The cobblestone streets of Asunción’s historic center might seem worlds away from Silicon Valley, but Paraguay is quietly positioning itself as South America’s next technology powerhouse. During my recent visit to Paraguay’s capital for the LATAM Tech Forum, I witnessed firsthand how this landlocked nation of 7 million is leveraging its unique advantages to attract tech investment and foster digital innovation.
“Paraguay offers what tech companies increasingly value—stable energy costs, a young workforce eager to develop skills, and a government committed to reducing bureaucratic hurdles,” explained Carlos Pereira, director of Paraguay’s Digital Agenda, during our interview at the newly inaugurated Asunción Innovation Hub.
The country’s transformation hinges on a comprehensive five-year initiative launched in 2022. Unlike traditional development approaches, Paraguay’s strategy capitalizes on existing strengths rather than attempting to replicate Silicon Valley’s model.
Most notably, Paraguay enjoys one of the world’s largest renewable energy surpluses, generating over 45,000 GWh annually from the Itaipú hydroelectric dam—shared with neighboring Brazil. With growing concerns about tech’s carbon footprint, this clean energy abundance has become a compelling advantage.
Data centers, the backbone of cloud computing and AI operations, consume enormous electricity. While tech giants struggle with energy costs and sustainability goals elsewhere, Paraguay offers a solution. Microsoft acknowledged this potential in March, announcing exploratory talks for establishing regional data infrastructure that would tap into this renewable energy resource.
But energy is just one piece of Paraguay’s tech puzzle. The government has systematically reformed its digital infrastructure, launching a streamlined business registration portal that reduces startup time from months to days. The National Innovation Strategy also includes targeted tax incentives for technology firms, including a 10-year tax stability guarantee for major investments—a rarity in a region known for policy volatility.
Education reforms represent another critical component. “We recognized early that our greatest asset is our young population,” noted Education Minister Eduardo Petta during the forum’s education panel. “But we needed to align our educational system with tomorrow’s needs, not yesterday’s.”
The National Digital Skills Program launched in 2023 has already trained over 12,000 Paraguayans in programming, data science, and digital marketing. The initiative partners with local universities and global online platforms to provide internationally recognized certification.
What makes Paraguay’s approach distinctive is its focus on inclusive growth. Rather than concentrating resources in the capital, digital hubs are being established in secondary cities like Ciudad del Este and Encarnación, creating technology corridors that leverage each region’s comparative advantages.
Not everything has been smooth sailing, however. Infrastructure challenges persist, particularly in rural connectivity. While urban centers enjoy increasing 5G coverage, approximately 30% of Paraguay’s population still lacks reliable internet access, according to the latest data from the International Telecommunication Union.
Critics also question whether the initiative adequately addresses Paraguay’s persistent inequality. “The tech sector can create opportunities, but we must ensure these opportunities are accessible to all Paraguayans, not just those with existing advantages,” cautioned economist María Gonzalez during our conversation at the Universidad Nacional de Asunción.
Despite these challenges, international investors are taking notice. Tech investment in Paraguay grew 47% in 2023, according to Paraguay’s Central Bank. Regional players from Brazil, Argentina, and Chile are establishing operations, while North American and European firms increasingly include Paraguay in their Latin American expansion plans.
The strategy also emphasizes developing Paraguay’s unique technology applications, particularly in agtech—a natural fit for a country where agriculture represents approximately 25% of GDP. Startups like AgriTech Paraguay are creating solutions for precision agriculture, supply chain management, and climate-resilient farming practices.
“We’re not trying to become the next Silicon Valley,” explained José Rodriguez, founder of Asunción Tech Accelerator. “We’re building something that responds to Paraguay’s realities while connecting to global innovation networks.”
Paraguay’s initiative offers lessons for other developing economies. Rather than competing directly with established tech hubs on their terms, the country has identified specific niches where it holds natural advantages. By addressing fundamental infrastructure and policy needs while simultaneously investing in human capital, Paraguay has created a foundation for sustainable digital growth.
As my flight departed Asunción, I reflected on how technology hubs emerge in unexpected places when the right conditions align. Paraguay’s experiment is still unfolding, but its progress demonstrates how thoughtful policy, natural resources, and human potential can converge to reshape a nation’s economic future.
For a region seeking new economic models in a post-pandemic world, Paraguay’s digital transformation initiative may provide a template worth watching.
