Ecuador Economy - History

Ecuador Economy - History


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Budget: Income .............. $5.1 Billion
Expenditure ... $5.1 Billion

Main Crops: bananas, coffee, cocoa, rice, potatoes, manioc (tapioca), plantains, sugarcane; cattle, sheep, pigs, beef, pork, dairy products; balsawood; fish, shrimpNatural Resources: petroleum, fish, timber

Major Industries: petroleum, food processing, textiles, metal work, paper products, wood products, chemicals, plastics, fishing, lumber

GDP (2002): $24.3 billion.
Real annual growth rate: 1996, 2.0%; 1997, 3.4%; 1998, 0.4%; 1999, -7.3%; 2000, 2.3%; 2001, 5.6%; 2002, 3.3%.
Per capita GDP: $1,959.
Natural resources: Petroleum, fish, shrimp, timber, gold.
Agriculture (34% of GDP): Products--Bananas, seafood, flowers, coffee, cacao, sugar, rice, corn, and livestock.
Industry (18.3% of GDP--oil and mining 15%): Types--Petroleum extraction, food processing, wood products, textiles, chemicals, and pharmaceuticals.
Trade: Exports--$5 billion: petroleum, bananas, shrimp, coffee, cacao, hemp, wood, fish, cut flowers. Major markets--U.S. 41%, Latin America 24%, European Union (EU) 14%, and Asia 10%.
Imports--$5.9 billion: industrial materials, nondurable consumer goods, agricultural products. Major suppliers--Latin America 39%, U.S.23%, EU 14%, and Asia 14%.


Ecuadorian History

Ecuador’s history packs a dramatic punch. It’s marked by periods of radical change, brought about suddenly by charismatic strongmen. First the conquistadores arrived, and pillaged without consequence. Inca kings defied the new rulers, no matter what the cost. Revolution then came to Ecuador, and a subsequent lineup of despots dominated the political stage.

Although Ecuador’s economy has seen massive improvement in recent decades, it’s unclear if the centuries of drama are coming to an end. At the very least, the 21st century has brought recognition of the necessity to protect natural resources and national culture.


Ecuador Economic Growth

2015 2016 2017 2018 2019
Population (million)16.316.516.817.017.3
GDP per capita (USD)6,0996,0466,2176,3196,222
GDP (USD bn)99.399.9104108107
Economic Growth (GDP, annual variation in %)0.1-1.22.41.30.1
Consumption (annual variation in %)0.3-2.03.62.40.7
Investment (annual variation in %)-6.2-8.95.32.0-3.4
Industrial Production (annual variation in %)- - - - -
Unemployment Rate4.35.44.44.1-
Fiscal Balance (% of GDP)-6.1-8.2-4.5-3.1-2.8
Public Debt (% of GDP)33.038.244.646.050.2
Inflation Rate (CPI, annual variation in %, eop)3.41.1-0.20.3-0.1
Inflation Rate (CPI, annual variation in %)4.01.70.4-0.20.3
Inflation (PPI, annual variation in %)- - - - -
Benchmark Interest Rate (%)5.145.124.955.626.22
Current Account (% of GDP)-2.21.1-0.1-1.2-0.1
Current Account Balance (USD bn)-2.21.1-0.2-1.3-0.1
Trade Balance (USD billion)-3.20.5-0.9-1.5-0.2
Exports (USD billion)18.316.819.121.622.3
Imports (USD billion)21.516.320.023.222.6
Exports (annual variation in %)-28.7-8.413.813.13.2
Imports (annual variation in %)-22.4-24.122.615.8-2.6
International Reserves (USD)2.54.32.52.73.4
External Debt (% of GDP)27.634.238.540.948.7

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Overview Of The The Economy Of Ecuador

Ecuador’s economy experiences an annual average growth of 6.88%. The country has a nominal GDP of $6.078 trillion and a PPP GDP of $98.9 billion. The annual GDP growth was projected at 0.3% in 2015 which was significantly lower than 2014 (3.7%). The annual consumption variation was estimated at 0.3%. The investment variation plummeted to -2.5% while the industrial production also decreased by 1.4% in 2015. The unemployment rate in the country stands at 5.1% while the inflation rate stands at 3.1% down from 3.7% in 2014. The public debt stands at 33.1%. The poverty declined from 37% to 22% between 2006 and 2014 due to the decrease in the Gini Index.The annual export variation fell in 2015 to -28.7% from 3.5% in 2014 while the export change was -22% during the same period.


Examining the Effects of Dollarization on Ecuador

Every day since 2015, thousands of Ecuadorians have crossed the bridge from Tulcán, Ecuador to the border town of Ipiales, Colombia to go shopping. Goods they purchase in Colombia include food, cars, television, and even bulldogs. On a holiday weekend between May 27 and 29, more than 50,000 Ecuadorians crossed the border to Ipiales. [1] Some shoppers come from as far as Quito, a five-hour drive south of the border. Ecuadorians purchase goods in Colombia en masse due to a simple fact: prices in Colombia have become significantly cheaper. For example, a 50-inch TV costs $1,300 USD in Ecuador, but less than $800 USD in Colombia. [2] The situation has become of such concern to the Ecuadorian government that last year, President Rafael Correa issued a “call of conscience” to Ecuadorians, asking his compatriots to “offer support to the national production” by buying Ecuadorian products. [3]

In addition to Panama and El Salvador, Ecuador is one of the Latin American countries that uses the U.S. dollar as the only official currency. Ecuador does not print its own bank notes. In recent years, the U.S. dollar has continuously appreciated against other currencies in Latin America, making the price of goods in Ecuador higher than that in neighboring Colombia and Peru. Ecuador abandoned its old currency, the sucre, during a severe economic crisis in 2000 and has been using U.S. dollars ever since. With the appreciation of the U.S. dollar, doubts have emerged regarding the fate of dollarization. A recent Wall Street Journal article stated that Ecuador “has the misfortune to be an oil producer with a ‘dollarized’ economy that uses the U.S. currency as legal tender.” [4] The appreciation of the U.S. dollar against other currencies has decreased the net exports of non-oil commodities from Ecuador, which, coupled with the fall in oil prices, has constrained the country’s potential for economic growth.

