The 1990s were a time of many economic and political changes in Paraguay. The nation has become arguably more democratic and has implemented a market economy system, but still Paraguay remains one of Latin America's more underdeveloped nations in many ways. The future of Paraguay is uncertain: Paraguay faces the challenges of consolidating its semi-democracy and possibly further democratizing while developing its weak economy at the same time. Trade and transport, and imports and exports, continue to carry the Paraguayan economy as development is slow in agriculture, banking, tourism, mining, and industry.
Paraguay's membership in Mercosur is beneficial in terms of stability and growth prospects, but the other member nations are apprehensive as to whether or not Paraguay will successfully consolidate its recent democratic and market economy reforms. Spectrum Oil Corporation is currently exploring potential oil sites in and around the Chaco region. Foreign investment is steadily increasing due to government incentives and the size and success of the Mercosur market.
Furthermore, government incentives are designed to keep foreign investors' goods in the Paraguayan market, so foreign companies cannot exploit Paraguayan labor. Labor will not be simply performing tasks contributing to goods being shipped back out of the country to be sold elsewhere. The government also gives larger tax cuts to profits reinvested in the nation, which is conducive to sustaining long-term investment and development. The Paraguayan economy is growing at its most rapid pace since the late 1970s, but the growth rate is slower than some of its neighbors. Overall, prospects are good for economic growth and development in Paraguay's near future.