Uruguay's Minister of Economy and Finance, Gabriel Oddone, has repeated a phrase ad nauseam that sounds like an unappealable verdict: "Uruguay is going to remain an expensive country, it's not going to become a cheap country overnight, among other things because it's not a desirable objective." With an air of resignation that seems more like dogma than analysis, Oddone tries to sell us the idea that being a small country is equivalent to being condemned to high prices, as if geography were an immutable economic curse. However, this statement, delivered with the solemnity of someone who believes he holds the absolute truth, doesn't withstand serious analysis based on data or sound economic principles. It's time to dismantle this myth with facts, logic, and a bit of common sense—and, in the process, unmask this narrative that reeks of an excuse for not doing the homework.
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The myth of the "small country, expensive country"
Oddone claims that Uruguay, because it is a small country, is structurally destined to be expensive. It sounds convincing if one doesn't stop to think, but the data tell a different story. Uruguay, with a GDP per capita of US$22,600, is the second highest in the region, but its projected inflation for 2025 is 4.5%, and its economic growth barely reaches an anemic 2%. Unemployment stands at 7.8%, and 17.3% of the population lives below the poverty line. If being small is synonymous with being expensive, why do countries like Singapore or Luxembourg manage to combine high incomes with competitive costs?
The answer doesn't lie in size, but in economic policies. Uruguay drags along a model of high state intervention, suffocating regulations, and a heavy tax burden that Oddone himself acknowledges as an obstacle. Instead of assuming that the country is doomed by its geography, we should ask why the government insists on maintaining a system that makes everything more expensive, from consumer goods to production. Saying that being expensive is "inevitable" is like admitting the patient is sick but refusing to give him the remedy.
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The economic logic behind prices
A rigorous analysis leads us to question Oddone's premise from the essentials of economics. Prices are not a divine decree nor an inescapable consequence of a country's size. They are the result of the interaction between supply and demand, shaped by incentives, regulations, and public policies. In Uruguay, high costs are directly linked to an oversized state that imposes bureaucratic obstacles and taxes that stifle competition and productivity.
Oddone admits that there are "enormous opportunities to increase efficiencies," but at the same time dismisses significant change because it would not be "desirable." Desirable for whom? For Uruguayans who pay 77.4% more for a basic basket than in Brazil? Or for businesses that can't compete with border prices?