The government of Ecuador has also cast doubt on the success of dollarization as early as 2014, Correa said that “dollarization was a bad idea.” [5] In the same year, he established a parallel electronic currency for domestic use, which some believe is the first step of de-dollarizing the economy. However, proponents of dollarization believe that it has generated considerable macroeconomic benefits to Ecuador in the past 16 years. Through an examination of the impacts of dollarization in the 21 st century and the economic principles behind it, this article argues that both the positive and negative impacts of dollarization are perhaps being overstated, and that a de-dollarization process would provide more negative effects than positive outcomes for Ecuador.

Why Dollarize?

Before delving into a discussion of the pros and cons of using dollars, one should first examine the history of dollarization in Ecuador. In the late 1990s, Ecuador experienced a severe economic crisis due to a combination of low oil prices, the low tax base of the non-oil sector, and big public sector wage increases. [6] The value of the sucre fell drastically, and the inflation rate galloped to 96.1 percent in 2000. [7] Ecuadorians first started adopting dollars informally in an effort to avoid losing their purchasing power, and massive capital flowed out of the country due to the exchange rate crisis. [8] In the same year, in order to halt capital outflow and hyperinflation, Ecuador decided to substitute its currency with the U.S. dollar. [9] The decision to dollarize the economy slowed hyperinflation, stopped the free fall of sucre, and stabilized the financial market, all of which significantly helped resolve the economic crisis. Although the exact impact of dollarization on Ecuador’s economic growth is beyond the scope of this study, after dollarization, Ecuador has enjoyed an average annual economic growth of 4.4 percent, higher than many Latin American countries. [10]

Benefits of Dollarization

There are several benefits of dollarization that should be noted. Most evidently, it decreases transaction costs in international trade, which normally occur whenever people exchange one currency for another. Dollarization eliminates this cost in the trade with the United States, Ecuador’s largest trading partner, since businesses do not need to change from one currency to another. It also promotes long-term investment and trade since businesses tend to be reassured by the stability of the exchange rate. [11] In fact, Ecuador’s export to the United States has increased since dollarization, while the exports of neighboring Colombia and Peru, whose economies are both larger than Ecuador’s, have stagnated, although dollarization may not be the only factor of such an increase.

Source: Author’s elaboration with data from UN Comtrade

The second benefit of dollarization is a lower risk of inflation. [12] By using a foreign currency, an officially dollarized country assures itself of a rate of inflation close to that of the issuing country because confidence exists that inflation in the dollar will continue to be low. [13] However, it should be noted that the adjustment to lower rates took several years after the abandonment of the sucre. The inflation rate stayed at double digits in 2001 and 2002, and did not go below five percent until 2004. [14] Some economists predicted that inflation rates in Ecuador in the medium- and long-term would be relatively consistent with U.S. inflation rates, but in 2011 and 2012, it climbed up again to around five percent. [15] In comparison, the U.S. inflation rate since 2000 has never exceeded four percent. [16] Dollarization is not enough for a country to have a stable inflation rate. In the case of Ecuador, a developing country, the associated risk premium is still higher than that of the United States, a developed country with relatively high economic stability.

Proponents of dollarization also refer to another advantage: currency substitution prevents the Central Bank from having its own monetary policy. This seems very counterintuitive, since monetary policy is one of the two instruments that a government can use to influence a state’s economy. Proponents of dollarization argue that the elimination of a national currency means that government deficits must be financed through fiscal policies, which include the fairly transparent methods of raising taxes or accumulating debt, rather than through printing money. [17] Unlike the U.S. Federal Reserve, but similar to many central banks in Latin America, the Central Bank of Ecuador is not an independent institution but an agency of the executive branch. This is explicitly stated in Article 303 of the Constitution of Ecuador. [18] In the United States, the independent Fed is able to institute sound monetary policies that are not subject to the political whims of the administration, but when a central bank is in complete control of the executive branch, there is a possibility that the government would implement expansionary monetary policies intended to provide an economic stimulus before elections or finance a growing government budget deficit. In both situations, an overly aggressive expansionary monetary policy would lead to a rising inflation rate and a falling exchange rate, which would contribute to destabilizing the economy. Such cases have occurred in the past in Argentina and Venezuela. [19] Proponents of dollarization argue that it gets rid of the moral hazard, by which politicians can infinitely finance public spending by increasing the money supply, and instead leads to budgetary discipline and more responsible government spending.

Putting aside the questions regarding whether Latin American governments are capable of developing sensible monetary policies and whether an independent central bank is preferable, dollarization does not fully address its proponents’ concern of growing public spending, since it does not curb expansionary fiscal policies. The government expenditure of Ecuador has increased from 20 percent of the GDP in 2000 to a high 44 percent in 2014. [20] In comparison, the government expenditure of Colombia, Peru, and Mexico has never exceeded 30 percent of their respective GDPs since 2000. [21] Consequently, since the Ecuadorian government cannot print money, it financed spending through debt. In the past decade, the debt-to-GDP ratio has also increased from a low of 16.4 percent to 33.1 percent in 2015. [22] The increasing government debt has not reached an alarming level, but the considerable increase in government spending necessitates caution. The government of Ecuador has taken steps to address the issue in April, President Correa announced a two percentage point increase in sales tax, a new wealth tax for millionaires, and the possible sale of government assets. [23] These measures will help finance an increasing budget and maintain fiscal sustainability. Nevertheless, dollarization does not impact fiscal policies, and has virtually no effect on the rising budget.

Disadvantages of Dollarization

The biggest advantage of dollarization in the eyes of its supporters is precisely the reason why others are critical of it—the central bank is unable to have its own monetary policy. The use of the U.S. dollar as legal tender means that one of the two instruments for influencing the economy is unavailable to the government. The absence of monetary policy, besides making it harder for the government to intervene during times of recession, has an adverse effect on exports. A weak domestic currency stimulates exports, and a strong domestic currency makes the country’s exports less competitive in the international market compared to goods from other countries. [24] In the past two years, the U.S. dollar has appreciated considerably the dollar index, which measures the relative value of the U.S. dollar against a basket of foreign currencies, has risen about 25 percent since 2014. [25] This makes Ecuador’s exports less competitive in the international market. In fact, in 2015, Ecuador’s non-oil export value dropped by 5.9 percent from the previous year. [26] In comparison, products from countries such as Colombia and Peru, both of which saw their currency depreciate against the dollar, became relatively cheaper and more competitive.

