The structural and historical relevance of services in Uruguay. A long run approach (1870-2020)

Services in Uruguay currently occupy a prominent role in the productive structure, accounting for about two thirds of GDP. It is this type of evidence that has led to the argument, from different points of view, that Uruguay is, today, a service-based economy. However, this characterization is far from being recent. Towards the middle of the 20th century, the share of the gross value added (VA) of services was more than 55% of GDP. Furthermore, the historiography is in agreement in identifying several service activities as determinants of economic development since the 19th century. However, the absence of systematic measures of the VA of services has restricted studies about the evolution of non-material activities and its relevance for economic growth. One of the main objectives of this article is to fill this gap by using recent estimates of the VA of services to cover a very long period: between 1870 and 2020. Based on this new information, we analyse the long-run evolution of services –mainly how the three-sector hypothesis is not fulfilled– and the transformations within the sector –the changes from services closely related to material production to other services more related to urbanization and sophistication of consumption.