The Export Sector in EcuadorHistoric Evolution and Perspectives

Juan Pablo Cuesta

General Background• Pop. (2010): 14,306,876

• GDP Per Capita (PPP): 2720 (1980). 8,027 (2010).

• HDI: 0.591 (1980). 0.718 (2012).

• Poverty Rates (2010)

▫ At $1.25 a day (PPP): 4.6%

▫ At national poverty line: 32.8%

• Dollarized economy since 2000.

Export Structure• Exports by group of

products (average 2001 – 2010):▫ Primary products

76%▫ Manufactured 24%

• Exports by destination country▫ United States 35%▫ European Union

13%▫ Panama 12 %▫ Peru 8%▫ Venezuela 6%

Source: World Trade OrganizationSource: Central Bank of Ecuador

Source: US Energy Information Administration

Oil Dependency

Source: Central Bank of Ecuador

Oil Dependency• Dutch Disease?

▫ Increase in exploitation of natural resources and decline in the manufacturing sector.

• IMF Working Paper by Kareem Ismail Apr-2010:▫ Permanent increases in oil

price negatively impact output in manufacturing.

▫ Oil windfall shocks have a stronger impact on manufacturing sectors in countries with more open capital markets to foreign investment.

Trade Agreements

•Comunidad Andina de Naciones (CAN)

•UNASUR (associate member)

•Andean Trade Promotion and Drug Eradication Act (ATPDEA) - Expired Feb-2011

Perspectives•Oil production to be maintained in the

short term but decline over the years if new oil fields are not discovered or exploited (Yasuni ITT).

•No clear policies towards fostering the non-oil exports, especially the manufacturing export sector.

•Government has adopted an anti “Free Trade Agreements” stand against developed countries.

•Need to maintain and strengthen exports to preserve dollarization.

Recommendations•Reduce dependency on oil.

▫Incentive agro-industry, services (tourism), non-traditional manufacturing Training, capacity building, credit.

•Diversify trade partners but do not neglect the current.

•Seek trade agreements.

•Bring exporting industry in, not lead them out.

References• World Bank, World Development Indicators. Website:

http://data.worldbank.org/indicator. Accessed on Apr-24-2012.

• World Trade Organization, Trade Profiles 2011. Website: http://www.wto.org/english/res_e/booksp_e/anrep_e/trade_profiles11_e.pdf. Accessed on Apr-24-2012.

• Banco Central del Ecuador. Website: http://www.bce.fin.ec/frame.php?CNT=ARB0000841. Accessed on Apr-24-2012.

• US Energy Information Administration. Website: http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=5&pid=53&aid=1. Apr-24-2012.

• IMF Working Paper: “The Structural Manifestation of the `Dutch Disease’: The Case of Oil Exporting Countries. Website: http://dev.revenuewatch.org/revenuewatch2/sites/default/files/Dutch%20Disease%20(IMF)%20Newest%20Version.pdf. Accessed on Apr-24-2012.