Even during times when the dollar is not rising, the instrument of monetary policy would give Ecuador an option to stimulate the economy through “competitive devaluation,” which refers to the strategic and large-scale depreciation of a domestic currency to boost export volumes. [27] For example, starting in 2013, the Japanese government deliberately depreciated its currency in order to make Japanese exports more competitive. [28] Without the option of implementing such policy, Ecuador’s exporters are dependent on the fluctuations of the market. Especially in times of economic crisis, countries without monetary policy have to go through internal devaluation, which restores competitiveness by reducing labor costs. and is often a much longer and more painful process.

Despite the benefits of having control on monetary policy, a de-dollarization in Ecuador would not do much to help its export sector, given that the underlying problem is that Ecuador’s economy is dependent on oil. The dependence has been a structural problem ever since Ecuador discovered its oil resources. In 2014, 52 percent of Ecuador’s export value came from petroleum. [29] Since then, oil prices have fallen significantly the Brent Crude decreased from $100 USD per barrel to less than $50 USD today, which dealt a heavy blow to the economy of Ecuador. [30] The dominance of the oil sector makes it extremely hard to rely upon monetary policies to boost export for two reasons. First, a currency depreciation does not help oil export because oil is priced and traded in a world price denominated in U.S. dollars. A country’s capacity to produce oil is also limited Ecuador cannot immediately increase oil production even if there is a sudden increase in demand. Second, the revenue brought in by oil exports is in U.S. dollars. If Ecuador de-dollarizes, a large and constant inflow of U.S. dollars would lead the national currency to appreciate because there will be a constant demand for changing the petrodollars to the national currency, whereas export sectors, such as manufacturing gain an advantage when the national currency depreciates. This means that the positive, effect of a currency depreciation on exports would be largely offset by the effect of petrodollars. In order to overcome the petrodollar effect, oil-producing countries have to depreciate their currencies much more than non-oil-producing countries to increase export value. However, a country cannot permanently conduct expansionary monetary policies, since doing so would both lead to a high inflation rate and encourage irresponsible government spending.

Moreover, placing the responsibility of boosting exports solely on currency depreciation would potentially neglect other ways to promote exports. In 2011, Colombia and Peru, Ecuador’s only neighbors, joined the Pacific Alliance with Mexico and Chile. The regional trade block has eliminated tariffs on over 92 percent of goods, eased intra-Alliance visa restrictions, and integrated stock markets of their members. [31] The elimination of tariffs makes goods from those four countries more competitive in other countries of the Alliance. Especially relevant is the advantage afforded to Colombia, whose banana and flower industries are as significant and competitive as Ecuador’s. Ecuadorian exporters will face increasing competition with their Colombian counterparts when they sell goods to Mexico, Peru, and Chile. Instead of fixating on the issue of dollarization, the government of Ecuador and international economists should be more inclined to promote regional economic integration and abolish tariffs between Ecuador and other Latin American countries.

Concluding Remarks

Both supporters and opponents of dollarization have overstated the policy’s effects on the Ecuadorian economy. Dollarization is not a sole remedy for all economic problems, but neither is having a national currency. De-dollarizing the economy today would trigger market uncertainty and lead to economic instability, which would inevitably hurt Ecuador. Furthermore, the fact that Ecuador’s economy is heavily dependent on oil is a sad but unavoidable truth that cannot be changed in the short term. This is not to say that the government should significantly shrink the oil sector—oil revenue is a crucial source of funding for social projects that benefit the lower class. Nevertheless, to offset the negative effects of using U.S. dollars, Ecuador should enact policies that maintain macroeconomic stability, such as setting up a rainy day fund for economic downturns, and promote regional trade and integration to boost its exports within the region.

By Sam Wang,Research Associate at the Council on Hemispheric Affairs

Original Research on Latin America by COHA. Please accept this article as a free contribution from COHA, but if re-posting, please afford authorial and institutional attribution. Exclusive rights can be negotiated. For additional news and analysis on Latin America, please go to: LatinNews.com and Rights Action.

Featured Photo: U.S. Dollars. Taken from Google Images.

[1] “Ipiales, La Despensa Colombiana De Ecuador.” EL PAÍS. 2016. Accessed July 13, 2016. http://internacional.elpais.com/internacional/2016/06/20/america/1466376543_846138.html.

[2] “¿Por Qué Correa No Quiere Que Ecuatorianos Compren En Colombia? – Latinoamérica – El Tiempo.” El Tiempo. Accessed July 13, 2016. http://www.eltiempo.com/mundo/latinoamerica/por-que-correa-no-quiere-que-ecuatorianos-compren-en-colombia/16343555.

[3] “Ecuador Les Pide a Sus Ciudadanos No Comprar En Colombia.” CNNEspañol.com. 2015. Accessed July 13, 2016. http://cnnespanol.cnn.com/2015/09/02/ecuador-le-pide-a-sus-ciudadanos-no-comprar-en-colombia/.

[4] Cui, Carolyn. “Cheap Oil and Strong Dollar: Ecuador’s Twin Troubles.” WSJ. Accessed July 13, 2016. http://www.wsj.com/articles/cheap-oil-and-strong-dollar-ecuadors-twin-troubles-1448320496.

[5] “Correa Says ‘dollarization Was a Bad Idea’ Says That Ecuador’s Reliance on the Dollar Puts Country in a Financial ‘straight Jacket’ | CuencaHighLife.” CuencaHighLife. 2014. Accessed July 13, 2016. http://www.cuencahighlife.com/correa-says-again-that-dollarization-was-a-bad-idea-says-that-ecuadors-reliance-on-the-dollar-puts-country-in-a-financial-straight-jacket/.

[6] “Ecuador and the IMF.” IMF. Accessed July 13, 2016. https://www.imf.org/external/np/speeches/2000/051900.htm.

[7] “Ecuador Inflation Rate (consumer Prices).” Index Mundi. Accessed July 13, 2016. http://www.indexmundi.com/ecuador/inflation_rate_(consumer_prices).html.

[8] “Ideas Have Consequences: The Case of Dollarization in Ecuador.” Atlas Network. Accessed July 14, 2016. https://www.atlasnetwork.org/news/article/ideas-have-consequences-the-case-of-dollarization-in-ecuador.

[10] “Dollarisation in Ecuador.” Adam Smith Institute. Accessed July 13, 2016. http://www.adamsmith.org/blog/international/dollarisation-in-ecuador.

[11] “Basics of Dollarization.” Global Policy Forum. Accessed July 13, 2016. https://www.globalpolicy.org/pmscs/30435.html.

