Paraguay, officially the Republic of Paraguay, is a landlocked country in South America. It lies on both banks of the Paraguay River, bordering Argentina to the south and southwest, Brazil to the east and northeast, and Bolivia to the northwest, and is located in the very heart of South America. The name 'Paraguay' is derived from the GuaranĂ­ word pararaguay meaning 'from a great river'. The 'great river' is the ParanĂ¡ River, which produces the greatest amount of hydroelectric power in the world.