Multi-year Expert Meeting Enhancing the Enabling Economic Environment

at all Levels in Support of Inclusive and Sustainable Development, and the Promotion of

Economic Integration and Cooperation

26-27 October 2017

Enhancing the Enabling Economic Environment at All Levels in Support of Inclusive and Sustainable Development, and the

Promotion of Economic Integration and Cooperation

Paper submitted by

Econ. Eva García Fabre Minister of Industry and Productivity of Ecuador

.

This expert paper is reproduced by the UNCTAD secretariat in the form and language in which it has been received. The views expressed are those of the author and do not necessarily reflect the view of the United Nations.

1

Enhancing the Enabling Economic Environment at All Levels in Support of Inclusive and Sustainable Development, and the Prom otion of Economic

Integration and Cooperation

Econ. Eva García FabreMinister of Industry and Productivity of Ecuador

2

Ecuador: Advantages

Geographical conditionsUnique place for diverse and permanent resources supply.Mega environmental, climate and ethnic diversity.

Strategic InfrastructureHigh level, connected and in the middle of the world

Development modelAligned to the Millennium development goals.Focus on the development of talent and knowledge. Economic growth with significant reduction of poverty and social inequity.

Productive EthicsOccupational and environment

Investment opportunitiesConstitutional and institutional security.One of the lower tax rates for businesses in the region.Investment attraction regulations

3

Ecuador: General information

Population of Ecuador:16,6 million people.

Economic and active population: 8,2 million people.

GDP:USD 5.969 in 2016 (World Bank)

Human development Index :High position, place 89 (UN)

4

Ecuador: P overty and Inequality indicators

Gini Index for National income

dic-070.553

dic-150.476

dic-160.4660

0.30

0.35

0.40

0.45

0.50

0.55

0.60

dic-

07ju

n-08

dic-

08di

c-09

jun-

10di

c-10

jun-

11di

c-11

jun-

12di

c-12

jun-

13di

c-13

mar

-14

jun-

14se

p-14

dic-

14m

ar-1

5ju

n-15

sep-

15di

c-15

jun-

16di

c-16

jun-

17

Gin

i ide

x-

Nat

iona

l

Dec-150,476

Dec-160,4660

Dec-070,553

5

Fuente: BCE

Ecuador: Productive structure (year 2016)

Agriculture and fishing;

[VALUE]

Oil and mines ; [VALUE] Manufacturin

g with Oil Refining;[VALUE]

Building; [VALUE]Commerce;

[VALUE]

Transport;[VALUE]

Finance services;[VALUE]

Other services;[VALUE]

Others; [VALUE]

Total GDP: USD 69.3 thousand millions (base year

2007)

6

Fuente: BCE

Total exports: USD 16.800 Millions

Ecuador: Export structure (year 2016)

Crude Oil[PERCENTAGE

]

Banana and plantain

[PERCENTAGE]Shrimp

[PERCENTAGE]

Cocoa and manufactured

from cocoa [PERCENTAGE

]

Tuna and fish[PERCENTAGE

]

Manufactured from coffee

[PERCENTAGE]

Others (Non traditional exports)

[PERCENTAGE]

7

Ecuador: New platform for systematic competitivenes s

Multi-purpose Project

� 182 thousand hectares for water irrigation � 142 thousand hectares for floods control

Human capital

� Investment of 2% from GDP for higher education.

� Improvement of quality in universities� 20 thousands scholarships given to

ecuadorians for studies in foreing countries.

Telecommunications

� Conectivity forty times faster than the year 2006.� Optical fiber (public-private) extended from 2174

miles (3500 km) to 37195 miles (59861 km).� 1 from each 2 ecuadorians has access to Internet

Markets

� Force and negotiating trade agreements correspond to 57% of exports of industrial goods.

� Creation of PROECUADOR for promotion of exportable goods and services, and attraction of investments.

Logistic� 94% the road network in good

condition� New ports, airports and craft

Energy� Ecuador has incremented twice its

installed capacity in generating clean energies for the industries, from 4.070 MW to 8.569 MW (from 2006 to 2017).

8

Ecuador: Global Competitiveness Index

0

20

40

60

80

100

120

3.20

3.40

3.60

3.80

4.00

4.20

4.40

Ecuador: Global Competitiveness Index (Score & ranking)

Puntuación Ranking

Sco

re

Ranking

Score

Source: World Economic Forum - Global Competitiveness Report - 2017

0.01.02.03.04.05.06.0Institutions

Infrastructure

Macroeconomicenvironment

Health and primaryschool

High education andcapacitation

Market efficiency andgoods

Market efficiency andoccupatinal

Finance marketdevelopment

Available Technology

Size of the market

Sophistication ofbusiness

Innovaion

Score ICG 2017-2018: Comparison Ecuador against to the region

Ecuador Latin american & Caribbean

Fuente: Global Competitiviness Report - 2017

9

Ecuador: Insertion into global value chainsGourmet Coffe

Chocolate TOAK

Shrimp

Software

10

Industrial Policy of EcuadorE

ntre

pren

eurs

hip

and

inno

vatio

n

Qua

lity

Pro

duct

ivity

Inve

stm

ent

Mar

ket

VISION: In 2025, Ecuadorian production diversifies, differentiates and is inserted into the world with higher value-added manufacturing and services, through

innovative, competitive companies with world-class standards and maximizing the platform for systemic competitiveness generated.