[12] “Dollarization Explained | Investopedia.” Investopedia. 2004. Accessed July 15, 2016. http://www.investopedia.com/articles/04/082504.asp.

[14] “Official Dollarization and the Banking System in Ecuador and El Salvador.” Federal Reserve Bank of Atlanta. Accessed July 13, 2016.


Contents

The country's name means "Equator" in Spanish, truncated from the Spanish official name, República del Ecuador (lit. "Republic of the Equator"), derived from the former Ecuador Department of Gran Colombia established in 1824 as a division of the former territory of the Royal Audience of Quito. Quito, which remained the capital of the department and republic, is located only about 40 kilometres (25 mi), ¼ of a degree, south of the equator.

Pre-Inca era Edit

Various peoples had settled in the area of future Ecuador before the arrival of the Incas. The archeological evidence suggests that the Paleo-Indians' first dispersal into the Americas occurred near the end of the last glacial period, around 16,500–13,000 years ago. The first Indians who reached Ecuador may have journeyed by land from North and Central America or by boat down the Pacific Ocean coastline. Much later migrations to Ecuador may have come via the Amazon tributaries, others descended from northern South America, and others ascended from the southern part of South America through the Andes. They developed different languages while emerging as unique ethnic groups.

Even though their languages were unrelated, these groups developed similar groups of cultures, each based in different environments. The people of the coast developed a fishing, hunting, and gathering culture the people of the highland Andes developed a sedentary agricultural way of life, and the people of the Amazon basin developed a nomadic hunting-and-gathering mode of existence.

Over time these groups began to interact and intermingle with each other so that groups of families in one area became one community or tribe, with a similar language and culture. Many civilizations arose in Ecuador, such as the Valdivia Culture and Machalilla Culture on the coast, the Quitus (near present-day Quito), and the Cañari (near present-day Cuenca). Each civilisation developed its own distinctive architecture, pottery, and religious interests.

In the highland Andes mountains, where life was more sedentary, groups of tribes cooperated and formed villages thus the first nations based on agricultural resources and the domestication of animals formed. Eventually, through wars and marriage alliances of their leaders, a group of nations formed confederations. One region consolidated under a confederation called the Shyris, which exercised organized trading and bartering between the different regions. Its political and military power came under the rule of the Duchicela blood-line.

Inca era Edit

When the Incas arrived, they found that these confederations were so developed that it took the Incas two generations of rulers—Topa Inca Yupanqui and Huayna Capac—to absorb them into the Inca Empire. The native confederations that gave them the most problems were deported to distant areas of Peru, Bolivia, and north Argentina. Similarly, a number of loyal Inca subjects from Peru and Bolivia were brought to Ecuador to prevent rebellion. Thus, the region of highland Ecuador became part of the Inca Empire in 1463 sharing the same language.

In contrast, when the Incas made incursions into coastal Ecuador and the eastern Amazon jungles of Ecuador, they found both the environment and indigenous people more hostile. Moreover, when the Incas tried to subdue them, these indigenous people withdrew to the interior and resorted to guerrilla tactics. As a result, Inca expansion into the Amazon Basin and the Pacific coast of Ecuador was hampered. The indigenous people of the Amazon jungle and coastal Ecuador remained relatively autonomous until the Spanish soldiers and missionaries arrived in force. The Amazonian people and the Cayapas of Coastal Ecuador were the only groups to resist Inca and Spanish domination, maintaining their language and culture well into the 21st century.

Before the arrival of the Spaniards, the Inca Empire was involved in a civil war. The untimely death of both the heir Ninan Cuchi and the Emperor Huayna Capac, from a European disease that spread into Ecuador, created a power vacuum between two factions. The northern faction headed by Atahualpa claimed that Huayna Capac gave a verbal decree before his death about how the empire should be divided. He gave the territories pertaining to present-day Ecuador and northern Peru to his favorite son Atahualpa, who was to rule from Quito and he gave the rest to Huáscar, who was to rule from Cuzco. He willed that his heart be buried in Quito, his favorite city, and the rest of his body be buried with his ancestors in Cuzco.

Huáscar did not recognize his father's will, since it did not follow Inca traditions of naming an Inca through the priests. Huáscar ordered Atahualpa to attend their father's burial in Cuzco and pay homage to him as the new Inca ruler. Atahualpa, with a large number of his father's veteran soldiers, decided to ignore Huáscar, and a civil war ensued. A number of bloody battles took place until finally Huáscar was captured. Atahualpa marched south to Cuzco and massacred the royal family associated with his brother.

In 1532, a small band of Spaniards headed by Francisco Pizarro landed in Tumbez and marched over the Andes Mountains until they reached Cajamarca, where the new Inca Atahualpa was to hold an interview with them. Valverde, the priest, tried to convince Atahualpa that he should join the Catholic Church and declare himself a vassal of Spain. This infuriated Atahualpa so much that he threw the Bible to the ground. At this point the enraged Spaniards, with orders from Valverde, attacked and massacred unarmed escorts of the Inca and captured Atahualpa. Pizarro promised to release Atahualpa if he made good his promise of filling a room full of gold. But, after a mock trial, the Spaniards executed Atahualpa by strangulation.

Spanish colonization Edit

New infectious diseases such as smallpox, endemic to the Europeans, caused high fatalities among the Amerindian population during the first decades of Spanish rule, as they had no immunity. At the same time, the natives were forced into the encomienda labor system for the Spanish. In 1563, Quito became the seat of a real audiencia (administrative district) of Spain and part of the Viceroyalty of Peru and later the Viceroyalty of New Granada.

