NATIONAL INTELLIGENCE SURVEY 87; ECUADOR; THE ECONOMY

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• Collection: NIS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP01-00707R000200110032-8
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 33
• Document Creation Date: October 25, 2016
• Sequence Number: 32
• Content Type: REPORTS

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B7 /GS /E
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r
1
Ecuador
1 UlY 1973
i
r
R
NA LINAL INTELLIGENCE SURVEY
FOR O,=FI CIAL USE ONLY
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WARNING
The NtS is National Intelligence and may not be re-
leased or si:own to representatives of any foreign govern-
meet or international body except by specific authorization
of the Director of Central intelligence in accordance with
the provisions of National Security Council intelligence Di-
rective No. I.
For NIS containing unclassified material, however, the
portions so markad may be made available for official pur-
poses to foreign nationals and congovernment personnel
ti provided ne attributian is mc-caa to Notional Intelligence or
the National Intelligence Survey.
Subsect ?om and gr -phks are individuolly classified
according to content. Classification /con'.. of designa-
tions are:
WOU) Unclassified /For Official Use Only
(C) Confidential
(S) Secret
r
i
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Page
Page
C. Economic policy and development
17
D. Inter.- .4tional economic xelatians
23
I. Policy
17
1. Foreign trade
23
a. Government participation in the
a. Composition of trade
23
economy
17
1 Direction of trade
24
b. Public finance
17
c. Trrde. regulations
25
c. Banking, money supply, and prices
19
2. Balance of payments
26
2. Development planning and investment
20
3,
21
Glossary
28
FIGURES
Page
P
Fig. 1 Economic activity (map)
2
Fi 13 Composition of manufacturing output
Fig. 2 Use c: resources (chart)
3
table)
15
Fig. 3 Gross domestic product (chart)
Fig. 14 Gocrnmcnt revenues and expendi
Fig. 4 Land use (chart)
turns (table)
IS
Fig. 5 Land tenure table)
5
Fig. 15 Government deficit (ciuir[
19
Fig. 16 Money supply (table)
20
Fig, 6 Principal crops table)
7
Fig, 17 Cost of living (table)
2G
Fig. 7 1 ivestoek numbers table)
9
Fig. 18 Bank credit (fable)
Fig. 8 Livestock products (table)
9
Fig. 19 Domestic investment (table)
22
Fig. 9 Fish cateb; (table)
Fig. 20 Labor force table
22
Fig. 10 Petroleum (ta>>le)
11
Fig. 11 Balance of trade (chart)
2.3
Fig. 11 New investment (table)
14
Fib;. 22 Exports (table)
Fig, 23 Imports (table)
24
25
Fig. 12 Sectoral distribution of manufacturing
Fig, 24 Direction of trade (chart)
26
(chart)
`I4
Fig. 25 Balance of payments (table)
27
B
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Ecu ador tF S -y4
of bananas, has been heavily dependent
on agriculture, and Is one ',)f the least
developed countries it, America I
South Mo
but the emeigence ot petroleum as
major export has, considerably improved 0-
the country's prospects for eiconomic
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,t, lfrnra
[Ser1Ct3 Iswaa
AMCULTURE
Il
Cglfce
qutto
R Ce
.S.q.)rc .o:
"4 Crna!s, won. Mlata's,
and Arelloc4
ff
tlrll ap
INDUSTRY
ssxsa a,;
i
F
llrmragcs
A! poco"'n mfm'ng
l
UKhW
Fa4ti prpp�.Rr1 ^y
E t
iu9b
pnun+aOeulrC:ds
,1
MINING
prtic4e m _....p'Pvrrnq;'
Z Gou An d l.:Srr_
FISHING
Shwop t}tTuna
otm erg
FIGURE 1. Economic activity
i v ul nerable to fl uctuating worl mar prices for t h is
Jinp diversificatiOn, prograins tliat have be
i commodity. While gross don-u -stic product (CDV) has
supported by loans fron, international :,genvias.
l gmun at all average annual rate of.about 555 suite
The d isLove ry (if petroleum in the. Oriente $n 1967
1950 and nea.ly 9% annually since 1069. per capita
anti its subse(laeut development by a U.S. cn n.nrlilt li,'
i Cc'ononiic gains have. been small" b ecause. of rapid
have improved Ectiado s fortunes considerably.
population growth. Per capita COF- w- estiniated at
Croide oil export%, Which n'cre illitiatcd iti Attgmt 1972
USS260 i:. 1971 ---is low even by Latin American
upon the eompletion of a M150. trillion ir alls-
standards, and income is very unevenly distributed.
Andean pipeline; will bee -Pine" t he countr%''S chief
Ecuador has kw principal a gricultural are as �the
sovirc'e of foreign CXCII'llkgC in 1973. Letiador. is also
fertile coast al plains l y ing West of tilt Antics and the
cly wit It v ttrfilier nNerv (in the irite and
high basins and valleys of the mountains. Production
ric O ff shor e fishilig gro un ds, but t res(lilrces are
and export Of bananas, coffee, COuva, and sugar :ire
only ill the prdm:lry. stages of d eve l opm en t. KWIl'fl
the ma economic activities in the'Loastal area, whi
m eta ll ic mineral reserves, unlike those in tivi mring
the highlands are more suited to lit production of
Andean .countries, are $111.111 alid poor in
.a
grains, vegetables an Other temperate climate Crops
quality,
(Figure 1). Export errip .production and livestock
Manufacturing and construction Fre fairly rapidly
raising are conce tin larger farni units; but
in the 1960's in response. to favoral4c 4
much agricultural activity is of the sul>_ristencr type.
promotion legislation. the creation of. finaticiA
Factors impeding agricultural gro wth includ the
intermediaries, and increased goverilment sledding
limited amount. of .,rabic land, the small size and
for ueur infrastructure Although one -third of [Ile
pri .te of most farms, and inadeq+Iate
10all nfaettiring nmt i Still IMKIIIVI' by handivraft
trallSpOrtation a n d m ar keting facilities. N ew
s the factory seclor is ex r:ll)l( an
g overnment p rogranis are aimed at dive ul g
manufacturin as a i whole has grows, at all average
a g ri cu ltura l' ou i mpro vi ng the water supply
amltt:ll rate of nearly 756 sitif -V 106. F(HI( processing
system, and expanding credit facilities and extension
and textile rnantlfacturing are file I.n:t in,p'..+rialII
s e t v i ces. Livestock raising and. the cultivation of
indtiatrics, but new plants have also }leer, established
African puim on banana plantations are two
for the pmcluction of hollwhold appliances, naperaud
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EW U:160:11l;167:Jll:01 [:3t91 File 011IIZQiIly fly /:11I1I1101111bI119M.]
w products, and gl ass rubb pn) d licts.
1.l of 1960 sucres
Cnnsr!ICtiorl activily doubled ill 2 years as a result of
BODO
ailficld.dcvelopment in the hinlerlands and a honsiug
TOTAL
boolt1 ir) Quito and Cli.q. Ittlli[, the colmtrv's two
26,008
ayslraTO
NET
Inajol titles:
IMPORTS
e"S'pite these advances. Em iador renwins iitrg all
GDP
agrarian society. The c)utilry is gellenilly self-
sufficicn, in agricultural commodities (except fur
wheat, vegetable oils. and dairy products) ati(I in most
22000
111 1111fact tired cimsi ltit:r pods [)tit most import mats
raa� nimeri:ds and itltermcdiate goods. as well as
0
nearly all of its Capital etltliptneitt.
inr e
de�eloprlleetl ct)ntillucs to be restricted by irladelluate
18.000
fillaucia! re'smi low levels of education and
t;orernmmane
;udustrial skills, and a small domestic market. Between
16,000
cesnsumpeioa
anc thi rd and one -half of the total population,
including; a large percrntage(if the 111(liall population,.
