180 countries in 2024 according to Transparency International), inefficient public entities, poor infrastructure, dismal education levels (ranked #80 out of 81 countries in 2023 by the Organization for Economic Cooperation and Development), low productivity and massive informality (62.5% of its labor force in 2024 according to official sources), are just some of the major obstacles that still need to be tackled in order to ensure a long-term socioeconomic development in Paraguay.
The field of international cooperation for development (ICD) then plays a fundamental role in this quest, by providing financial resources, technical assistance, training and other forms of external aid that are meant to improve living conditions within the country, both through public and private sectors. In practice however, poor government planning and weak project management capacities -as displayed by most Paraguayan institutions- have usually translated into inadequate articulation between stakeholders (e.g. miscoordination and inefficient overlaps are not uncommon), poor project execution, heavy overruns and delays, as well as loose monitoring/evaluation leading to project discontinuation in time.
A sound alternative to -at least- mitigate some of those flaws would then be the establishment of a national agency for international cooperation, as shown by other developing nations across the region. Countries such as Chile, Peru or Uruguay, have demonstrated non-minor improvements in terms of ICD by the sole creation of their own government-run agencies, as these are usually small independent, agile and highly technical entities centralizing all official development assistance (ODA) within a country. This of course leads to better results not only in terms of project management and coordination between parties, but also regarding projects allocation, larger ODA flows, broader cooperation schemes/instruments and stronger strategic alliances, among other substantial benefits.
Furthermore, Paraguay’s successful experience of growth during the last couple of decades has made it possible for the country to generate some very valuable knowledge and lessons, particularly in the macroeconomic and public policy fields, that would be suitable to share with other developing nations. The introduction of a Paraguayan Agency for Internacional Cooperation (APCI) would then boost the country’s efforts to position itself as a relevant player worldwide, by being able to officially -and significantly- provide ODA via South-South or triangular cooperation mechanisms, which could in turn leverage Paraguay’s own ODA demand vis-à-vis external donors, foreign cooperation agencies and multilateral organizations.
A comparative analysis of other agencies across the region suggests that a proper “blueprint” for the prospective APCI should essentially follow the Uruguayan model, since it’s also a small unitarian country like Paraguay (albeit more economically developed). Being created in 2010 with only USD 400.000 of budget, the Uruguayan Agency for International Cooperation (AUCI) is responsible for all ODA received and offered by Uruguay, in line with the country’s official development plans and policies. It has full technical autonomy and a communication channel with the Executive Branch via the President’s Office.
As of 2024, the staff included around 30 public servants distributed in technical departments, such as Multilateral Affairs, Programs & Projects, Bilateral Cooperation, South-South Cooperation, Scholarships, Innovation & Technology, etc. The entity was involved -directly or indirectly- in more than 700 ODA activities during the period 2021-2023, interacting with entities from almost 200 countries and supporting more than 180 Uruguayan institutions involved in such cooperations.
These broad facts clearly illustrate that a cooperation agency is not only necessary for supporting a country’s development process but can also be very cost-efficient if designed correctly from scratch. Paraguayan policy makers should therefore waste no time in sketching -and promoting- a solid structure of APCI that follows AUCI’s model, as it will contribute significantly to improve ODA impact within the country, while positioning Paraguay in the international sphere and mitigating the risk of falling in a middle-income trap.