The 1797 Riobamba earthquake, which caused up to 40,000 casualties, was studied by Alexander von Humboldt, when he visited the area in 1801–1802. [23]

After nearly 300 years of Spanish rule, Quito was still a small city numbering 10,000 inhabitants. On August 10, 1809, the city's criollos called for independence from Spain (first among the peoples of Latin America). They were led by Juan Pío Montúfar, Quiroga, Salinas, and Bishop Cuero y Caicedo. Quito's nickname, "Luz de América" ("Light of America"), is based on its leading role in trying to secure an independent, local government. Although the new government lasted no more than two months, it had important repercussions and was an inspiration for the independence movement of the rest of Spanish America. August 10 is now celebrated as Independence Day, a national holiday. [24]

Independence Edit

On October 9, 1820, the Department of Guayaquil became the first territory in Ecuador to gain its independence from Spain, and it spawned most of the Ecuadorian coastal provinces, establishing itself as an independent state. Its inhabitants celebrated what is now Ecuador's official Independence Day on May 24, 1822. The rest of Ecuador gained its independence after Antonio José de Sucre defeated the Spanish Royalist forces at the Battle of Pichincha, near Quito. Following the battle, Ecuador joined Simón Bolívar's Republic of Gran Colombia, also including modern-day Colombia, Venezuela and Panama. In 1830, Ecuador separated from Gran Colombia and became an independent republic. Two years later, it annexed the Galapagos Islands. [25]

The 19th century was marked by instability for Ecuador with a rapid succession of rulers. The first president of Ecuador was the Venezuelan-born Juan José Flores, who was ultimately deposed, followed by several authoritarian leaders, such as Vicente Rocafuerte José Joaquín de Olmedo José María Urbina Diego Noboa Pedro José de Arteta Manuel de Ascásubi and Flores's own son, Antonio Flores Jijón, among others. The conservative Gabriel García Moreno unified the country in the 1860s with the support of the Roman Catholic Church. In the late 19th century, world demand for cocoa tied the economy to commodity exports and led to migrations from the highlands to the agricultural frontier on the coast.

Ecuador abolished slavery and freed its black slaves in 1851. [26]

Liberal Revolution Edit

The Liberal Revolution of 1895 under Eloy Alfaro reduced the power of the clergy and the conservative land owners. This liberal wing retained power until the military "Julian Revolution" of 1925. The 1930s and 1940s were marked by instability and emergence of populist politicians, such as five-time President José María Velasco Ibarra.

Loss of claimed territories since 1830 Edit

President Juan José Flores de jure territorial claims Edit

Since Ecuador's separation from Colombia on May 13, 1830, its first President, General Juan José Flores, laid claim to the territory that was called the Real Audiencia of Quito, also referred to as the Presidencia of Quito. He supported his claims with Spanish Royal decrees or Real Cedulas, that delineated the borders of Spain's former overseas colonies. In the case of Ecuador, Flores-based Ecuador's de jure claims on the following cedulas - Real Cedula of 1563, 1739, and 1740 with modifications in the Amazon Basin and Andes Mountains that were introduced through the Treaty of Guayaquil (1829) which Peru reluctantly signed, after the overwhelmingly outnumbered Gran Colombian force led by Antonio José de Sucre defeated President and General La Mar's Peruvian invasion force in the Battle of Tarqui. In addition, Ecuador's eastern border with the Portuguese colony of Brazil in the Amazon Basin was modified before the wars of Independence by the First Treaty of San Ildefonso (1777) between the Spanish Empire and the Portuguese Empire. Moreover, to add legitimacy to his claims, on February 16, 1840, Flores signed a treaty with Spain, whereby Flores convinced Spain to officially recognize Ecuadorian independence and its sole rights to colonial titles over Spain's former colonial territory known anciently to Spain as the Kingdom and Presidency of Quito.

Ecuador during its long and turbulent history has lost most of its contested territories to each of its more powerful neighbors, such as Colombia in 1832 and 1916, Brazil in 1904 through a series of peaceful treaties, and Peru after a short war in which the Protocol of Rio de Janeiro was signed in 1942.

Struggle for independence Edit

During the struggle for independence, before Peru or Ecuador became independent nations, a few areas of the former Vice Royalty of New Granada - Guayaquil, Tumbez, and Jaén - declared themselves independent from Spain. A few months later, a part of the Peruvian liberation army of San Martin decided to occupy the independent cities of Tumbez and Jaén with the intention of using these towns as springboards to occupy the independent city of Guayaquil and then to liberate the rest of the Audiencia de Quito (Ecuador). It was common knowledge among the top officers of the liberation army from the south that their leader San Martin wished to liberate present-day Ecuador and add it to the future republic of Peru, since it had been part of the Inca Empire before the Spaniards conquered it.

However, Bolívar's intention was to form a new republic known as the Gran Colombia, out of the liberated Spanish territory of New Granada which consisted of Colombia, Venezuela, and Ecuador. San Martin's plans were thwarted when Bolívar, with the help of Marshal Antonio José de Sucre and the Gran Colombian liberation force, descended from the Andes mountains and occupied Guayaquil they also annexed the newly liberated Audiencia de Quito to the Republic of Gran Colombia. This happened a few days before San Martin's Peruvian forces could arrive and occupy Guayaquil, with the intention of annexing Guayaquil to the rest of Audiencia of Quito (Ecuador) and to the future republic of Peru. Historic documents repeatedly stated that San Martin told Bolivar he came to Guayaquil to liberate the land of the Incas from Spain. Bolivar countered by sending a message from Guayaquil welcoming San Martin and his troops to Colombian soil.

Peruvian occupation of Jaén, Tumbes, and Guayaquil Edit

In the south, Ecuador had de jure claims to a small piece of land beside the Pacific Ocean known as Tumbes which lay between the Zarumilla and Tumbes rivers. In Ecuador's southern Andes Mountain region where the Marañon cuts across, Ecuador had de jure claims to an area it called Jaén de Bracamoros. These areas were included as part of the territory of Gran Colombia by Bolivar on December 17, 1819, during the Congress of Angostura when the Republic of Gran Colombia was created. Tumbes declared itself independent from Spain on January 17, 1821, and Jaen de Bracamoros on June 17, 1821, without any outside help from revolutionary armies. However, that same year, 1821, Peruvian forces participating in the Trujillo revolution occupied both Jaen and Tumbes. Some Peruvian generals, without any legal titles backing them up and with Ecuador still federated with the Gran Colombia, had the desire to annex Ecuador to the Republic of Peru at the expense of the Gran Colombia, feeling that Ecuador was once part of the Inca Empire.

On July 28, 1821, Peruvian independence was proclaimed in Lima by the Liberator San Martin, and Tumbes and Jaen, which were included as part of the revolution of Trujillo by the Peruvian occupying force, had the whole region swear allegiance to the new Peruvian flag and incorporated itself into Peru, even though Peru was not completely liberated from Spain. After Peru was completely liberated from Spain by the patriot armies led by Bolivar and Antonio Jose de Sucre at the Battle of Ayacucho dated December 9, 1824, there was a strong desire by some Peruvians to resurrect the Inca Empire and to include Bolivia and Ecuador. One of these Peruvian Generals was the Ecuadorian-born José de La Mar, who became one of Peru's presidents after Bolivar resigned as dictator of Peru and returned to Colombia. Gran Colombia had always protested Peru for the return of Jaen and Tumbes for almost a decade, then finally Bolivar after long and futile discussion over the return of Jaen, Tumbes, and part of Mainas, declared war. President and General José de La Mar, who was born in Ecuador, believing his opportunity had come to annex the District of Ecuador to Peru, personally, with a Peruvian force, invaded and occupied Guayaquil and a few cities in the Loja region of southern Ecuador on November 28, 1828.