14.000
re mains outside t16 111011C' econ0niv.
Sit)(.e Illc rnic l9G0's. the g overnment has pla ye d a
12.000
P consum
More active role Ill file development procrs ant[ has
pursued ilimietary aild fiscal policies (l('SlgteCel to
t)rolilotc industrial growth. A vilal exogenous growth
0
fael(rr }las the large -scale infitix of I)rivalc f o re i g n
1966 6 7 68 69. 70 71
lrtvest)neril ill lite petnActlm lrldtistrw. Total f;xe([
Ava;labreirsoarcrs
capital Formation alm dot ibled dnriug 1970 -71 bi
equal GOP
pins net im ports efpoods and suriees,
since about half of the new capital forinalion va
ftlreigpl- fillanCtId, it did not impallge oil culsurner.
l:[GURtc 2, Use of available resources
exllentlitures, and tie I.itterrosc in line with cur. The
for ei gn f illv 'wer reflected Ill
C :i ti11Lil'ssfllllx' negotiated a USS�t0
hicreased nut imports of rmtlrces (Figure 1).
million private b ack l oad and, later ill tike yea a
T he 'in ipe nd tll g putrolemn boom also fueled public
$17.9 mi l li on _s agreemen wilt the Intema.
exlHCtations :old led to:a lmnature acceleration in
CJ tltlnal 1Unetilr Fund. a,5 a fCSidt of new cap
y l
9(7vc'rnment Spending during the 1967 -7 1)Criod.
Altl)cnigh revemics grow rapidly; they ii ere iiisufficient
inflows and :ill improved trade balance, net
to crner.thc ?O
20% atnlual Increase ]p ex1)L'rtd1l11rCS,
intern atiorldl reserves We re buill up fro -1 M Inilliun
1\101111tilig- final deficits were flounced largely by
in F'ebmary to $128 million by ;be erld of lice year..
Central B.&O. borrowing, precipitating, strong
pelroletlin exporls we initiated livi liti- August, and
inllationary presst)res after malty years of relative priCV
th n
e govennent, confident that tile financial crisis had
slahilily. 'rile dellland for imports not cove by
p am ed l) c:gan to case impor, an cre restrictions in
foreign capital inflows also rose, and Evoiador hovered
an effort to_ mollify d omestic husinc -s)neu and spur
Ilia the brink of a bahinec elf payments crisis during the,
economic activity.
lash year of tie linage) lhami, administration. rile
Ecuador is clearly .at a ermsToads in its
g ov e rnment re sponded to reserve los ses with imp ort
deve l opt n erit. T h e military' g ove r nment is com
restrictions, credit controls on commercial bank+, and
to reform Ect iadllr'S arrl)aic soc';OCLY)nOr11tC StrltClllrC,
devalilatioll of the sncre: however, the fundarnelltal
and new petr0culn nveililes can finance a re asanahli
problem of excess .liquidity, attributable largely to
ambitious program: Like its Peruvian counterpart,
fiscal irresvim% persisled.
how ever, til R o drig ttc' x reg ime is beco a wafo
In February 1972, the nlilit:lry, headed by Cen.
that widespread. social, reform and rapid canurn;c
Cuillcrri)o llodrigucz I.ar;(, ousted tilt Vclasai reg;rlie
gramdi ,do. not always go Hand -in- laud:. 'rile nc
atld immediately initiated .l stabilivation p ro g ra m It
regime is i ll the pn) ems of ass prioritiL s t(1 its
lightened controls oil private sector crcciif, .raised
sometimes co :levelopmcnt goals: D espite
advance import delxisils, and curbed govenrnmelit
rising poiblic expectations, it is. unlikely that social
3.
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I_1 �:160:1 M161:x:1 :1 3993/_ a: 911 11ZQlI lyflf /:11I1I1101111bI119M.]
r
wry, .WrrM,iH1.Mf .:+.....w..r.�wr...
vci.ure Hill iroprove markedly in the sl+ort roll, given
ovefall growth rite and acco)uuted for about 4 4 5 7 Of
(he [nagnitude of 1116 task and the military
GDP In 1411 I; or about the S:Inte as ill .19)w.
government's strong desire to push l;cnador
substantially further along the pa of economic
1. Agriculture, forestry, and fishing
dcvclopnlent.
Agricultui l output rosy, b an uunu uyeragc of
B. Structure of the economy
3_a[r duri tlh. l960's. appnixim ltillg tale poptilatioll
gmvth rate, but substanti;allr bp[ o)v alai 3.7; :ncr: +g(�
Relatively rapid grov!h in lli :wlufactlirirtg :uld
annual growth in CUP. Agrictihitral output is I)OW
consIrtidiun durin, [he last decade an(] thc.dlsCIMI
about e venly divided heEaccn [export products and
large (fllpantllies of netroleutl) h ave reduced
domestic crops. I olnestic [ntptit Supplies about Wr'
l.coador s dependence oil agrielrlture and oil
[if f'"Cl requirements and man 9f the agricultural ram
traditional expo crops.. Although E cuador .still is
materi,:ls rectnlred by lnlustry. Deniand is OR1111 [Cing
basically a rural society with inorc than Italf its labor
production, however, even though per c:kpita food
force employed in the agricultural sector, agriculture
cornst,mption iit Ecuador remains %yell below the Latin
aud fishing together aecotint far less tharl a third (if
Anwric::n average. Agricultural imports curtoinarly,
CDP (Figurc 3). Manufacturirig noiycoolndbutes more
include wheat, full a oils, lokricco, and dam'
than 17% of CDP, and factory pa)duclinn is
products.
diversifying rapidly in respc;slse to high protective
a band 434P
tariffs and othe ind +lstrial incentives. Constructi(i1%
activity bctaccu t9ti9 and !t)7I, slirnulatcd
Agricultural prwhiction in l:euador is almost
`L by oil exploration in the Oricn #e as yell as a hnusin,
exclllsi'ely confined to lvo anus thc fertile� coastal
boom in the larger cities, and it n'lw contrikiutes rltarc
plain f talc {'osta) a nd 9916 (Call })Cr highland region
than 8% of GDP. Commerce, public a #ililies, and
(tire Sierra). The Costa contains almilt W. of the
tither services expanded nlore or less in line with the
c'nllnlry total land aTva :and about 60% (if lE;7
cropland. Because of its proximity to the sea, 111ILCIN of
Ehe Costa is pat :ntcd to exlinrtable tropical crops.
liainfall 'varies wict-el}, however, Ind coffee growing
1%0 9971�
requircti irrigation in alai dria�r areas. '['he Sierra
l29S5 Mllliansa! 146osucres 22.9!6
e( inlprises only ?7So of the total land area and most Of
the reinainink cropland. but it contallis ;about half cif.::
the population. The region consists of the e astern and
y:
:7+
Agriculture.
forestry, sod
weStCrtl ridges of the Andes and the interniontaue
fis3sing
basins and valleys. Maicla of the crop .production for
domestic c usumptiors and nos! liv[h production
is(% l
Manu
11.3%.
take p lace in the Sierra. 11ursli 1opogr poor soil
Iniln.l;r.mcrtt, alit extreme fragmentatran of the l and
Construction
alb��
do to population pressure have pniduee widespread
soil erasion n reduce
a crop yields.
Transpoi atlon
The vvo remaining areas �the Oriente (East) and
spy. i
eommunlotion
electric power
E Gat u [7s fs la sds --t ge ther eo rn rise sonle. 4
p g t, P
of the laud area but are of little agricill(tiral
Mining
s 1.9%
significance. "rhe wet and.'ain1id Oriente region lies
cast of the Andes and slopes gently toward the
a
Commerce and
other. services
ATna7dnl Diver basin. It, is, lied 'il' forested, spars
,x
p[ p lll a te d, anti largely tindev Nonet heless,
ca ttle raising is of some im :ulce, and fertile snits in
Fsttrnoud.