Promoting Ecuadorian productionPromoting Ecuadorian production10

11

Creative P

roduction

Market S

ophistication

Infrastructure

Hum

an Capital and R

esearch

Business S

ophistication

Production of technology and

knowledge

Institutions

Ecuador: Ranking between Global innovation Index components (127

contries)

Source: Global Innovation Index Report, 2017.

66

Entrepreneurship and Innovation

4653 58 63 65 67 69 70 76 79 84 85 91 92 98 103104106

Chile

Costa R

ica

México

Panam

á

Colom

bia

Uruguay

Brasil

Perú

Argentina

Rep. D

ominicana

Jamaica

Paraguay

Trinidad y T

obago

Ecuador

Guatem

ala

El S

alvador

Honduras

Bolivia

Latin America and the Caribbean:Ranking of the Global Innovation index*

Source: Global Innovation Index Report, 2017.* With respect to 127 countries

Ecuador is located at the 92 position between 127 countries according to the Global Innovation Index.

Its main weaknesses lie in the dimensions of institutions and production of technology and knowledge.

Ecuador

92

66 6876 93 103 109 116

12

Investment

Fuente: Banco Central del Ecuador

Ecuador: Public-private Gross fixed-capital formation (in millions of USD)• Private and investment have increased in recent years.

• However, public investment grew in greater magnitude than private investment specially for the years 2013 and 2014.

38%49% 44% 41%

37%30% 25%

46% 48%

91%

79%75%

88%

137%

118%

87% 83% 79%

0%

20%

40%

60%

80%

100%

120%

140%

160%

0

2000

4000

6000

8000

10000

12000

14000

16000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

sd

2015

p

2016

pre

l

2017

(pre

v)

FBKF Pública FBKF PrivadaRelation GFCF Public / GFCF Privada

GFCF Public GFCF Private

Source: BCE

13

Productivity

Source: Monthly Statistics Report, BCE. National Employment and Unemployment Survey, INEC

9.9

9.6

10.4

10.1

10.7

11.3

11.6

11.4

12.5

12.7

11.6

11.2

11.5

10.2

7.5

7.4 7.8

7.9

8.1 8.6

8.5 8.9 9.3 9.6

9.7

9.8

9.5

9.3

10.0

11.5

7,6

9,1

0

2

4

6

8

10

12

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

(prev.)

Mil

es

de

US

D 2

00

7

Productividad media laboral de la industria

Productividad media laboral de la economía

Evolution of Average Labor Productivity

The Average Labor Productivity of the industry has decreased since the year 2012.

The Average Labor Productivity of the economy registers two consecutive years of degrowth.

Average Labor Productivity of the industry

Average Labor Productivity of the economy

14

Quality

Source:SAE

• 36% of the Ecuadorian technical regulations have a conformity assessment organizations that ensures compliance.

• National producers who must demonstrate the quality of their products must send abroad to carry out the required tests which raises their costs.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

27 41 51 56 69 78 81 88 106 120 128

48

8 911

13 11 1622

23 23

00

1 23

613 40

5361 69

Accreditations of conformity assessment organizations

LABORATORIOS ORGANISMOS DE CERTIFICACIÓN ORGANISMOS DE INSPECCIÓN

220204

181

144105

97836760

4931

LABS Certifications organizations Assessment organizations

15

Exports mainly from primary and natural resource-based products.

Technology products are exported almost entirely towards CAN, MERCOSUR and other ALADI.

Source: BCE

Market:

Non-oil exports by destination and product type (ye ar 2016)

12.3%

30.5%39.3%

76.9%51.2%

48.0% 35.4%

16.7%

15.4%

4.9% 8.8%

14.8% 5.9% 7.9%

2.5% 10.3% 8.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

CAN MERCOSUR Rest of ALADI Rest of the world

US

D m

illio

ns

Primary Based on natural resources Low technologyMedium technology High technology OthersExports USD

16

Industrial development intends to achieve:

16

In a framework of trust, stability and permanent di alogue

In the economy:• Strengthen dollarization• Increase investment• Generate employment of quality

In public – private relations:

• To promote a leading role in the private sector (Productive Dialogue).

• Strengthen academia-business-state relationship towards production

In the region:• Promote economic integration• Promote productive complementarity

In the production:• Improve quality• Diversify goods and services• Generate innovation in the sectors• Strengthen product chains

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Implementing a national network of citizen Business Development centers in coordination with the private

and academic sector

Implementing a national network of citizen Business Development centers in coordination with the private

and academic sector

Citizen Business Development Centers (CBDc)

SIGHT MISSION APPROACH

STRATEGIC AXES

1.- Joint 2.- Service delivery 3.- SpecializationPublic Private

AcademyBusiness development

InnovationProductive vocations

• Business Incubation• Productive innovation• Business sustainability• Business aceleration

To promote the territorial business development through the provision of specialized services

18

Dialogue as an instrument:

The Consultative Council Productive and Tax

19

Dialogue as an instrument:

The National Agreement for the production and employment

20

Dialogue as an instrument:

Provincial competitivenessWorkshops

21

Thank you very muchEcon. Eva García Fabre

Minister of Industry and Productivity of Ecuador egarcia@mipro.gob.ec