Ecuador Economic Conditions

Social mobilization

Since 1979, social movements and organization have been regarded as actors of widespread legitimacy in Ecuador. The relationship between civil society and the state has historically been a reflection of the country’s changing institutionalization. From the corporate unions of the 1980s, to the ethnic and collective-based resistance of the indigenous movement of the 1990s, to the rise of civil society organizations’ demands for civil rights in the first decade of the twenty-first century. During the Revolición Ciudadana, national, social organization has changed character for the benefit of local civic organizations, aided by increasingly regulatory and advisory institutions and mechanisms. Examples of this are referendums and the “new” fifth state power, Citizens’ Participation Council and Social Control (C onsejo deParticipación Ciudadana and Control Social), as wellan increasing number of government-affiliated social organizations in all sectors of society.

The Civil Society Organizations Act of 2013 has provided the authorities with a tool to crack down on increasing civil disobedience. However, many civil society organizations view the law as an authoritarian political twist to crack down on mostly peaceful demonstrations and constructive work. The shutdown and dissolution of the environmental and human rights organization Fundación Pachamama and problems related to international organizations such as the German Konrad-Adenauer-Stiftung (KAS) are examples of this. In connection with the events, President Correa has stated the following:
“The function of non-governmental organizations is not to pursue politics, nor to be at the forefront of violent acts. If they want to pursue politics, they can do it as political parties, if they do not violate democracy ”.

Since July 2011, all international foundations and NGOs have had to register with the Technical Secretariat for International Cooperation (SETECI) and present their annual projects to the Secretariat. SETECI reserves the right to evaluate whether the organizations’ work meets the national priorities for international cooperation. This condition has been criticized by a number of international organizations, with Konrad-Adenauer-Stiftung and Usaid among the most profiled to leave the country as a consequence.

New media law

Historically, the country has had a high degree of ownership concentration in the media sector. This has been problematic and has helped to exclude groups in society from participation in public debate. After several years of debate, the National Assembly in June 2013 passed a new media law.The Act contains 119 articles that provide licensing guidelines for supervision, responsibility, ownership and distribution of television and radio frequencies between public media (33 percent), local, cooperative media (34 percent) and private media (33 percent). That is, a legal enactment of responsible media diversity.

At the same time, the law is controversial, and human rights and press organizations have criticized weaknesses and problematic articles in the law, related to independence and procedures for granting concessions. In recent years there have been several instances where journalists and newspapers have been sentenced to fines and imprisonment for violating license terms and abusive and false statements. By January 2015, cartoonist Javier Bonilla (Bonil) and his newspaper El Universo were fined. They were convicted of an abusive drawing by an Afroecuatorian politician Agustin Delgado,formerly playing on the Ecuadorian national football team, now MP for the ruling party. Seventeen civil society organizations had complained to the cartoonist and newspaper to the Media Supervisory Council (Supercom) with allegations of racism, which was again met with allegations of censorship and lack of freedom of expression from the opposition.

Environment and forest

Ecuadorian forest cover is approximately 10 million hectares, or 36 percent of the territory. The 1.89 percent annual deforestation rate is among the highest in Latin America. Deforestation is mainly due to agriculture. Since 2009, Ecuador has included the fight against deforestation in national governance documents, created a climate department in the Department of the Environment, and started the voluntary, incentive-based conservation program Socio Bosque. There is a national cross-departmental high-level climate control group, with a planned working group for the forest conservation program REDD +. A round table for civil society and indigenous peoples to discuss REDD + is being established.

On August 15, 2013, President Rafael Correa decided to dissolve the Yasuní initiative and have it declared in the national interest to extract oil inside the Yasuní National Park. The 2007 proposal sought not to utilize the oil reserves located in the vulnerable rainforest area in exchange for partial financial compensation from the world community. However, it failed to mobilize enough support for the initiative.

Civil society and academic institutions have shown concern and uncertainty about the opening, but at the same time have hopes associated with the economic gains of oil recovery. The dispute has been between those who emphasize financial resources for the development and safeguarding of basic needs, and those who fear the possible negative social and environmental consequences. Between 2010 and 2013, there have been 539 episodes of oil spills in Ecuador, according to figures from the country’s Ministry of the Environment. In the northern parts of the Ecuadorian Amazon, the US oil company Chevron is poised to pay $ 9.51 billion in damages for environmental damage after leaving large amounts of crude oil and oil sludge in the period 1964 to 1990 to the detriment of humans and the ecosystem.