"includes road anj Pipeline carseruedari
some parts of thr region offer land colonization
for petrotearrl development.
possibilities that are 1)eiFig lnadc M feasible through
the colnstrtictiou of aeress niads by foreign oil
Colllpatli['S. !'ale Galapagos Islands co 151St .[if :l t;Tt7ik13'
FIGURE 3. Gross domestic product,
of and rocky, volcanic islands lying about 600 rlliles
by sector of origin
off the Ecuadorean coast:
a
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{p
Putures and
meac!ows
Arable land .r IV
s5p/, Foraits
Built -up arm. 267
woste +and.
and other
NOTE: This destrihu0;n cmdudes the
Oriente and the GorapoEm Islands.
for which information is not araildhre.
FIGURE A. Land use
Exclrlding Oriente and tike Calap:kgos Islands,
mlv aboul of the laud area is devoted to
agricullure, ;lad over half is forest eovenKl (Vig tire -1).
The ruggedness of the terrain and the high cost of
Clearing forests. elnlstrueling roads, and improving
irrigation facilities are formidable obstacles to
agricultit rti eximosiom Population pressure o11 the
la� d is par �icalarty Lwow in parts of lire Sierni, where
the olua itily of cullivaled 4,.11d per inlwbilatil is as low
as 1.2 acres.
h. Lantl lentlre a nd agrarian reftlrin
I.:tnd (e nure (I"i 5) is .characterized by the
predominance of small sulisistcot-e farlits {rr1�11f-
FIGURE 5. Changes In Land tenure
(Area irr acres)
rrHCt:JTeRl; t11ST11111tTIOS
ftrrldios) and a Sill-Lill tnturber of large rirnitifulidly
farms Ualifroldlos). Most of like minifluidios :rte
loemed ill the Sierra and areengoged ill domestic food
prilduction. I"cunls of 250 acres or more made ill) only
2Sfi of tolal farm units loot necupied over .I 7 S of (lie
farm land ill 196S. Included ill this categor� are titer
cvrnnicreiul t1l:uliatians ill the Costa. which Iz�rodne'er
rnaiu;y export croln, and manage+r�oper:tted estates in
the Sierra, engaged nt :tlttly in livest;wk rtising and
fond crop production. About 20% of the farms ill
F,etiador am conrlrollc d by absentee im,ne-rs.
Although pressure for agrarian reforuilnrs not been
severe. ale govvmmenl initiated :t modest reform
prol;ranl in 196-1. Its goal~ ittelimed the abolition of
unfair temmey and labor systems: cY>loniving public
lands, .subdividing and resettling goverutllellt -owned
es tales, and e xpropriating and subdividing tinder
titili ed private holdings. The Itistitute of Agrcrian
Reform and Colouizatioll {II'.ltrlC:) was establislred as
the (main illiplerllenting agency. IEHAC was
autllorizcd to cxpro)riulc avid redis(ribute privalc held
left idle for 3 years or used "inefficietktly." and tc) set
(04x1(1111111 size limits for .111 landitolditigs. Covenrnterrt
bonds wcrc to be issued as compe:ilsalion for
expropriated lauds.
1i,cmpered hr a luck of financial rtsources aml the
organ4cd oppositii)n of the l ;ulticd gentry, the
ag arias. reforu4 p.- grails bas done little to alter
traditional patterns of halt! (enure, Iiy 1972 less thaw
44.600 acres lmd been redistribuled to 31,503
families: most of this land had been held by
governtoent agencies rather than private landowiters.
Ill addition, about 1,J00,000 -crex had been opened
odder ?.lie colonization program and siome 1.1.300
families were seltled on the licw ]itnd. Perliaps the
nlo�t 11otable achievement of the 1964 luw been
7
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NUMISVIe Or rA10 rt
T[f'r,11. A1111.e
1`Umber of arms
'101:11 area
I'A"m stzr
10;14
lOttB
105
1!hiti
i 4
10titi
1931
100'1
Le>vl than 12.5
251,680
�170,347
1,0SU,e100
1,772,5(111
73.0
:;.2
7.2
10.2
12 .a162
36,180
68.52i
078,7511
1, 165.
1,).:i
10.8
y.ti
b.e
05 to 40.9.....,
21,400
30.228
73:1,750
1,213,930
11,x7
5.7
;.0
7.17
5U. to 121.0
111,�11S
32,7411
1,478,750.
2.S 1a 7S8
5.0
4.m
r+.7
125 to 1
8.3 �_7
15,555
1. 3118,980
2.4.11,433
2,4
..G
v.1
1s.1
250 to 1,'2451.0.......
3,787
5,467
2,SOr1,750
4,119,7(11)
1.7
1:3
19.=
23.S
1.250 to 2,490.9.......
4364
922
1 1111.750
1, .1'30,384'
0,
0.2
7,$
+.1
2
705
-1_13
5.t1m,On
2,499,om
0.1
A.1
37.4
Total .1.....
344,234
633.218
14,90!4,750
17,344.847
100.0
100.0
100.0
(00.0
7
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the abolition of httasiumtgwje, a fort[[ of 1woll:tge
under which the Indians worked on la rge estates in
return fora small pit-Ou of !arid: Under the laW. the
Indians were given title to their, land parcels and were
to be paid wages for their work on the estates. To date,
the govermn tit has been less sscccssfui in eliminating
sharecropping :ind other unsalaried farm labor
bCC4LUNC such workers have been unablC to make the
necessary cast paytrtcitts to purchase their pmts.
c. Agricultural inputs and productivity
Agricultural productivity is aunkng the IOWCst ill the
1'estcrn lienlisphere. Most of the past rixe ii1
at',rieulhlral ()kaput Itas I)eetl attribulcd to i ncreased
farm acreage, although the use of modern inputs
I 'Whinery, fcrtiliztrs, irrigation. and improved
seeds also has increased, (mpriT 'e(l icchnologr Ims
been litrtitc(l mainly to large estates and collllnereiII
FarrIls. In the snbsistencesector, odicsm size o farms,
a lack of credit, and insufficient extension services
have prevented large productivity gains. lnfrastrm-
hire development has liven held back by the van�
limited firlancial and tCChuical nsuurCps IV, ilablC to
the governnicnt. A1nong the most pressing ne(Kls are
farm -to- market roads, access roads to colonization
areas. told expanded irrigation facilities.
Primitive me thods of Sowing wid harvesting prevail
alt the slopes of the Sierra and in parts of tile. Costa;
oxen and hand itttlflcnrcnts are used on mint will i.
The lose of rrtccklarlir d eclttiptnent is cortfined to few
large fauns. Consumption of ehernical fertilizers has
more than tripled since 1965, but their roes of use is
still low� and largely restricted to commercial farms,
The lisp of insCeticides is also limited main1v to
commercial faruls. The National lnslitUtC of
Agricnllural lleseareli (INIAP) has rua.lc sonic
pre,,;ress iu seed intprovoment� notably wheal. Corn.
tied some otter
d omestic crops ---but yiehls have
reittained low even by Lilin American standards. Poor
soil matt;tgen +ettt in the Sierra Itas rc'sultcti in
Widespread erosion, which bas reduced productivity is
sarnc a rcas.
