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Economy of Ecuador
Currency United States Dollar (USD)
Fiscal year calendar year
Trade organisations WTO, Unasur, CAN
Statistics
GDP $98.28 billion (2007 est.)
GDP growth 1.8% (2007 est.)
GDP per capita $7,100 (2007 est.)
GDP by sector agriculture: 8.5%, industry: 26.4%, services: 65% (2006 est.)
Inflation (CPI) 2.2% (2007 est.)
Population
below poverty line
43% (2007 est.)
Gini index 46 (high)
Labour force 9.21 million (2006 est.)
Labour force
by occupation
agriculture: 10%, industry: 35%, services: 54% (2001)
Unemployment 9.8% (2007 est.)
Main industries petroleum, food processing, textiles, wood products, chemicals
External
Exports $13.3 billion (2007 est.)
Export goods petroleum, bananas, cut flowers, shrimp
Main export partners United States 53.6%, Peru 8.2%, Colombia 5.6%, Chile 4.4% (2006)
Imports $13 billion (2007 est.)
Import goods vehicles, medicinal products, telecommunications equipment, electricity
Main import partners United States 23.1%, Colombia 13.3%, Brazil 7.3%, Panama 4% (2006)
Public finances
Public debt $17.56 billion (31 October 2007)
Economic aid $209.5 million (2005)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars

The economy of Ecuador is based mostly on exports of bananas, oil, shrimp, gold, other primary agricultural products and money transfers from nearly a million Ecuadorian immigrants employed abroad. In 2002, oil accounted for about one-third of public sector revenue and 40% of export earnings. Ecuador is the world's largest exporter of bananas ($936.5 million in 2002) and a major exporter of shrimp ($251 million in 2002). Exports of nontraditional products such as flowers ($291 million in 2002) and canned fish ($333 million in 2002) have grown in recent years. Industry is largely oriented to servicing the domestic market.

Deteriorating economic performance in 1997-98 culminated in a severe financial crisis in 1999. The crisis was precipitated by a number of external shocks, including the El Niño weather phenomenon in 1997, a sharp drop in global oil prices in 1997-98, and international emerging market instability in 1997-98. These factors highlighted the Government of Ecuador's unsustainable economic policy mix of large fiscal deficits and expansionary money policy and resulted in an 7.3% contraction of GDP, annual year-on-year inflation of 52.2%, and a 65% devaluation of the national currency in 1999.

On January 9, 2000, the administration of President Jamil Mahuad announced its intention to adopt the U.S. dollar as the official currency of Ecuador to address the ongoing economic crisis. Subsequent protest led to Mahuad's removal from office and the elevation of Vice President Gustavo Noboa to the presidency.

The Noboa government confirmed its commitment to convert to the dollar as the centerpiece of its economic recovery strategy, successfully completing the transition from sucres to dollars in 2001. Following the completion of a one-year stand-by program with the International Monetary Fund (IMF) in December 2001, Ecuador successfully negotiated a new $205 million stand-by agreement with the IMF in March 2003.

Buoyed by higher oil prices, the Ecuadorian economy experienced a modest recovery in 2000-01, with GDP rising 2.3% in 2000 and 5.4% in 2001. GDP growth leveled off to 3.3% in 2002. Although final figures are not yet available, it is expected to fall further, to about 1.7%, for 2003. GDP growth is estimated to recover to over 4% in 2004, due largely to expanded oil exports. Inflation fell from an annual rate of 96.1% in 2000 to an annual rate of 22.4% in 2001; although final figures are not yet available, it is expected to drop below 7% for 2003. Despite recent gains, 40% of the population lives below the poverty line, more than double the rate five years ago.

The completion of the second Transandean Oil Pipeline (OCP in Spanish) in 2003 will enable Ecuador to expand oil exports. The OCP will double Ecuador’s oil transport capacity, but Ecuador will need to attract additional foreign investment to realize the full economic potential of the added capacity.

Diversity and Sustainability

Ecuadorians often describe the country as a series of "micro-environments" and economic-cultural regions that are reflected in the country's cultural and geographic diversity of coastal fishing and trade (with Guayaquil as a port), highland Quichua-speaking peoples (with Quito as a center, and the Amazon or jungle region, with several indigenous populations continually facing intrusions by "colonos" (colonists) seeking to use land for farming including palm oil, or for oil and resource exploitation. Various studies have noted the threats to the country's cultures and the continuing growth in population that has contributed to poverty and are a reflection of unsustainable development. Migration of more than 500,000 Ecuadorians following crisis in 1999 also highlights the population growth and inability of the resource base to sustain it, as well as the lack of appropriate economic planning in the country to fit historical traditions or the resource base.[1]

Political tensions with neighboring countries like Peru over mining and other resources to support the growing population, and struggles between the growing urban mestizo population and indigenous peoples over land and resources have underlined the political struggles in recent years. Though foreign-driven economic approaches have mostly focused on exports and on resource exploitation and development rather than on sustainable economic development and stability within the regions and the micro-environments, some economic teams, such as one led by David Lempert, have sought to focus on sustainability.[1]

See also

References

  1. ^ a b David Lempert, Kim McCarty and Craig Mitchell, "A Model Development Plan: New Strategies, New Alternatives," Westport, CT: Praeger Greenwood Press, 1995, 1998.
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