The war ended when a triumphant heavily outnumbered southern Gran Colombian army at Battle of Tarqui dated February 27, 1829, led by Antonio José de Sucre, defeated the Peruvian invasion force led by President La Mar. This defeat led to the signing of the Treaty of Guayaquil dated September 22, 1829, whereby Peru and its Congress recognized Gran Colombian rights over Tumbes, Jaen, and Maynas. Through protocolized meetings between representatives of Peru and Gran Colombia, the border was set as Tumbes river in the west and in the east the Maranon and Amazon rivers were to be followed toward Brazil as the most natural borders between them. However, what was pending was whether the new border around the Jaen region should follow the Chinchipe River or the Huancabamba River. According to the peace negotiations Peru agreed to return Guayaquil, Tumbez, and Jaén despite this, Peru returned Guayaquil, but failed to return Tumbes and Jaén, alleging that it was not obligated to follow the agreements, since the Gran Colombia ceased to exist when it divided itself into three different nations - Ecuador, Colombia, and Venezuela.

The dissolution of Gran Colombia Edit

The Central District of the Gran Colombia, known as Cundinamarca or New Granada (modern Colombia) with its capital in Bogota, did not recognize the separation of the Southern District of the Gran Colombia, with its capital in Quito, from the Gran Colombian federation on May 13, 1830. After Ecuador's separation, the Department of Cauca voluntarily decided to unite itself with Ecuador due to instability in the central government of Bogota. The Venezuelan born President of Ecuador, the general Juan José Flores, with the approval of the Ecuadorian congress annexed the Department of Cauca on December 20, 1830, since the government of Cauca had called for union with the District of the South as far back as April 1830. Moreover, the Cauca region, throughout its long history, had very strong economic and cultural ties with the people of Ecuador. Also, the Cauca region, which included such cities as Pasto, Popayán, and Buenaventura, had always been dependent on the Presidencia or Audiencia of Quito.

Fruitless negotiations continued between the governments of Bogotá and Quito, where the government of Bogotá did not recognize the separation of Ecuador or that of Cauca from the Gran Colombia until war broke out in May 1832. In five months, New Granada defeated Ecuador due to the fact that the majority of the Ecuadorian Armed Forces were composed of rebellious angry unpaid veterans from Venezuela and Colombia that did not want to fight against their fellow countrymen. Seeing that his officers were rebelling, mutinying, and changing sides, President Flores had no option but to reluctantly make peace with New Granada. The Treaty of Pasto of 1832 was signed by which the Department of Cauca was turned over to New Granada (modern Colombia), the government of Bogotá recognized Ecuador as an independent country and the border was to follow the Ley de División Territorial de la República de Colombia (Law of the Division of Territory of the Gran Colombia) passed on June 25, 1824. This law set the border at the river Carchi and the eastern border that stretched to Brazil at the Caquetá river. Later, Ecuador contended that the Republic of Colombia, while reorganizing its government, unlawfully made its eastern border provisional and that Colombia extended its claims south to the Napo River because it said that the Government of Popayán extended its control all the way to the Napo River.

Struggle for possession of the Amazon Basin Edit

When Ecuador seceded from the Gran Colombia, Peru decided not to follow the treaty of Guayaquil of 1829 or the protocoled agreements made. Peru contested Ecuador's claims with the newly discovered Real Cedula of 1802, by which Peru claims the King of Spain had transferred these lands from the Viceroyalty of New Granada to the Viceroyalty of Peru. During colonial times this was to halt the ever-expanding Portuguese settlements into Spanish domains, which were left vacant and in disorder after the expulsion of Jesuit missionaries from their bases along the Amazon Basin. Ecuador countered by labeling the Cedula of 1802 an ecclesiastical instrument, which had nothing to do with political borders. Peru began its de facto occupation of disputed Amazonian territories, after it signed a secret 1851 peace treaty in favor of Brazil. This treaty disregarded Spanish rights that were confirmed during colonial times by a Spanish-Portuguese treaty over the Amazon regarding territories held by illegal Portuguese settlers.

Peru began occupying the defenseless missionary villages in the Mainas or Maynas region, which it began calling Loreto, with its capital in Iquitos. During its negotiations with Brazil, Peru stated that based on the royal cedula of 1802, it claimed Amazonian Basin territories up to Caqueta River in the north and toward the Andes Mountain range, depriving Ecuador and Colombia of all their claims to the Amazon Basin. Colombia protested stating that its claims extended south toward the Napo and Amazon Rivers. Ecuador protested that it claimed the Amazon Basin between the Caqueta river and the Marañon-Amazon river. Peru ignored these protests and created the Department of Loreto in 1853 with its capital in Iquitos which it had recently invaded and systematically began to occupy using the river systems in all the territories claimed by both Colombia and Ecuador. Peru briefly occupied Guayaquil again in 1860, since Peru thought that Ecuador was selling some of the disputed land for development to British bond holders, but returned Guayaquil after a few months. The border dispute was then submitted to Spain for arbitration from 1880 to 1910, but to no avail.

In the early part of the 20th century, Ecuador made an effort to peacefully define its eastern Amazonian borders with its neighbours through negotiation. On May 6, 1904, Ecuador signed the Tobar-Rio Branco Treaty recognizing Brazil's claims to the Amazon in recognition of Ecuador's claim to be an Amazonian country to counter Peru's earlier Treaty with Brazil back on October 23, 1851. Then after a few meetings with the Colombian government's representatives an agreement was reached and the Muñoz Vernaza-Suarez Treaty was signed July 15, 1916, in which Colombian rights to the Putumayo river were recognized as well as Ecuador's rights to the Napo river and the new border was a line that ran midpoint between those two rivers. In this way, Ecuador gave up the claims it had to the Amazonian territories between the Caquetá River and Napo River to Colombia, thus cutting itself off from Brazil. Later, a brief war erupted between Colombia and Peru, over Peru's claims to the Caquetá region, which ended with Peru reluctantly signing the Salomon-Lozano Treaty on March 24, 1922. Ecuador protested this secret treaty, since Colombia gave away Ecuadorian claimed land to Peru that Ecuador had given to Colombia in 1916.