Althmigh agricultural credit has been increasing
fairly` rapidly, it is still inadecluatC. As might be
ext)ected, a large proportion of ii Ilas hcen absorlted by
the large commercial farms and the export svetor..The
lack of credit for small farmers is linked to the `laod
terwre problem; since instituliolia! credit is 2 :01
generally available act farmers that lack clear to.
their ];tied, despite legislation requiring private banks
to invest some 15 of their deposit liabilities in 16c
agriculti ral sector and despite increasing :,mo!lnts of,
external assistance. only recently has nit attewipt been
i
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made tO increase credit to small farmers. The U.S.
Agelley for Irtlernational Development (All)) hits
esttblish:.�d an agricultural trust fiend for this purlwsc
to he administered by the Central Balih.
d. Principal crops
Ecll tldor prodnees both tropical acid temperate
crops for export and is self- sufficient in most domestic
food crops: Its farm development pro};rant is designed
to increase doniestic food pr(xinction� especially
NOVIM:n1S, peanuts, lentils, beans, peas, African fialm,
and Fief ---mid to divcnify agricultimil exports. Wide
variations in weather and in export I)riCeS.have had a
major impact on bath the agricultural sector mud t he
cconrnn as a whiffle.
(I) Export crops� Prod tiction of the tradiliort:tl
export crops, li:manas, coffee, migar, ant :'ncoa. has
Varied according to wealher Conditions and increases
in planted area. mwage. yields have not cha
nlark since 1960 (Figure W.
The most inilxtrtaut export crop is hanaims,:wIlich.
suppliml about half of total czparts in 1971. yetis than
half of.the banana production is exportmi, and oho
remZU -der is eithe used for domestic consomption or
w'iksted..o was a reword -1 million tort_� in 1971,
even though the arc;, under banana production
declined by.5% afterthe gOyerntttl-'nt l :lunc llctl its crop
diversificati-,n program in WK. '['his program has
fostered a I shift to the higher yielding Cal-,w1ish
variety, which is more WONIMR to Plata diseases and
more readily acceptable in international markets; the
!ow�cr wielding Gros ,Mirlwl variety still.predominat.:s,
however, iek terms of total planted a:creake:
Soil sand climate conditions--- liartical:;rly in th
Provinces of, LOS Rios;' 1:l Oro, Guavas, and
Cotopaxi� would allow ntiich higher banana
production beet a momithig world surplus has limited
sales lxtrsiliilities. Although Ectiador rcrnains, tI!e
world'% leading banana exporter, its market share has
declined steadily %iliac 1964 becatise of stiffening
competition from Celttral America, Ta alit. the
Philippines. In retvnt rears, Fctiador has offwtsizahle
losses in U.S.. and WCSIe m European markets by
lterletrating other areas, nowlily japan; however.
ce MpAition in those markets is also intensifying.
To rninintize the economic impact of a potential
reduelion in carniltgs from battana sales.. the
goyernme is, attemotirlg tO diversify pro doctioli in
the major growitig areas. Sma,l producers already have
been hit !lard by the virtual exclusion of the
'F'or diacritics on plate rsatncs %w the list of ts:;mrs at the end of
the chaplrs.
CIA- RDP01- 00707R000200110032 -8

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r
T
r
11
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tr ;cclitianal (;TOO Jklichcl variety from world warkets.
Ahhoug;h the African palm appears to be well suited
to the Maroc sails atud could vase the production defivit
is vegetabie ON, ucither it te other m4table crops
Would provide as =utrch entployotvut anti itivotm� as
banarta production. 'floe government is s1xinson119
development of n mixture: of bautatr,ts autd corn for sale
ns livesti.ck and chicken feed.
Ecuador also. has* an ovvnttpply of coffee. 't'ltis
commodity, which ;icevtemtvti for UV of 1971 exgxuls:
is grown liriucipally in thevoastal province of Ntaoa bi
eat inefficient orte- fault'. t� lawns. Over the tears, coffee
production has fluctelated widely, dt gx�nclingt on
weather cond,tiolls in 1970. coffee production
substantiullt� exceeded the export quota fixed 'under
the Ittternattional Coffee Agreement, and sizable�
sirwks accrued despite a quadrupling; in ,-,ties to
nonquota markets. lit 1971, output rematinrd high,
while Ecwidt r s cxlmrt iluola was cut ;tit([ nooquota
market prices fell from their 1970 Ieyel. Although ;ill
""imaged Otte third of the 1972 coffee crop was lost
becantse Of bad weather. Ecuador s sopplics are
expected to be tttttre 111:01 sufficient to fill its exixirt
(Moot. of (i M}0 bags.
Cuvua production in 1971 reached the near record
level of fi0,0lH) tolls; oulr Iwo-thirds of the outpu! ax
exported because of rising; domestic cons. urnptiou.
1�:cnmdur's cow a is ire strong, demand ire internaition:d
rttarkets because Of its special aron)alic flavor.
Although it is very susceptible to disease, producers
have beers reluctant to change to cm disease- resistant
trees that du not yield the arorrttic yariMV. COML.
which accuttnled for IOrn of exports in 1971 is growil
mainly in the constatl proviim s of Guayas, le>s Rios,
null ,lfatsabt. With govenunent incentives, cocoa
production is expected partly it) replace banana
eullivalion oil souse coastal, pl;mtations. stn increasing;
portion of this unlput will he domestically processed
into powdered 1cocoa.
Sugare�anr production has more lhaut doubled since
1 1960. easily keel :og boleti with rapidly rising; dorticslic
c onsttr np tion and export demand. S ugar exports,
w hich accounte for 5.6 of total exports ill 1971,
fluctrialc ill aveordalim with the U,S. strg;ar duola,
I'nithtclion ecsts g;euvrally acre too high to I)crntit sales
outside the I U.S. market, but Eenador brew Ort,
accumula stocks to take advantage of abnormally
high world inaerket, pHecs ill 1971. Sugar deliveries let
llte United State rose considerably in lire first half of
1072 because cf air ioerease in 1'sc111ad0r's quota.
Productioo o', centrifugal sugar in 1972 t( 1.
?1;5,000 shor:'tolls.
Pyrelltrtint, a flower that is dried aaml txwdered into
:o Outstral in�tetieide, w as introdetcrd as out export crap
fi
in the- early 1960's. Lower world tnarkel prices a
higher iMiljtretion. casts reclncvct profit tnarg;im for
domestic producers, Icadiltgt to a sixthly dcc�rease in
i}te area itlanted to pyrclluutn in suhwtluent yeah. An
increase in thesupport price: paid to fartnen resstited ill
ioerc ;-Std planting s. but output fruut the young; plants
is small; total mitim, is 1971 was only about 7(H) lolls.
Otlter mitsor ag;riceel;trral exporls irtcletdtr lea, .fruits.
uutshutorns, castorlwolls. and cut flowers,
(2) 1)omes1fc vrolm� Protltrctimi of clarnvstic
crops espeehilly corn. cotton, rice. wlivat, hcans.
barley. and potatoes �lias la;~g{ed behind detrtatrtd,
which has increased rabidly I)ei'anM7 of the high
population growth rate and rising; incorrte Ievels.
Aithoug it so ;itc Progress has been Made �since the ttiid-
1960's to�ard increasing; yields of seimc atop;, they
growth ill output is largely altribntablc to expanding
at�rcag v.
CLOTH, which traditionally ha. been grown in the
Itighland., is Fv11.r;3ors most intlwrt ;trot food crop.
Both the ureto harvesled and total outpnl reached
record levels in 1971, ill part because of inere:ssed
l,,auti,ts in the Costa and the Oriente �here yields
are itig;hc :r, With :ut autltul opltro 0!),0!}0
metric tour, writ amotrats for about nuc -third of all
cereals cKinsanicd by the local ]x,pul:ttion ,and hats
become increasin0y important as a live feed.
Wiaat production hus declined as a result of two
successive poor crop years. Oulpul dropped from
9.1.0Q.) tons i;: 1969 to 70,000 losts in 1971, requiring;
imports of about tWjXK) toils to satisfy local deittand.
