Estimated GDP: US $ 107.4 billion (2019)
Per capita income (purchasing power parity): US $ 11,846 (2019)
Human Development Rank (HDI): Rank 85 (of 189)
Proportion of poverty (less than $ 1.90 per day): 3.3% (2018)
Distribution of income (Gini coefficient): 44.7 (2019)
Economic Transformation Index (BTI): Rank 60 (out of 137)
The economic development since the 1970’s was driven by the oil revenues and was characterized by a growing role for the state, a country located in northwestern part of South America according to dentistrymyth. Falling oil prices, the inefficiency of state-owned companies and the sharp rise in debt had put the country in a difficult position.
The former President Sixto Duran-Ballen, who died in November 2016, tried to put economic development on a stable basis by introducing a structural adjustment program. This had considerable negative consequences for the population, which led the president to set up a social fund to cushion these effects. The adjustment policy has been pursued half-heartedly by the various governments. Also the attempt by President Mahuad (1998-2000) failed to attract urgently needed foreign investments with a strict neoliberal course and structural adjustment measures. A deep economic crisis began in 1998 as a result of the devastating effects of the “El Niño” climate phenomenon and the Asian crisis (drop in oil prices), but mainly due to internal problems. The Mahuad government decided to dollarize the national economy as the main strategy for overcoming the crisis. Mahuad failed because of this plan, but his successor Gustavo Noboa (2000-2003) succeeded in obtaining the approval of parliament and in March 2000 to enforce the introduction of the dollar as the official currency. The new one, adopted during the presidency of Raphael Correa (2007-2014), The 2008 constitution strengthened state control over the economy – for example, the central bank lost its autonomy. The country’s large financial and industrial conglomerates are no longer allowed to own media. The constitution also establishes a number of social rights, such as free access to health and education systems and social security for all.
At the end of his term in office, Correa’s economic policy was overall positive, even if critical voices spoke of a “division” of the population even then. Despite all government efforts, Ecuador still ranks one of the lower places in Latin America and the world in terms of the degree of economic liberalization (170th out of 180). In 2019, the value on the Index of Economic Freedom deteriorated again slightly and the economic system of Ecuador is still characterized as “repressed”. For current data see the BMZ’s Ecuador website and for analyzes of economic (and political) transformation the detailed one Ecuador report of the Bertelsmann Transformation Index 2020. Soon after taking office, President Lenín Moreno initiated a turnaround in economic policy. The new economic policy course is based on a dialogue between government, multilateral organizations and the private sector and achieved a normalization of relations with the IMF and the World Bank. The strategy Moreno, in the ” prosperity plan”(Plan de Desarollo) finds its expression, relies on economic development through the mobilization of private capital in order to boost production. The measures include tax breaks for large companies, reducing the tax on foreign currency transfers, increasing the Exemptions for the taxation of high-income groups as well as the opening of the financial sector to foreign finance capital.The World Bank supports the Plan de Desarollo with 1.7 billion US dollars and has committed further multi- million loans.
The Human Development Index published in the current UNDP Human Development Report (2018) – it takes into account life expectancy, education and standard of living – ranks Ecuador 86th out of 189 countries. The country has been able to continuously improve its HDI value since 1980 and also made the leap into the “high human development” category, but it is still one of the worst performers in South America.
Ecuador achieved significant successes in achieving the Millennium Development Goals (MGD). The proportion of people living in absolute poverty in the country fell by 73% between 1990 and 2013. Ecuador got involved in the discussion of the Sustainable Development Goals (SDGs) above all with the concept of Buen Vivir or Sumak Kawsay. At present, however, there is still a lack of the institutional and financial prerequisites for the most comprehensive possible implementation of the SDGs.
At the end of Correa’s presidency, most analysts drew a positive assessment of the country’s development. For example, a study by the Center for Economic and Policy Research (CEPR) in Washington DC comes to the following conclusion:
- As a result of economic growth and employment programs, the poverty rate fell by 38% during Correa’s tenure; extreme poverty decreased by 47%.
- Between 2006 and 2016 the annual growth of the gross domestic product (GDP) per capita was 1.5% – despite the international financial crisis 2008/2009 and the decline in the oil price since 2014); in the previous 26 years, growth averaged 0.6%.
- There have been significant increases in social spending in the health sector, housing, urban development and education.
- The government invested 2.1% of GDP in higher education, making Ecuador the leader in Latin America (and above the OECD average).
- Ecuador is a “role model for other countries in the Global South”.