Following the February 2013 elections, Ecuadorian authorities have taken significant steps towards a more pragmatic development strategy and resource extraction. After moderate economic growth in 2007, with the exception of the 2009 financial crisis, the country has sustained high economic growth with an average of 4.25 percent from 2007-2014 in gross domestic product (GDP). An important contributing factor to growth has been an annual increase in the public budget of between 20-25 percent, as a result of increased tax revenues.

GDP growth is manifested through increased demand, and thus higher tax revenues and growth in public consumption. Infrastructure projects such as the development of roads, as well as measures to improve the education and health sector are the clearest examples of the government’s development and welfare policy in recent years. Negotiating foreign debt and stricter fiscal policy are other key measures that explain the good economy.

The authorities have succeeded in a substantial reduction in poverty. According to the United Nations Economic Commission for Latin America and the Caribbean (CEPAL), Ecuador has reduced social inequality by 7 points on the GINI scale from 0.551 to 0.485.

At the same time as economic growth in Ecuador has been sustained high, the government has facilitated important investments in special infrastructure, which is thought to play an active role as a basis for a further change (diversification) of the country’s production composition. Looking at the non-petroleum-oriented sector, there has been a growth of 14.4 percent, mainly driven by growth in agriculture and the fishing industry. Oil still accounts for more than 50 percent of the country’s exports, and high oil prices have been the main contributor to higher revenues. A renegotiation of the extraction licenses with the international oil companies and a strengthening of the state oil company mean that Ecuador is normally left with a much larger share of oil revenues than before, from about 6 to 20-80 percent.

Energy is a key point on the country’s development agenda going forward. A 15-kilo gas can cost $ 1.60 in Ecuador, while the price in Peru is $ 20 and Colombia $ 26. President Correa has decided that gas subsidies should be gradually reduced and differentiated, depending on income, before they disappear completely. The gas dependency is thought to have been replaced by a large-scale electrification project related to the country’s hydropower development and industrialization policy. The goal is for 93 percent of the national electricity demand to be met by hydropower by 2016, from today’s 45 percent. In parallel, the authorities have implemented large national programs for increased energy efficiency, including energy-saving bulbs, induction ovens and general phasing-out of subsidized gas use in the home.

Tax revenue has increased dramatically under Correa, from $ 4.67 billion in 2006 to $ 12.51 billion in 2013. The increase in tax revenue is a very important part of the basis for social reform in the country. Better tax collection and campaigns to reduce tax evasion have brought Ecuador’s tax burden (the total level of taxes and fees) from about 11 percent to 15 percent in the period. Something that is very low even in a regional context. The government therefore still has room for maneuver to further increase the revenue of the Treasury through further tax reform (long-term level should, according to the authorities, up to about 25 percent), thus making social measures sustainable and less dependent on petroleum revenues in the long term. In the short term, Ecuador has also secured funding, including through Chinese loan packages related to future oil sales. Ecuador’s credit rating is now on the brink of improvement after the country in 2008-2009 chose to renegotiate and repurchase 91 percent of its debt obligations. Until recently, the country has been virtually excluded from the global credit markets and borrowed mainly from China, Brazil and the Inter-American Development Bank (IDB).

Regional cooperation

Ecuador has a long tradition of broad contact in the region, both economically and politically. The country has played a key role in the creation of the Unasur and ALBA integration projects, while the Andean Community (CAN) trade bloc has lost practical political significance. Ecuador is also an observer in the so-called Pacific Alliance, which includes Chile, Peru, Colombia, and Mexico. The desire to hold such observer status in the market liberalization project surprised many because Ecuador is also a key ALBA country. This can be explained by traditional Ecuadorian multilateralism and the propensity for regional trade and integration projects, despite a somewhat different ideological worldview from some Pacific Alliance members.

The last few years have seen a growing collaboration in a number of areas with Peru and Colombia. Humala’s government in Peru provides a basis for a certain ideological approach and more cooperation between the countries, especially in the economic and military spheres, but also in environmental matters. Peru has now formally accepted the maritime border between the countries.