Prodoet:on hats Well held down h hoar wea lher.
shortages of scc'cl and fertilizer, and the tsutycrsion of
some wh eat acreage to barley for the m1 utding;
brewing industry_ tin sorts cif barley ond are also
required to supplemen m
t doestic output.
Mice production has risen sharply sbtce� IMS as.a
resell of higher yields friin improved euliMitiou,
methods, imp"wed seeds. and increasei ttse of
fcrtilirer and irrigation. Despite heavy rains it) the
cvatstal growing; areas, 1972 omipetl was expected to
exceed the 1971 re( of 200.000 metric tons.
I'otatoes and cassava afire the major root crops
g;ro%vii. Potato production, which is concentrated ill
the Sierra. ex"Veded a00,M) toils in 1071. Yield's hays�
increased as ;t result of plattttittg improved varieties,
better cttltivatimi practices, and greater use of
fertilisers and iriserticidcs.. Cassava is [lie* basic root
crop grown ill the Costa; atmitatl production averages
1I,0[)0. tons:
Prudctetiort of pulses has doubled since 1962, and
tile aarcu Planted to Mesons has increased markedly.
Bcans mainly ccttmnon rlry, hcauls, arc grown chiefly
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FIG1 7. Livestock numbers
(in thousands)
t n1u1 11037.
Ilurses, tiluivs,and users 50130 510
Cattle... 2,20(1 2.300
Flogs 1 1,27x:
1 t1'r 1.: jf1
C oals 170 IN
I'auliry. 0,5010 'i,S:3t1
TotaI
1 1 359 11, 5S8
1 Ms
196
1
5111
ri 31
+03:3
3.393
2.400
2,4441
1,294
1,300
1,330
1,511
1
1,2100
184
123Fi
181
5,537
I'l 511
5, 5
11,73-
11,783
11.11113
ill the Sierra and are an imp minor food cr
rC and. calming faellitleti dls r n p tS 111131
e or beans a alstz iieing [lC'CIUI1LYl ;1ti. a. ininor
distribution to.11eban areas. i�'lo cr, Periaviiin cattle
r
export crop. Cotton is all important nonfood elt>
hovers have been conipeti fig. wit It local hovers for live
crop.. Expanded acreage and inlprllved seed% )}lave
Clittle, rL'Stllling in a rising con(raband traf:ec.''rhew
made Ecua almost self sufficient in cotlot hllt
su constralktits and a using del laild' fv red meat
damag Frailly i n 19 1' twCess la rger im I[1
h av e d ri veii pricvs stead '+i pwarc l in the nlatin
tikllinlY the dom estic (CSt1lL' ifldllstry..
colls11111I)tioll [Y'llte of Quito .1t1[l Goa va[lllil.
c. l it eafock
Marge portioll of tit, milk supply :I I(1 most of (lie
beef are ol)laillc& froill local Criollo cattle. although
Despite vroving demand for liw'sttck products,
7.cbu, 111creford, firal[tllan, arid: Holstein cattle l) avc
particularly red rtleut, livestock uklrobers and toca;
bee it imported for lire ding pit oscs..l'ovilcre(I milk
production kwitinile to increas(: at a von S10' rate
is li nporled to Su pp l ement donl e StIC n lll k pro(IIH;titlll.
(Figures 7 and 8). 'rh catt pop[ilation. Which has
which has generally failed I ke pace with
hccn growing at an average annual late of about 2fe',
pi)pillatioti growth. Factors impeding the expansion of
is distribllted;anlollg dairy Perms in the Sierra and beef
the dairy iedtistry include the inability to transport
rallelles, I oil the coastal plaills. Developmerit [if the
milk over long distances, tine expausioli 0f Crop
indts has been ham p ered byioa
C'111t1Vallnn at the expense o f. I) a stlrrel: l rt( l, an
and _storage facilities, animal losses from foot atid-
artificially low wholesale price ceilings.
ulolith d"seuse and cholera. and the ponr quality of
)lore intensive development of the. cattle irldilstry.
a ilirnal feed. licpro(fuctic efficiency is lov,
has beers the` aitil of three I'
T- Bank for
Focal meat prGdtiCtiQIl ill 1971 Was estimated at
'Zectnistruclion and Development (IMD) loans
only 86,000 tons, or 33 pounds per capita.
totaling US$15 million. The first two loans were
Slaughtering facilities are limited, and butchering
earmarked for improving the coastal 1-eef. cattle
Outside of licensed facilities is coininun. The lack cif
industry..1Wiinly b y L�unverting banana acreage and
FIGURE 8. Livestock products
(hr thousands of mofr ;c fans)
I9titi
IM7 111([13 1111000 0117[1
Beef and VPId' 42
4:. 11 42 42
Mution and larnhO. 7
7 7 7 7
Pork........... 21
23 �t 36 3;
Pntllir)�.. a.4
f.3 6.o 7.41 na
Milk a4o
cats 480 450 X93}
Is' c.......... E0.1
10.2 30.2 10 :2 10 4
3.1
3 2.4 2.4 2:4
'T'n1ul:. 520.8
b�18.2 570 :0 -55.2 ss581i.9.
na Data not n�uilable..
'Con[merrial production from indilprnous natlnnls.
00 1970 tolal doex not include puttltry meat.
S
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wastulaild into pasturelaml. '1'be. third loan gas
I':cu:lc;.or iid lime (I a long rang^ program for_
exlen:lc(i iii laic 1870 to finance iulports of c }u;llity
t)iltullled exploilaIioti of its forest areas Sn iK, �.01etl
bee anti dAry cattle--- ilrlinir from the Uoittx!
13 timher (oocessians were gra fitted on 840.000 acres 'sn
States -as well as. the creation of new pasturJaud.
Esmeruldas. Provistice, Under like terrrls of the
Research hi livestock mitrition and inanagement,
19rcxmcnts, each c'ompativ was obliged to pay rental
InCitid kilt! deve.`lopillelit (if nev feeds, is uririg
fells for like! otlli %alioli of l:lrid alld timber. to.erelplov
C:Crle(l out 1)y �t'lsll'. 111 addition, thegoverituient has
loCal tt-el r1]Ci.Uls acid hllmr. to vstahllsli Integral(A
plans for. establishing cattle breeding cro(ers and
luttiher oper:ltions, and to reforest harvested :ircas. In
ltulderniring slauglACT110usc 17361ities- It also has given
'1970, 11 of the 13 C011C r sS10115 %'ere C.LTIMIed hCCaUSe
high priority to developilig beef Cattle r:atlellltlg ill the
tll eolllpanies had faile to hiit1ato corvArlktai0l) alld
tipper regions of the Am 1 %oit Bashi, aii area that is
Illstall:ktioll of, rzeilit'ies. withiii [fit-, si- w6fied I tulle
heilig opined by I)CtrolethlTl (1C 'e1c1 })II1CIlt.
period Despite t set b ac k, 1 -1 additimial s- imeessiolis
The sheep :Intl hcg populations lluve hi-ell
Covering 1.1 million acres were g.,raiited ill neighboring
ipicreaslhig- soille1'hat more rapidly thaii cattle. Ilie
areas in 19 Prospects for accelerati the
sheep popnlatioil, esiitllated at 2 million in 1972, is
kploitatiort of timber resources were, improved by the
(Y1E1CCIitriltet! in the Sierra -about equally divided
1971 Law for Foresiry Devcloplilclli which O ffers tax
b etween larg and su bs istence f arms. 1 TT1}HOved .s heep
a nd impo il1C1'Tlti'CS for lrll't�4mellts iti this sector.
breeds have sleek imported from both the United
The otllt' imporl'arll forest ilidostry is saa�Illilling.
