Brief Overview

In the disastrous War of the Triple Alliance (1865-70), Paraguay lost two-thirds of all adult males and much of its territory. It stagnated economically for the next half century. In the Chaco War of 1932-35, large, economically important areas were won from Bolivia. The 35-year military dictatorship of Alfredo Stroessner was overthrown in 1989, and, despite a marked increase in political infighting in recent years, relatively free and regular presidential elections have been held since then.

Economy

Paraguay has a predominantly agricultural economy, with a thriving commercial sector. There is a large subsistence sector (including sizable urban underemployment) and a larger underground re-export sector. The country has vast hydroelectric potential (including the world's largest hydroelectric generation facility at the Itaipu Dam), but lacks significant mineral or petroleum resources. The government welcomes and provides national treatment to foreign investors and businesses.

The economy-dependent on exports of soybeans, cotton, cattle, and timber; on electricity generation; and on the lucrative business of re-exporting products made elsewhere-is vulnerable to the vagaries of weather and to the fortunes of the Argentine and Brazilian economies.

Paraguay's population is distributed unevenly throughout the country. The vast majority of the people live in the eastern region, most within 160 kilometers (100 mi.) of Asuncion, the capital and largest city. The Chaco, which accounts for about 60% of the territory, is home to less than 2% of the population.

Ethnically, culturally, and socially, Paraguay has one of the most homogeneous populations in South America. About 95% of the people are of mixed Spanish and Guarani Indian descent. Little trace is left of the original Guarani culture except the language, which is understood by 90% of the population. About 75% of all Paraguayans speak Spanish. Guarani and Spanish are official languages. Germans, Japanese, Koreans, Brazilians, and Argentines have settled in Paraguay.