The relationship with the regional powers of Argentina and Brazil is good today and the problems associated with Brazilian investments and companies’ behavior in the country from the last decade have calmed. The relationship with the ever-important export destination and the historic ally of Chile has seen a distinction between the political and the economic, caused by Ecuadorian statements in support of Bolivia’s demand for access to the Pacific.

The Correa administration has had good trade and ideological cooperation with Venezuela’s President Maduro and the late President Chavez, Argentina’s President Kirchner and Bolivia’s President Morales. The relationship with the like-minded countries of the ALBA is particularly ideologically sound. The ALBA countries have acted uniformly in the negotiations in a number of international forums.

Relations with Colombia are characterized by trade dependency, and cooperation has improved far since the diplomatic crisis that followed the then Defense Minister (and current President) Santos’ order to bomb a FARC guerrilla camp in Ecuadorian territory in 2008. Since then, Ecuador’s armed forces have exchanged fire with irregular Colombian forces on a number of occasions. In 2014, there are about 170,965 people with refugee status in Ecuador, of whom about 64,000 are in the northern border provinces, most of them from Colombia, according to the UN High Commissioner for Refugees. The presence of the Ecuadorian state in these areas has traditionally been weak and the social challenges great with widespread racism and xenophobia.

Geopolitical situation

According to, the EU is the leading destination for Ecuadorian non-oil related export products by about 29.2 percent, at an annual value of US $ 2.44 billion. Many of these are dependent on the current extension of the GSP (Generalized System of Preferences) scheme, which has ensured duty and quota-free market access for a wide range of Ecuadorian products. Public procurement, local production and technology transfer, European agricultural commodities and strategic sectors have been among the most difficult issues during the negotiations. After seven rounds of negotiations, the parties reached an agreement in the summer of 2014 and the agreement is expected to enter into force during the second half of 2016, pending approval by the European Parliament. It is currently uncertain how Ecuadorian energy and trade cooperation with Russia will affect this process.

As of 2009, Ecuador has had extensive energy cooperation with China, placing it among the four main recipients of Chinese financing and investment in Latin America. The relationship in political and economic terms is a cooperative relationship of “mutual benefit”, based on the principles of equality, non-interference, and energy complementarity. In a period where Ecuador had until recently had trouble obtaining international funding, China has been tasked with diversifying its energy composition through loans from Eximbank of China and China Development Bank with security in Ecuadorian oil supplies. Chinese companies then received lucrative multibillion-dollar contracts in the oil, energy, mining, infrastructure and healthcare services sectors.

The relationship with the United States has been turbulent, but also characterized by mutual asymmetric dependence. The United States is Ecuador’s premier export destination, with annual exports of $ 11.14 billion in 2013, and approximately 2 million Ecuadorians live in the country. On the other hand, Ecuador is important in the North American war on drugs, both as a transit country and money laundering destination, positioned between Colombia and Peru – the world’s two largest exporters of cocaine. The relationship between Ecuador and the United States has been characterized by political quarrels. Repeated expulsions of US officials at the US embassy in Quito, for involvement in internal Ecuadorian affairs, and Ecuadorian involvement in the Julian Assange and Edward Snowden case, have at times created a difficult collaborative climate.

In spite of this seemingly poor political climate of cooperation, commercial pragmatic solutions have often emerged as soon as the worst public political divide has settled. An example of this was in July 2013, when the spur of the negotiations for an extension of the Andean Customs Preferences System (ATPDEA) coincided with Ecuadorian involvement in the Snowden case. Negotiations broke down, but the two countries eventually agreed on an extension of the tariff preferences within the GSP system, which reduced the consequences for the approximately 30,000 jobs depending on ATPDEA.


Capital: Quito
Population: 16.08 million (2016)
Life expectancy: 76.8 years (2016)
Infant mortality: 16.9 per 1,000 (2016)
GDP per capita (pp): 11,000 (2016)
Religion: Catholicism 74%, evangelism 10.4%, Jehovah’s Witnesses 1.2%, other 6.4%
Official language: Spanish
Currency: US Dollar
Export Items: Oil, Bananas, Flowers, Shrimp, Cocoa, Coffee, Wood and Fish.
Regional Relations: Member of CAN, Mercosur (Associate Member), UNASUR, CELAC, ALBA, OAS