Why
Import from Ecuador?
Advantages
to Importing from Ecuador
Geography
Demographics
and Language
Foreign
Trade
Labor
and Wages
Economic
Environment
Advantages
to Importing from Ecuador
1)
Tremendous geographical and cultural diversity results in
high-quality, specialty goods, which are difficult to find
in other parts of the world.
2)
A dollarized economy eliminates all exchange rate risks.
3)
Low labor costs result in extremely competitive prices for
value-added goods.
4)
Economically open and business-friendly political culture
facilitates international transactions.
5)
A recent surge in economic growth has led to a dynamic,
fast-paced business environment.
Geography
Although
it is only 271,000 square kilometers in size (similar to
the US state of Colorado), Ecuador is a culturally diverse
country with a wealth of natural resources. The country
is divided into four geographical regions: El Oriente (Amazon
jungle) in the east, La Sierra (Andes mountains) in the
center, La Costa (the Pacific coastal lowlands) in the west,
and the majestic Galapagos Islands off the coast.
Demographics
and Language
Ecuador's
population is estimated to be 12,646,095, with a less than
2% annual growth rate. The population is ethnically mixed:
55% mestizo (mixed Indigenous - Caucasian), 25% Indigenous,
10% Caucasian, 9% African, and 1% other.
Although
the population was heavily concentrated in the Andes highlands
region a few decades ago, today it is divided about equally
between that area and the coast. Migration toward cities
- particularly Quito and Quayaquil - in all regions has
increased the urban population to more than 50%. The rainforest
region to the east of the mountains remains the most sparsely
populated of Ecuador's three continental regions and contains
only about 3% of the population.
The
official language of Ecuador is Spanish. Quichua, Shuara,
and other native languages are also widely spoken. Ecuador
is a very English-friendly country, with many Ecuadorians
studying English as their second language.
Foreign
Trade
Until
the early 1970s, when geologists discovered oil in the Ecuadorian
Amazon, Ecuadorian exports consisted almost exclusively
of primary agricultural exports, such as bananas and cacao.
With the advent of oil, however, the focus of the Ecuadorian
economy shifted to petroleum production. The oil sector
continues to be a pillar of the economy, accounting for
nearly 45% of export earnings and generating an approximately
equal percentage of public sector revenue.
Nevertheless,
Ecuador is now undergoing widespread economic reforms and
modernization and is aggressively seeking to diversify away
from a strict reliance on both petroleum and primary agricultural
exports. A number of projects are underway to diversify
Ecuadorian exports and to thus avoid the boom and bust cycles
that inevitably accompany an economy that is overly reliant
upon primary exports.
Ecuador's
total exports reached $4.926 billion in 2000. This is approximately
a 10% increase from 1999, when total exports equaled $4.451
billion. Ecuador is currently the world's leading exporter
of bananas and the fourth leading exporter of petroleum
in Latin America, after Venezuela, Mexico, and Colombia.
Ecuador's primary exports for 2000 are summarized in the
following table:
|
Product
|
Export
Amount (Millions of US $)
|
%
of Total Exports
|
| Petroleum |
$2,144
|
43.5%
|
| Bananas |
$821
|
16.7%
|
| Shrimp |
$285
|
5.8%
|
| Flowers |
$194
|
3.9%
|
| Tuna |
$72
|
1.5%
|
| Cacao |
$38
|
.8%
|
Although
the six primary-goods exports above accounted for 72.2%
of all Ecuadorian exports in 2000, value-added, secondary
goods exports are gradually growing in importance. While
such exports accounted for only 3.8% of total exports in
1999, their percentage rose significantly to 6.0%, by 2000.
Artisan goods are an important component of Ecuador's secondary
goods exports. These handicrafts, which are primarily produced
by the country's Indigenous peoples, are recognized the
world over for their creative designs and high levels of
quality. The Ecuadorian tourism sector is also expanding
rapidly. In 2000, 637,000 travelers visited Ecuador, spending
more than $400 million.
The
steady diversification of Ecuadorian exports can be attributed
to the country´s vast resource base and high-quality
goods, as well as to the ongoing government promotional
efforts. Ecuador
now exports a wider variety of goods that at any time in
its history. Moreover, Ecuador is now exporting more intermediate
and final goods than ever before.
Labor
and Wages
The
labor situation in Ecuador can best be characterized as
being quite difficult for the country's workers. The unemployment
rate stood at 9.50% in 2001. While this rate is significant,
it is still down slightly from 2000, when the rate stood
at 10.30%.
Ecuadorian
wages are quite low by international standards. The minimum
wage in the country is $125 a month, while per capita GDP
in 2001 stood at $1,383. Average wages in various industrial
sectors for year 2000, as compiled in a study by the Ecuadorian
National Institute of Statistics and Census, are summarized
in the following table:
|
Economic
Sector
|
Average
Yearly Wage (US $)
|
|
Commercial
|
$4,600.97
|
|
Manufacturing
|
$4,131.00
|
|
Mining
|
$6,100.93
|
|
Services
|
$3,383.16
|
Economic
Environment
In
1999, faced with a severe recession and a currency that
was losing its value by the day, President Mahuad decided
to take the drastic measure of dollarizing the Ecuadorian
economy. At the time, this was a step that was vigorously
debated by economists throughout the world. The principal
argument for dollarization was to restore currency stability
to the country and to bring devaluation-induced inflation
under control. The inflation rate stood at 60.70% in 1999.
A major argument against dollarization, meanwhile, was that
it would cause Ecuador to surrender control of its monetary
policy, as well as an escape mechanism for ensuring that
its exports remain priced appropriately in world markets
- free currency fluctuations (and the too-often-used currency
devaluation). Following much debate both inside and outside
of the country, the dollarization program was finally approved
and put into effect in 2000.
As
of this time, the jury is still out on whether dollarization
was an appropriate step to take and whether, or not, the
country's economic situation has improved as a result. On
the positive side, the GDP growth rate has been moving in
the right direction. After contracting by a stunning 7.3%
in 1999, GDP growth climbed into positive territory in 2000,
registering a growth rate of 2.3%. In 2001, the GDP picture
has become rosier still. For 2001, the GDP growth rate was
5.40% - the highest in the Latin American region.
In
spite of the healthy GDP growth figures, however, various
other macroeconomic indicators have not been nearly as positive.
For example, it was once hoped that a single-digit inflation
rate would be achieved in 2001. Inflation, however, ended
up registering at 22.40% for this year. Although this is
down significantly from the inflation figure at the time
when the dollarization plan was conceived, it is also quite
far from the targeted rate.
Information
gathered from the following sources: Cámara
de Comercio de Quito, EcuadorExplorer,
Instituto Nacional de
Estadistica y Censos, and Organization
of the Petroleum Exporting Countries (OPEC).