On July 21, 1924, the Ponce-Castro Oyanguren Protocol was signed between Ecuador and Peru where both agreed to hold direct negotiations and to resolve the dispute in an equitable manner and to submit the differing points of the dispute to the United States for arbitration. Negotiations between the Ecuadorian and Peruvian representatives began in Washington on September 30, 1935. These negotiations were long and tiresome. Both sides logically presented their cases, but no one seemed to give up their claims. Then on February 6, 1937, Ecuador presented a transactional line which Peru rejected the next day. The negotiations turned into intense arguments during the next 7 months and finally on September 29, 1937, the Peruvian representatives decided to break off the negotiations without submitting the dispute to arbitration because the direct negotiations were going nowhere.

Four years later in 1941, amid fast-growing tensions within disputed territories around the Zarumilla River, war broke out with Peru. Peru claimed that Ecuador's military presence in Peruvian-claimed territory was an invasion Ecuador, for its part, claimed that Peru had recently invaded Ecuador around the Zarumilla River and that Peru since Ecuador's independence from Spain has systematically occupied Tumbez, Jaen, and most of the disputed territories in the Amazonian Basin between the Putomayo and Marañon Rivers. In July 1941, troops were mobilized in both countries. Peru had an army of 11,681 troops who faced a poorly supplied and inadequately armed Ecuadorian force of 2,300, of which only 1,300 were deployed in the southern provinces. Hostilities erupted on July 5, 1941, when Peruvian forces crossed the Zarumilla river at several locations, testing the strength and resolve of the Ecuadorian border troops. Finally, on July 23, 1941, the Peruvians launched a major invasion, crossing the Zarumilla river in force and advancing into the Ecuadorian province of El Oro.

During the course of the Ecuadorian–Peruvian War, Peru gained control over part of the disputed territory and some parts of the province of El Oro, and some parts of the province of Loja, demanding that the Ecuadorian government give up its territorial claims. The Peruvian Navy blocked the port of Guayaquil, almost cutting all supplies to the Ecuadorian troops. After a few weeks of war and under pressure by the United States and several Latin American nations, all fighting came to a stop. Ecuador and Peru came to an accord formalized in the Rio Protocol, signed on January 29, 1942, in favor of hemispheric unity against the Axis Powers in World War II favouring Peru with the territory they occupied at the time the war came to an end.

The 1944 Glorious May Revolution followed a military-civilian rebellion and a subsequent civic strike which successfully removed Carlos Arroyo del Río as a dictator from Ecuador's government. However, a post-Second World War recession and popular unrest led to a return to populist politics and domestic military interventions in the 1960s, while foreign companies developed oil resources in the Ecuadorian Amazon. In 1972, construction of the Andean pipeline was completed. The pipeline brought oil from the east side of the Andes to the coast, making Ecuador South America's second largest oil exporter. The pipeline in southern Ecuador did nothing to resolve tensions between Ecuador and Peru, however.

The Rio Protocol failed to precisely resolve the border along a little river in the remote Cordillera del Cóndor region in southern Ecuador. This caused a long-simmering dispute between Ecuador and Peru, which ultimately led to fighting between the two countries first a border skirmish in January–February 1981 known as the Paquisha Incident, and ultimately full-scale warfare in January 1995 where the Ecuadorian military shot down Peruvian aircraft and helicopters and Peruvian infantry marched into southern Ecuador. Each country blamed the other for the onset of hostilities, known as the Cenepa War. Sixto Durán Ballén, the Ecuadorian president, famously declared that he would not give up a single centimeter of Ecuador. Popular sentiment in Ecuador became strongly nationalistic against Peru: graffiti could be seen on the walls of Quito referring to Peru as the "Cain de Latinoamérica", a reference to the murder of Abel by his brother Cain in the Book of Genesis. [27]

Ecuador and Peru signed the Brasilia Presidential Act peace agreement on October 26, 1998, which ended hostilities, and effectively put an end to the Western Hemisphere's longest running territorial dispute. [28] The Guarantors of the Rio Protocol (Argentina, Brazil, Chile, and the United States of America) ruled that the border of the undelineated zone was to be set at the line of the Cordillera del Cóndor. While Ecuador had to give up its decades-old territorial claims to the eastern slopes of the Cordillera, as well as to the entire western area of Cenepa headwaters, Peru was compelled to give to Ecuador, in perpetual lease but without sovereignty, 1 km 2 (0.39 sq mi) of its territory, in the area where the Ecuadorian base of Tiwinza – focal point of the war – had been located within Peruvian soil and which the Ecuadorian Army held during the conflict. The final border demarcation came into effect on May 13, 1999 and the multi-national MOMEP (Military Observer Mission for Ecuador and Peru) troop deployment withdrew on June 17, 1999. [28]

Military governments (1972–79) Edit

In 1972, a "revolutionary and nationalist" military junta overthrew the government of Velasco Ibarra. The coup d'état was led by General Guillermo Rodríguez and executed by navy commander Jorge Queirolo G. The new president exiled José María Velasco to Argentina. He remained in power until 1976, when he was removed by another military government. That military junta was led by Admiral Alfredo Poveda, who was declared chairman of the Supreme Council. The Supreme Council included two other members: General Guillermo Durán Arcentales and General Luis Leoro Franco. The civil society more and more insistently called for democratic elections. Colonel Richelieu Levoyer, Government Minister, proposed and implemented a Plan to return to the constitutional system through universal elections. This plan enabled the new democratically elected president to assume the duties of the executive office.

Return to democracy Edit

Elections were held on April 29, 1979, under a new constitution. Jaime Roldós Aguilera was elected president, garnering over one million votes, the most in Ecuadorian history. He took office on August 10, as the first constitutionally elected president after nearly a decade of civilian and military dictatorships. In 1980, he founded the Partido Pueblo, Cambio y Democracia (People, Change, and Democracy Party) after withdrawing from the Concentración de Fuerzas Populares (Popular Forces Concentration) and governed until May 24, 1981, when he died along with his wife and the minister of defense, Marco Subia Martinez, when his Air Force plane crashed in heavy rain near the Peruvian border. Many people believe that he was assassinated by the CIA, [ citation needed ] given the multiple death threats leveled against him because of his reformist agenda, deaths in automobile crashes of two key witnesses before they could testify during the investigation, and the sometimes contradictory accounts of the incident.