States and Australia uildera government development
Sioce t he mid-.1960 the aimual'tinlbc Cut totaled
pm g ran l: t f irA phase of ibis progi -Wo emphasize
r
a b out 850 miliio cubic feet, of chich et} r v as used
the pro1 half of direct in'esttltell(' from. non -U.S.
r
generate employment and provide a nglllar fltse of
The small si--m of the dmiestic market limits
raw materials for agmindustrv. The IBRD. estimales
sources.
1xn5il}ilities For ftireign investment, bnt gt >vernmcnt
i
that project ctonlmitrments from international agencies
politics: and the degree of lxllitical stability will be
should average US$80 milliori .annually in 1973 -76,
mo re importan factors o%�er the i1ext few }'cars.
necessitating a c�[ona)mitunt increase in domestic
counterpart funds.:..
3. Manpower
Private capital forulation has been the most
dynamic force in investment gr owt h since the lilte
Tile lubor force In 187 comprised uboul 2 million
1960's. Sparked by large capitol inflows fmnr foreign
persons, or 31 m bf the total population-Because Iiecausc of the
ail companies, private capital Fnrmatieon increased an
high birth rote, about 11 llf of the population :s iltuler
21
2222 _:,::..,....:,k- :.a:: first:
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FJGtIW 19. Gross domestic. Investment
(Millions of 1960 sucres)
11167
Fixed eupital forinntion.. 2,277
Public.........:
Privstte
1. 1 111
Changes in taek t4 312
Total domemia inveRUUent.... 2,617
Fixed enpitnt fornintion nx a percent of (MF...... !!.R
Financing of capital foriwition (in herevnt):
D oatestic mwingx 78
Foreign capital...........
Vroukional.
��loll: ertiniatc.
13 )'ears of age. Nolore Ill. 5.150' of the la bor force is
ernpl6vtA ill agriculture, agroilid auul related.
services (Figure ?tl); liver 20% is uugaged ill Ills
l;rctiink Sall exporting elf hananasslollrt. Manufactur-
ing is the second ranking sector ill provitlilig
cngllovitl^nl: while govcnuneitc and other i-crvicws,
cutrinlemv. and cmistruction eniploy the bulk of tits
reinainder. Factor eniplovnt@]lt has illcrea'w'd very
rapidly.
Urbanuuemplovinent has increased witli the rising
z influx of unskilled peawints from rural areas. The
1
National Planning Board estimates that WO of Ilia
total labor farcc is unemployed or 1111d6reinployed.
The predominance of small scale operations and
q 111titlllal labor restills ill relatively low pniductivily ill
both agriculture and nuluufacturillg. Low edue:ition
levels, poor health, and insufficient teclinicatl avid
managerial skills also restrict pwiltictivity. The
government is al icinptlnfg to reorganize ..tid linpTove
tlle..,educatiou systcra, and loth A113 aid the
lllli8 1969 i9 -P tire1��
2,775 3.276 .19h 6,009
(932) (1,1413) S 1,2:37) (1, 103)
(1.843). (2,.17:3) (s.b.%r9} I,5�lli!
371 �101 it) I 120
:3.1.16 3,USU. 1,,i1iU 13,1''r
13.7 15.4 18.2 2".1
36 39 47 :i 1
vocational tmininr programs. The h1diall llopulut'too.
which comprises rough1v 40'c' of the lot:tl popiilatioit,
is I:argeh' unskilled and participates ornt y3narginallv.irt
lite uaamey ecollotny.. )ob rllohility is ilnprdcd b%
traditional attitudes, poor trousportiatinn, and
ignorancti' of rruploylllcnt d, ltortuititics.
Geographically. the labor force is distributed very
lillevtriiv. Ill 1962, the Sierra volitaiacd ahoiit 3�t r. of
the labor force :oar! the Costa :niothNr I.M. At th
time, itiore than one third of the labor force t�as
c mcantr:ktled in Quito :aid Cti:ty shc�rc Ill( "I of
the larger nlalirifacturing firlus are located, The
rti: t'S sii'c irlflux of nnskillud w into Quito a
Gusyagitil has increased unetnployrnent and the
dcttiaud fair h6kising .aid other services. Ecuador alsa
suffers from a "brain drain,"� as the vouligcr, better
educat"d. and mare skilled wor seek better
euiploviricut opiwrturilties abroad.
Labor iegislation, which is c'ontaiiied it lite 19313
labor Cor!c, the 19.6 Constitution, a ind�subsccluenl
1 lntematu l.Amer Orgarurltion are assisting in laws, provides for :rtl 0 -hour weirking d:rv. a t t hour
.i
FIGURE 20. Distribution of Inbur force, by economic activity
3
11140
11165
1971...
r 'Total labor farce (thousands)
k i37
1,651
2.007
Permntagr diatribut4n;
Agriculture, aoraladsustry, related aen�ices
i,7.7
SB.7
55 -R
i
hrsufr.e ISrinJ(.. i...
1.4.0'
1Y.l
13.3
t Commerce.:......
6.4
L.11.
7 .0
Trannport.und communications..
2.8
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'1ltnfr3.
3 Construction
9.1
3.6
4.
Electricity..:.
0.3
0.3
0.4
f Public udministratiaa...
s Other services........
14-2
12.5.
1119
Total
!0'a o
!0'a a
Iaa o
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work week, minitntim wages to he set by the
government, oth er worker benefits such as vaeation>
Pldl nnrJor U,5 dalius.
and I)rofit- sharing, :tlld regulated wooing et)II litielrl%.
Workers and ernployers' associations have the right to
strike, and. procedures hove been es, for
1
settling Libor disputes through a special tribunal 11r, in
Elie .16miee of a negotiated agrm-- ntcltt, through a
=3W
government appoinled laWr administrator. The 19.12
Compulsory Social Security Law provides.for'sickness,
24ti
Im
Inaterriit {lisallility, and all{} age and (feath benefits
for widoWN and orphans. At the end of 1969. hutivever,
less thilll Of the labor force was insured under the
210,
program.
There. are three major labor confederations and
IN
r large number of independent unions; hilt less than
sptx
17rn of the labor fares: is organized.. Ire mid -1972, 1lie
ibp
E.cuadore C nifederation of fret' Labor Org ;itii%'k-
tians (CEOSI.) Ii5ted .10,M) m embers, starpussing (lie
30,t]W "live members of the Conimunist-CllntrolINI
Ijp
Confederation of Ecuado rean IYorken f C1'sy. fhe
lscuadorcau Central of Class Organivationv;: CEDOG}
eo'
claims 18,000 mcinben and Followers. Labor unions
it re ci %ncentrated ire Qnito. and Guayaeluil, wjilt
membership drawn primarily frcin manual laborers
white- collar workers. and artisans I employed in
industry, government, Viand ecmtrncrM. '1'ite lgricul-
T
Wd8
tural Sector remains largely, unorganized.
+982. 61 bb fQ 7r
In Decemller 1970, .tlte. rlinin nin n) rin tl i ly N' at; e
was raised frmn USU-1 to slightly more than &SO for
nonagriculturd workers, while the tninimrm wage f or
rural worke remained it $24 in the Costa and $118 izl
FIGURE 21. t3atonoe of trade
the Sierra. I Prevailing labor market conditiolis
inflttcncr 1% 9c levels more tll :in fr{lcra! cr,dcs,
difficiiltics in other banana- praducing countries
however. Industrial Wages generally exceed the
(1'iglure 21). Ecuadoes I:kck of export diversification
nlinlritllm level, v111 11 gn C Ult l: r:tl Iv ages ar [1 ft C[1 fa
has m ade [li colnoray v ul iiera hle to fl ucltla:ing
w I iLlotV 1t.
