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With only 3.3 million residents, Uruguay may be small, but "Argentina's little brother" - to lift a phrase from a local practitioner - has become a reliable investment destination, especially as global demand for crop staples soars....

With only 3.3 million residents, Uruguay may be small, but "Argentina's little brother" - to lift a phrase from a local practitioner - has become a reliable investment destination, especially as global demand for crop staples soars. "In the past, you would need two or three cows to buy a computer, now it is reversed," says one partner. "The world needs food and the fact is, Uruguay produces food, meat - we have soy, wheat, corn."

GDP growth surged to roughly 8% last year, a slight boost from the impressive gains in 2004-08, which the World Bank put at 6.7%. "The price of our commodities is booming," says one lawyer. "For the first time in Uruguayan history, Uruguay is on the map for FDI [foreign direct investment]." Overseas investment in Uruguay soared to $2.35 billion in 2010, a 47% increase from the previous year, according to the 2011 World Investment Report published by the United Nations Conference on Trade and Development (UNCTD).

With such positive statistics, it is easy to see that the economy is humming. The stress endured by the country's economic crisis in the early part of the decade, stemming from Argentina's default and a Brazilian devaluation, is a distant memory. "A pretty solid institutional foundation is finally paying dividends," says one partner, referring to the stability of the government as one issue that has helped build the positive economic environment.

The global commodities boom is having reverberations throughout the economy. Argentine agribusiness is snatching-up land, looking to benefit from competitive prices and boosting the local real-estate sectors. "Agriculture has been very active, some of it due to changes in Argentine law," explains one local practitioner. "The whole real estate sector has been active."

For three years in a row, Uruguay has been able to export more beef than its much-larger neighbour, a result partially due to Argentine President Kirchner's 2008 ban on beef exports. But Uruguay has a much smaller internal market, and all those exports need a way to get out of the country to meet demand. Upgrading Uruguay's basic framework has become a priority. "We need infrastructure," claims one partner. "To ship, you need to have roads, rail-roads. We need to expand the ports."

To help stimulate infrastructure investment, the government passed a public-private-partnership (PPP) law in 2011, hoping to invest roughly $750 million in projects by 2014. "Uruguay has been growing steadily over the past years," says one practitioner, noting that the unanimous approval of the legislation will send "a strong message for the private sector and international community."