Ecuador Economy

ECONOMY: GENERAL INFORMATION

Ecuador, while remaining at the bottom of the wealth rankings among Latin American countries, is not entirely devoid of potential. Based on a traditional economy, divided according to the orographic and morphological structure of the country (rain plains, irrigated reliefs intended for self-consumption agriculture, coastal strips occupied by agricultural enterprises oriented to intensive production) the country has suffered, starting from the middle in the 1960s, a profound reorganization, largely following the discovery of the oil fields located in the eastern section of the country. The impulse received from the secondary sector, the construction of oil pipelines, the positive effects on the manufacturing industry have, on the one hand, The initiatives undertaken during the 1960s and 1970s were all aimed at industrial diversification and the growth of sectors such as the construction and manufacturing sectors and the division of the active population by economic activity sectors has undergone profound transformations, marking the transition from a predominantly agricultural economy to a more articulated economy, which in the early years of the new millennium saw the tertiary sector rather clearly prevail. Greater economic stabilization characterized the early nineties of the twentieth century, characterized by plans to contain inflation, promotion of the private sector, increase in fuel prices abroad, reduction of public spending, up to a strong devaluation of the currency, in order to incentivize the weight of national products on international markets. Despite these measures, inflation continued to reach very high values, against the backdrop of an international situation that saw the crises of South American and Eastern European countries worsen suddenly. The consequences of the floods caused by El Niño in 1998 brought the country to the brink of a very serious economic recession, which led to moments of strong social tension. In addition, an unprecedented crisis in the banking system has forced the state to allocate nearly a billion dollars to the bailout of dozens of financial institutions and to block a quarter of total bank deposits for months. In 1999 Ecuador announced that it could no longer honor its foreign debt and, the following year, with the support of the IMF, the government decided to adopt the US dollar as its national currency, thus converting salaries into dollars and commercial and financial exchanges, with the effect of further decreasing purchasing power of the most disadvantaged classes (in particular the Indian peasants). As far as national wealth is concerned, GDP started to grow again at the beginning of the millennium, reaching, in 2008, the figure of US $ 52,572 million, with a per capita GDP of US $ 3,776. Nonetheless, foreign debt (equal to over one third of GDP), public debt (about one third of national wealth) and unemployment, which affects about 10% of the active population, remain high.

ECONOMY: INDUSTRY AND MINERAL RESOURCES

Despite the insufficient production of energy, the industry has made remarkable progress and also works for exports; alongside the predominant traditional sectors, namely textiles, represented above all by cotton mills, food (pasta factories, oil mills, sugar refineries, breweries, meat and fish canneries, etc.) and tobacco factories, there are paper factories and pulp, chemical (fertilizer), petrochemical and pharmaceutical plants, oil refineries, rubber industries and, more recently, mechanical (vehicle assembly) and iron and steel complexes.

According to allcountrylist, the country can count on various, and in some cases substantial, mineral resources. In addition to gold – whose extraction, flourishing with the Spaniards, is now in decline – and silver, the Ecuador has deposits of copper, lead, manganese, iron, sulfur, salt deposits, natural gas; but the most important product of the subsoil is oil, extracted both ad Ancón, in the peninsula of Santa Elena, where it is piped to the La Libertad refinery (other refineries operate in Cautivo and Quito), and from the rich fields of the East, located on the border with Colombia along the Putumayo river: the main stimulus to the Ecuadorian economy during the entire seventies, still representing the first export good today. Oil has been largely placed at the service of electricity production which does not, however, meet the needs of the country; however, the problem should be solved by making greater use of the very rich hydroelectric potential of the Andean region, which by far represents the main national energy resource.

Ecuador Economy