4'Ufl CAI'iliCI for barian.1S :111 {1, to :1 lesse e %tent.
CYl e0co an d however, the d eve l op m ent cf
r D. International economic relations
the petrr)leum itidi:.stry has Substantially reduced
E:c'tiadtir s dependenec on tmpic.d ap,tictllt'lral exports:
Fareign trade
fx 1 Frreign tra is highly important to t Letladoreatl
a Comprsilinrt of trade
ccilnumy.. Exports e qual about 16% of GD1 and
Ru1,; eta coffee, cvco aril sugar provided' rrnrre.
fluctuations in exports greatly influence overall
tha=t 8051 of total exlxlrts in 1971; bananas alone
ecorio rlic performance.. Rect)rd high export levels in
actYotantcd for half e,f the total (Figure 22): Ecuador
1i910 an 1971 helped to generate a 9 :il1uual rise in
brriefited from a postwar hantina export booth until
real output. Ecuador rnccs heavi!y :m imports for
C }kr. mid- 1960's, tvIien. increased impetition fn)m
various industrial waterials, most capital goods, urd
other pr -'Ati r.rs began t as to regulate its foreign
lleuih weighted in l:ciuuti.ir's favor. As result of this
trade. Import acid export duties are alwa import ;int
i :nitalance, Ecuador has mo its p
agreements. with Hungary and Poland to pntvi for
revilMIC r rtt casures; irnitort controls ll ;t ve arced
periodic selllemenIs ill convertible currency, and
lttilized to. onitect domestic industni and (tivourage
I l3ul aria plans to disecu
g p ltiulll its. ill 1973.
uanessential imports. in 1971, ECkla nor. adopted the
Barter Crude with the U.S.S;R, alas fa red some what
Brussels Customs lvomenclattire and i:tcl+rporated
heater; l:cundor bus. irnportcd Soviet cement, tractors,
existing specific duties and all ad calure.m surcharge
l and #nicks in rxchvngc: for tropical. agricultural
into a orw cltsloms tariff.
prothiets. Banana deliveries are expected: to increase
l moitted imporls are divided into two categories:
cightfaltl llctweeIY 1971 and 19 5, and m rcqui
List I (esse goods, comprising about 85 of
Soviet puymt -tits in :cas as well its mantlfacturetl
licensed imlxrts) ut3d list ll {ottr.r imports All items
goods:
not included on these lists are prethibited, anti license:,
Since 1967, Communist 'colon, drs have extended
are joired Fitt th bulk of per nitted imports. As a
US$15.�l million in credits.to Ecuador, of wilkh only
requirement for the granting of lic vies, import duties
36.2 millinn hits peen drawn. In 1967; Czechnslovakia
and additional tuxes wist Ito prepaid in full and
extended It `l�7 million credit for machinery p 5
a ilnporl deposits must he. placed Wil the
and in 1y[i9 l'altlnd extended n 85.tnillion credit for
Central. Bunk. Certain imparts ialclttdin; some
electric generating plants. In 1971, Czerhorlovakia
industrial rati mutcriul+.lnd goods financed by foreign
25
o- w.,.�...:,..,.,.:,. a, n.... .....:.we...w...nA.w.,..r.:. s..w:..�vv,.r.:ri
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IMPORTS EXPORTS August 1970 and set a new official selling rate.of 2.5 Percent {o.b.) SltC res USL 41. Tltisrate al)plitw prirtcipally exports,
C O ther ilnlxtrts, guvvrismoot transactiols, aild .transactions
Communist related to registered private capital. Approximately
.9 countries of all transactio:s take )lace in the paral fret
Cher Loin I'
American countriesm: tp exchange taarket,, Whew the raw is allowed to
10 Andean Pact L
countries flucltiate. During the early rnouths of 1972 the lucre
r to Sold at about a 10 o discount iii the free inarket, but
)ativan� 1973. the Sucre strengthened,, selling .11
European
fro* Trade Amid the official rate. Following the February 197c3
Area 17 dc�alu n atio of the U.S. tIollar, Ecuador's Monetary
2s E o om< u Board set the Batik buying rate for dollar, at.
21 community 2 t 1 7.1.80 sucres and the selling rate :it 2 bill the old
o(which Sol late continued to apply lo,netrulcum tt:tusactiotis. The
04) (Well Germany)
Lenador!an Government also expressed its intention
to unify the offici;E and foe market exchange rates in
1)TaCJ ee.
39 3# United Saccs Ecoador has set up au (nstilute of Forcikn Truk
i and Integnttion to coordinate its parti-ipation in the
Latin Anterican Free Trade Assoviatian (3 and
s the Audeau Ce)mmorl Market (ANCOM), as well as to
AW 1971 tld7 trio develop an export promotion Ixolici% Brcauw il,Ey an
considered less develOped,. tat�tiadr, Bolivia,
FIGURE 24. ircc?on of trade Puraguay, and Unrgtt:t% are arctirded special stattts in
f loans --are cwrnpted front advance isuport deposits. 1AFTA. Ecuador :retools
preferential trcatmrnt 'to
'These delmsits may also be reduced or eliminaled from imports of approximately 1;7(X) J)foc}ucts from other
tile impacts etF domestic firms actiurded high priority [AFTA mernbcls: Ft also maintains reciprocal line of
Joy :the Ministry of Industries, Cstmrrtcrce, anti credit with Peres, Colomlfia, Mexic'r. [irolisia, and
Integration.
Bra zil, Ecuador and 11olivia are also acaor(Icd special
:n ,corder t insure th e full surren of ,foreign privileges With ANCOM, whose other memhers
exchange proceeds it) the Cenlral [sunk, thr. incletda Colcsmbia, Pent, Chile, and Venezuela. guventmeni requires that altnt>St all cxpurts be Ecuador is a xignatnry' to the International Coffee
licensed. Ecuad amM"cS specific and ad rxllomIll A gree me nt but is nut a member o` CATr.
cxpurt duties on bartunas, c sugar, eeicYa, and
sea�ond. Ban sna taxes are based.on reference prices 2. Bulanct of payments
fixed by the gavernment. ivlurny manufactUmd err
pr)cessed goodN and Other nnsntraditiional.agric:ultutal. Fcuador s. trade balance, Which Itad been very
ctormmn(litics urc exempted from export duties and also
fuvorable through �the early 1960s, leas. progrtssiveh�
benefit from export subsidies in tile form of tax credit
Worsened hecatem of rapidly rising imports and uneven'
export performance. ht widening trade gap, tt)gethcr
certific:tles. .with a mounting deficit on services, resulted in a lame
1 [n August ii}70,. Ecuador undertook a ct)mprchcn increase in the -current account deficit (Figure 2i). Its
sivc reform of its exchange system that included a 2t3ro impact ou the ove balance of payments .as
devaluation o� the siicre; it also estal,lished ad nul0rrm mitigated, however, by a tenfold increase iu gross
intpnrt an(I export duties. [it .1971; tinder pressure from direct private ins'estment, mainly for petroleum
f the private sect� r, t }te authorities reduced- ur dev lnpmcnt. Although tint r)ffleial long term Capital
eliminated scvend export taxes and reduced advan[ a infv
los were only US$H million to SM Trti]lian
import deposits; but these actions hclped to generate annually during this period, totyl Capital inflows mere
senows balance of payments problems. In November sufficient 'to avoid any appreciable Icons itt.net farolgn
l97 i, the 1 eluxrn
government rec tal)lished the tl?Ual rrscrves until I9i F: That years balance of payments
excllungc onto system that had pmvalled prior to deficit Muted net reservers to plummet in. m S'%
AR
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FIGURE 25. Balance of payments
y (Whans of U.S. dallors)
PUMA
190"
loss 1900 1970 1 971
Exports, f.o.b.................... 207.3
LIi.B 104.0 233.9 291.1
lmpnrle, c.i�i.� 23�t.
