Despite rich resources, Ecuador is not an economically
rich country. In 2017, GDP per capita was estimated at USD
5848 (World Bank). The 2019 state budget is $ 31,309
Both GDP and the budget have been significantly reduced
since a peak in 2014. The reasons for this are declines in
oil prices and debt uptake for public projects in the period
2009–2014. From 2017, a gradual improvement has been
COUNTRYAAH, Ecuador is a traditional raw material supplier with
little developed own industry, just like the other South
American countries. The production and main export products
have been agricultural products, especially bananas, cocoa
and coffee. From the 1970s, oil extraction has accounted for
the largest revenues.
In the 1980s and 1990s, a neoliberal policy was pursued
with the privatization of public business and of the oil
industry. High inflation and the collapse of the banking
system led to the national currency sucre being replaced by
the US dollar in 2000. From 2006, the authorities have
worked to nationalize resources and control the oil
These years have also been characterized by economic
growth and welfare development. High oil prices and
increases in taxes have resulted in ever-increasing
government budgets. Tax revenues for 2006 were $ 4.6
billion, while in 2014 they increased to $ 12.51 billion.
Lower oil prices from 2014 have created problems for the
budget and sought to compensate with loans from abroad,
mainly China, and further taxation.
The earthquake that took place on August 16, 2016 was
another blow to the country's economy.
Even though agriculture has declined compared to other
industries, it is still here that most are employed. After
the oil industry, agriculture is the main source of export
revenue. In the neo-liberal era, intensive use was made of
the cultivated land for export. Agricultural policy has
recently had a new focus on self-sufficiency, without this
having led to a significant shift in agricultural production
in the country.
Agriculture is differentiated according to the country's
climatic regions. In the lowlands of the coastal region,
large plantations that grow bananas, coffee, cocoa, palm
oil, rice and sugar dominate. Most of this is intended for
export. In the highlands, potatoes, corn, beans, quinoa,
broccoli and wheat are grown. In the Amazon region,
agriculture and livestock farming were introduced in the
1960s and 1970s through highland migration and
colonialization. The main products are manioc, other root
fruits, bananas and a variety of tropical fruits.
Ecuador is the world's largest producer of bananas and
supplies 1/3 of what is found in this fruit on the world
market. Revenue amounts to approximately $ 2 billion
annually. However, there has been a problem with
overproduction and falling prices. Many major manufacturers
have changed their strategy and started to grow other
products. Small producers sell off at low prices or go
Cocoa was the most important export product in the early
1900s. This led to a period of economic recovery on the
coast of Guayaquil, known as the cocoa era. Eventually other
countries like Brazil took over the hegemony
internationally. Today, mainly cocoa beans are exported and
to a small extent processed goods. In 2012, cocoa brought in
$ 346 million in export revenue.
Coffee production has problems with low profitability and
lack of investment in technology. Coffee plantations have
also been heavily affected by fungal attacks. Revenues in
2012 totaled $ 274 million.
Flower production is a relatively new activity, about 30
years old. Unlike the aforementioned products, flower
production takes place in the highlands. Ecuador sold roses
and other flowers to the United States, Western Europe and
Russia for $ 766 million in 2012.
For internal consumption, corn, rice, wheat and potatoes
African palm trees were introduced in 1953 for the
production of palm oil for industrial purposes. The
production and lack of control of this has led to pollution
of fields and water reservoirs.
20 percent of the land is devoted to livestock. There are
most cows (8.3 million), but also pigs and sheep. The
highlands account for 51 per cent of the brotherhood. The
lowland on the coast has 36.7 percent and the Amazon 12.3
Fishing and farming
The most important export product in Ecuador after oil is
shrimp, which brought in $ 3234 million in 2018 (Banco
Central del Ecuador). However, shrimp farming along the
coast, especially in the province of Esmeraldas, has been
debated as it threatens the mangrove forests.
Extensive fishing is conducted along the coast of Ecuador
and around Galápagos. In addition to internal consumption,
large quantities of tuna and canned fish are exported.
Ecuador has high deposits of copper, gold, silver and
lime. Mining has until recently been characterized by small
and medium scale enterprises. From the end of the 1980s a
number of licenses were distributed to major foreign
players, and today several international mining companies
have established themselves in the country.
The Mirador project, run by the Chinese company
EcuaCorriente, and the Fruta del Norte project, run by the
Canadian company, Lundin Gold, will in the next few years
initiate the extraction of copper, gold and silver. Both of
these projects are located in the Amazon rainforest. Several
other international companies are in the start-up phase.
In 2009, the mineral sector in Ecuador was regulated in a
new mining law. However, this was modified in 2013 to secure
foreign investment. Ecuador is considered to be a country
that paves the way for foreign mining companies.
Both small-, medium- and large-scale mining operations
have serious environmental consequences, and pollution to
water sources, rivers and water systems is a particular
challenge. The major mining projects have caused protests
and actions by Ecuador's environmental and indigenous
organizations. The question of Ecuador's aiming to align the
economy with industrial mineral extraction is one of the
most inflamed political issues in the country.
