Ecuador has considerable potential to grow given its petroleum resources and fertile soil to grow fruits, vegetables and other frm produce. But hstory shows that political thoughts and circumstances have led to periods of good economic growth and stagnation. Ecuador needs a a few decades of consistent, stable open economic policies to do better economically.
Not much latest information on all aspects of the Ecuador econmy is widely available. This reflects unfavorly on the relative lack of Govt.s openness, and aggressive development stragey. Ecuador needs to build up many other ares of economic capabilty beyond petroleum oil and fruts and vegetable exports.
You may like to use some sentences from the following notes for your essay.
1.The economy of Ecuador is based mainly on exports of bananas, oil, shrimp,other primary agricultural products and money transfers from nearly a million Ecuadorian emigrants 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 economic and 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 the removal of Mahuad from office and the elevation of Vice President Gustavo Noboa to the presidency.
The Noboa government confirmed its commitment to dollarize 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. But 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, 70% of the population lives below the poverty line, more than double the rate of 5 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.
2. A road filled with potholes is an apt way to describe the economic history of Ecuador. Ecuadorians have enjoyed many eras of prosperity and suffered eras of crisis. Thanks to the fertility of our soils, we have been able to grow
products like cacao, banana, rubber and other products that in agreement with difficult periods for the rest of the world, have been highly valued products. The chocolate, banana and most recently, oil booms provided income that was taken advantage of or wasted-- depending on the use the government of the time put the money to. For internal consumption, food has never lacked. Ecuadorians, even the most poor rarely go hungry. Things turned sour, however, when trying to meet foreign demand. To meet external demand, Ecuadorians borrowed money to improve production. However, this money was not used wisely by corrupt and incompetent officials. Ecuador was left without a thriving industry and in debt to foreign banks.
3. Petroleum has been the main source of foreign currency to the country for the past 25 years. Oil exploration began in Ecuador on the Santa Elena Peninsula in the first quarter of the 20th century. However, it was not until the seventies, when exploration was begun in the Amazon region, that oil production began, turning Ecuador into one of the world’s most important exporters of this natural resource. Other products of economic importance to the country are bananas, coffee, cocoa, shrimp, timber, tuna, and, more recently, flowers. Ecuador has a vast array of natural riches. It has been calculated that there are gas reserves of 300,000 million cubic feet in the Gulf of Guayaquil. Tourism is Ecuador’s fourth most important export in terms of income.
There are also non-traditional export products, such as certain fruits and vegetables, which are slowly gaining a foothold in the international market. Currently, Ecuadorian legislation is being drafted to encourage the development of industry by means of the Ley de Fomento Industrial. The main purpose of the Law is to encourage international investment in Ecuador. In addition, to large industries such timber and textile, the Ecuadorian economy is also powered by small industries such as the production of handicrafts, a group of products which Ecuador produces in abundance, suiting the needs of consumers worldwide.