200.0. 301.6 311:6 365.8
Trade balance_. 27 t
75: 8 106.7 74.7 1;-1.7
Services (net)........ -d2.3
-52.3 -00.0 -77.2 -2A.2
Private transrere.. 5.0
4.7 5.3 5.4 5.3
Current areount balamv. 04.7
123.4 162.3 -140.5 205.6.
Public lnsnsfers (grants) 7
8.5 7.0 8,3 7. e'
Private long -term capital (nett....... 17.8
30.6 75,3 00,(I. 143.3
(Of, which: Direct investment)... MAY
j (241.7) (72.0) (90.0). (117.0)
Official long -term capital (net).. 21.7
28.6 13.2 25.3 16.7.
Capital account balance �17.2,
67.7 95.5 123.0 161.7
$port lerm capital (net) (includes error+'
and omlmions).. .2.5.0
40.8 71.3 10.0 10.8
Allocation of SIM's
.4.2 3:5
Payments surplus or dMicit +8,4
78.0. +4.5 -1.8 -29.0
Increase ar.decrease in not
foreign reserves.. R.�1
+8,9 4.3 I.8 +29.0
Not pertinent.
'Adjusted -for balance arpaymentz purpwAs and thus
do not Agree with totals shoran in Figure 70�
m illion to $25 rnilLotl^-^the equ of about I
e xport ,receipts also wil appre t ext
month's imports.
debt burden should not reach unmanageable E2ro-
Increased import rr+trictions and the initiation of
portions�
petrolerun exports brought a substantial improvement
The U.S. Government, the principal source of
in the balance of payments in 1972. I.icrnsed exports
foreign assistance, has provided nearly two- thirds of
ruse 39%., while liceasetl imports rose only 8%. and the
the total of such assistance received bctarecn 19.16 and
deficit on the trade account narrowed substantially.
1971. receipts of assistance, by sources, during. that
'Chic smaller deficit, coupled with large inflows of
period taco as ftllltlns- in millions of U.S. dollars:
long -term capitul, resulted in u basic balance of
U.S. Government:
payments surplus of about US$100 million, and
Economic 310.8
international reserves rose to $12.8 million at the end of
:tlilitary (30,0
s
Totnl U S. Gtnemm ent 371.4
As of. June 1971 Ecuador's total externu4 public
i debt �julstanding. amounted to USS237 an
International agencies;
.million,
International Bank of Reconstruction and
f increase of 7091 Over the 1856 level. Of tiffs amaclnt,
Development 71.3
nearly 80% represented central government indebted
International Finance Corporation 22
Arcs. AlAjut 30% of the total foreign public debt was
Interna60nal 11mlelopment Association 24.6
held by in ertial Lunks anti su[?ltars.2fl9b b }'.AID,
Inter American Development. Bank 7e.2
20% by 1DB, and 145 by F,cuudors delft
United Nations Development Program 21.2
IND.
Other Uniletl ifnt[ans 5.8
service: ratio is Ilt high by Latin American standards;
estimated debt service payments amounted to only
Total intrmationai 203.3
15% of the receipts from exports in 4971. As the result
Total 5741
of large now Inans contracted in 1972, Increased use of
F s uppliers' credits, and a dru of the $164 million
U.S, economic assistance took tile, form !if grunts,
in the foreign aid pipeline, total delft service payments
development loans repayable in dollurs, and deliveries
I are expected to rise.over the next few years. Because
of surplus agricultural commodities under P. L. 480. In
f
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additimi. iti the US$2(k3
millimi rece frelill CllrhlllitmentS. fr4mi 111ternational n6lc�ie5. Its 1111le
IlltlTrtlallfllt aj l)1' i113C
1, (H'e f st7 million V` 7
for example, the IBRD �'i s5 considering it it
relllailled ill (lle plllelilke. The
rC.alively r ilitprecedentet $130 M illiml Ii lie of Credit (11.I111i11mv
Imlicies lltitslted by [lie Hodriple% goveriltlll'ilt and the varitlll5 edtleatioll. port, live%tock fisheries. (illiber,
Inure sh ale political outlemik
auglar well for irtcn-ased irrigatiflll.
and cellt3niiali projects.
Glossary
AN CO i% I
Andean Common Market
CE DOC'......:
Central kruateriano do Oritoni;acionrs
Feuaderean criarnl of Claws Organi -a�
Clasistas
tionm
CE \ME:S,....
Ce n fro de ArwrroNa lnduslrial del
Industrial Developmi�nl (,enter of
Ecuador.
Fruadar
C F0,41,
t'vafederacian l: cuclorianet de
ti ruagiorean Gan[rdrrtttion u[ Free
thpani:arionrs Sindieaks Libras
l.alror Organixationit
CFPE........
Catpuracion Litatal Pttrolera
F.cuado State Petroleum Curpo�a.
Rtuatarianu
tion
CF'N
Corporation Finanrirra acional.....
National Financial Corporation
COFIF.C......
Corporation Finencirru 15ruatoriana..
Ecuado Development Finuntr Cur-
Potation
CTE..........
Cenftderdnion de Trnbajadares
Confedernlion of Eettadarrta %Vnrkerx.
13euatoriartae
l31 PROFIT..
Emprrsa Naeianat de Produrlw Yitales.
National �V ilal Products Compnn}
FLOPEC....
Fiala Petrslera Fcualoriona......
Fetiadortan Oil Tuakrr Coalpany
IFRAC.......
Institute Ecuatorieno de.Reforina
Iartitute of .Agrarian Reform and
Agroia g Cnlani rocion
Cotonlution
INF.Ctsl.......
Inal li ruatariaau de Fterfrificarion.
Ecuadorean E:lpcirifiratiun Institaly
I NIAP........
lnsfifulo 'Nacional de I nrtsligariones
National institute of Agricultumi He-
apropecunriaw
search
LAFTA.::..._
Latin American Free Trade Amuriation
NPF'..........
Fundo de Participatiaa.Natianol.:.....
National Partieipation Fund
t TAMP,_.....
Transpartrs Aercoi .1lilitarrs
Eruadoreun Air'!. sport
ij
F.ruafarianitx
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Places and features referred to in this chapter
ruunoisATKK
s 'S.
r r1Y
Amazon :13asin (basin) 1110
75 W
A mbata i 15
78 37
Andea (mla) I 2 00
7!i 10
Aauay (prorince) 3 00
711 00
Carchi .(prvrineel.: 0 45 V.
7S 1111
Cotopaxi (prorinee) 0 Mb
78 55
Cuenca 2 b3
78 59
i. El Oro (prorince) 3 30
79 50
Esmeralds.. 0 59 Y.
79 -12
konioaldas (prorince}......... 0.40 X.
79 30
Galapagos Islands 0.30
9D 30
Golfo de Guayaquil (gulf) 3 00
80 30
s Guayas (prorincc).... 2 00
80. 00
Guayaquil.. 2 10
7 50
Isla leabela (ial) 0 30
91 013
L atacungs............................. 0 56
78 37
Loin.., 4 OD
70 13
Lou iilos (prorince).. 1 30
79 25
Atachnia 3 10
70 58.
Mambl (prarince)...................... 0 40
80 05
fonts:.. 11 57
80 44
Peninsula do Santa Elena (peninsulo) 2 15.
80 50
Porlovieja 1 03
80 27
Quito 0 13
78 39
i Riobamba 1 40
78 38
Tixdn...: 2 p"
78
NOTE �All latitudes are South unless otherwise indicated.
t
I
FOR OFFICIAL USE ONLY
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