The Ecuadorian oil adventure was started in 1964 by the
Texaco Gulf in Lago Agrio, the northern part of Amazonia. In
1972, the state oil company CEPE, later Petroecuador, was
established. In 1976 CEPE held the majority of the shares in
companies operating in the oil business. However, its role
was gradually weakened in the neoliberal period, until
privatization was reversed from 2006.
Ecuador supplies about 0.5 percent of the world's annual
oil consumption. With all known deposits, including in the
conservation area of the Amazon rainforest, reserves are
estimated at 3,538 million barrels of oil. With today's
production, it can be maintained until 2032.
In 2012, Ecuador exported crude oil worth $ 12 715
million. 70 percent of this was pre-sold to China to cover
loans and credits.
There are three major oil refineries in the country, in
Esmeraldas, in La Libertad and in Shusufundi. The largest in
Esmeraldas has a capacity of 110,000 barrels daily.
Despite its own production of oil derivatives such as
gasoline, diesel and gas, Ecuador still has to import for
its own consumption.
Yasuni ITT initiative
Extraction of oil in the rainforest area is
controversial. The desire to preserve as much rainforest as
possible and the diversity of species found there are
weighed against the economic interests of recovery. Large
parts of Ecuador's oil reserves are located in the so-called
Yasuni ITT region, located in Amazonia. It is also believed
that people live in voluntary isolation in these areas. In
2007, the Ecuador presented the Yasuni initiative at the UN.
Against a world community compensation equivalent to half
the estimated value of the oil reserves, Ecuador would
undertake not to recover them. In 2013, President Rafael
Correa noted that the plan had not had a sufficient impact
and decided to implement plan B, which will involve the most
gentle recovery. The decision has led to protests from
environmental protection organizations.
The lawsuit against Chevron
Since 1993, there has been a process primarily between
the multinational oil company Chevron and a group of Amazon
Surfers. The oil company Texaco, which later merged with
Chevron, extracted oil from Lago Agrio from 1964 to 1990.
This business caused significant environmental damage,
emissions into rivers and swamps, health damage to people in
the area, dead animals and damaged crops. In 1993, a lawsuit
was brought in New York, where Texaco had its headquarters.
The plaintiffs represented the indigenous peoples Cofàn,
Siona, Secoya, Huaroani and the Amazonaskichwa. They
demanded complete cleanup of the contaminated areas, new
drinking water reservoirs, medical assistance and
compensation for all concerned. After ten years, the lawsuit
was dismissed in New York and referred to treatment in
Ecuador. In 2011, Chevron was sentenced to pay $ 9150
million in damages in another instance in the province of
Sucumbios. Chevron has since contested the verdict and
worked to have it annulled by international courts.
There is little industrial activity in Ecuador, even by
Latin American scale. The goods produced are mainly for
internal consumption and some exports to neighboring
countries. The most important industrial products are oil
derivatives such as diesel and gas, fish canning and metals.
Given that oil reserves will cease, it is an expressed
desire by the authorities to develop more high-tech
Tourism is an increasingly important source of income for
Ecuador. It has been steadily increasing. In 2012, 1,271,953
tourists arrived. It brought in $ 849 million to the
country. The most attractive are the Galapagos Islands. Next
comes the old towns of Quito and Cuenca with its colonial
settlements. Both are designated UNESCO World Heritage
Sites. Ecuador also has several major national parks located
in the Andes and Amazonia. There is great capacity for
The informal economy
By informal or black economy is meant business carried on
by persons or associations that are not registered as
traders or employees. They do not pay taxes and have no
social rights attached to their business. We do not have
specific figures on the extent of this, but analyzes show
that for Latin America as a whole, it is estimated that as
much as 60 percent of all work done can be put into this
The informal economy is very visible as it is practiced
by thousands of ambulatory street vendors and shoe
polishers. There are also craftsmen, construction workers
and cleaners in this niche. Many combine informal work with
The reason for the scale of the informal economy is the
lack of jobs. The prices of the goods or services offered by
the informal economy are low appreciated and leave little
room for payment of government fees or taxes.
Transport and Communications
The country's topography, dense forests and scattered
settlement make the development of a transport network
difficult and expensive. The Pan-American Highway passes
through central Ecuador for a length of about 1400
kilometers, with side roads down to the Pacific coast.
Most major cities have air services. International
airports can be found outside Quito (Mariscal Sucre) and
Guayaquil (Simón Bolívar). The main port cities are
Guayaquil, Esmeraldas, Manta and Puerto Bolívar.
The earthquake on August 16, 2016
The earthquake, which was measured at 7.8 on Richter's
scale, caused significant material damage in addition to the
loss of 668 lives.
The quake particularly affected the province of Manabi
which is located on the coast. A large number of buildings
are destroyed. Thousands have lost their homes. There is
significant damage to public buildings, such as schools and
hospitals, and the road network.
The Department of Planning (Secretatía Naciónal de
Planificación) has calculated that it will cost USD 3 344
million to repair the damage.
Ecuador received relief from a number of countries and
international institutions immediately after the quake.
Norway contributed NOK 15 million.
For long-term reconstruction, the country has received
loans from the World Bank, the International Monetary Fund,
the Banco de Desarrollo de America (CAF) and the Banco
Interamerícano de Desarrollo (BID) for a total of USD 1,000.