Roldos was immediately succeeded by Vice President Osvaldo Hurtado, who was followed in 1984 by León Febres Cordero from the Social Christian Party. Rodrigo Borja Cevallos of the Democratic Left (Izquierda Democrática, or ID) party won the presidency in 1988, running in the runoff election against Abdalá Bucaram (brother in law of Jaime Roldos and founder of the Ecuadorian Roldosist Party). His government was committed to improving human rights protection and carried out some reforms, notably an opening of Ecuador to foreign trade. The Borja government concluded an accord leading to the disbanding of the small terrorist group, "¡Alfaro Vive, Carajo!" ("Alfaro Lives, Dammit!"), named after Eloy Alfaro. However, continuing economic problems undermined the popularity of the ID, and opposition parties gained control of Congress in 1999.

The emergence of the Amerindian population as an active constituency has added to the democratic volatility of the country in recent years. The population has been motivated by government failures to deliver on promises of land reform, lower unemployment and provision of social services, and historical exploitation by the land-holding elite. Their movement, along with the continuing destabilizing efforts by both the elite and leftist movements, has led to a deterioration of the executive office. The populace and the other branches of government give the president very little political capital, as illustrated by the most recent removal of President Lucio Gutiérrez from office by Congress in April 2005. Vice President Alfredo Palacio took his place and remained in office until the presidential election of 2006, in which Rafael Correa gained the presidency. [29]

In December 2008, president Correa declared Ecuador's national debt illegitimate, based on the argument that it was odious debt contracted by corrupt and despotic prior regimes. He announced that the country would default on over $3 billion worth of bonds he then pledged to fight creditors in international courts and succeeded in reducing the price of outstanding bonds by more than 60%. [30] He brought Ecuador into the Bolivarian Alliance for the Americas in June 2009. To date, Correa's administration has succeeded in reducing the high levels of poverty and unemployment in Ecuador. [31] [32] [33] [34] [35]

After being elected in 2017, President Lenin Moreno's government adopted economically liberal policies: reduction of public spending, trade liberalization, flexibility of the labour code, etc. He also left the left-wing Bolivarian Alliance for the Americas (Alba) in August 2018. [36] The Productive Development Act enshrines an austerity policy, and reduces the development and redistribution policies of the previous mandate. In the area of taxes, the authorities aim to "encourage the return of investors" by granting amnesty to fraudsters and proposing measures to reduce tax rates for large companies. In addition, the government waives the right to tax increases in raw material prices and foreign exchange repatriations. [37] In October 2018, the government of President Lenin Moreno cut diplomatic relations with the Nicolás Maduro regime of Venezuela, a close ally of Rafael Correa. [38] The relations with the United States improved significantly during the presidency of Lenin Moreno. In February 2020, his visit to Washington was the first meeting between an Ecuadorian and U.S. president in 17 years. [39] In June 2019, Ecuador had agreed to allow US military planes to operate from an airport on the Galapagos Islands. [40]

The 11 April 2021 election run-off vote ended in a win for conservative former banker, Guillermo Lasso, taking 52.4% of the vote compared to 47.6% of left-wing economist Andrés Arauz, supported by exiled former president, Rafael Correa. Previously, President-elect Lasso finished second in the 2013 and 2017 presidential elections. [41] On 24 May 2021, Guillermo Lasso was sworn in as the new President of Ecuador, becoming the country's first right-wing leader in 14 years. [42] However, President Lasso´s party CREO Movement, and its ally the Social Christian Party (PSC) secured only 31 parliamentary seats out of 137, while the Union for Hope (UNES) of Andrés Arauz was the strongest parliamentary group with 49 seats, meaning the new president needs support from Izquierda Democrática (18 seats) and the indigenist Pachakutik (27 seats) to push through his legislative agenda. [43]

2019 state of emergency Edit

A series of protests began on 3 October 2019 against the end of fuel subsidies and austerity measures adopted by President of Ecuador Lenín Moreno and his administration. On 10 October, protesters overran the capital Quito causing the Government of Ecuador to relocate to Guayaquil, [44] but it was reported that the government still had plans to return to Quito. [45]

The Ecuadorian State consists of five branches of government: the Executive Branch, the Legislative Branch, the Judicial Branch, the Electoral Branch, and Transparency and Social Control.

Ecuador is governed by a democratically elected president, for a four-year term. The current president of Ecuador, Guillermo Lasso, exercises his power from the presidential Palacio de Carondelet in Quito. The current constitution was written by the Ecuadorian Constituent Assembly elected in 2007, and was approved by referendum in 2008. Since 1936, voting is compulsory for all literate persons aged 18–65, optional for all other citizens. [46]

The executive branch includes 23 ministries. Provincial governors and councilors (mayors, aldermen, and parish boards) are directly elected. The National Assembly of Ecuador meets throughout the year except for recesses in July and December. There are thirteen permanent committees. Members of the National Court of Justice are appointed by the National Judicial Council for nine-year terms.

Executive branch Edit

The executive branch is led by the president, an office currently held by Lenín Moreno. He is accompanied by the vice-president, currently María Alejandra Muñoz, elected for four years (with the ability to be re-elected only once). As head of state and chief government official, he is responsible for public administration including the appointing of national coordinators, ministers, ministers of State and public servants. The executive branch defines foreign policy, appoints the Chancellor of the Republic, as well as ambassadors and consuls, being the ultimate authority over the Armed Forces of Ecuador, National Police of Ecuador, and appointing authorities. The acting president's wife receives the title of First Lady of Ecuador.

Legislative branch Edit

The legislative branch is embodied by the National Assembly, which is headquartered in the city of Quito in the Legislative Palace, and consists of 137 assemblymen, divided into ten committees and elected for a four-year term. Fifteen national constituency elected assembly, two Assembly members elected from each province and one for every 100,000 inhabitants or fraction exceeding 150,000, according to the latest national population census. In addition, statute determines the election of assembly of regions and metropolitan districts.

Judicial branch Edit

Ecuador's judiciary has as its main body the Judicial Council, and also includes the National Court of Justice, provincial courts, and lower courts. Legal representation is made by the Judicial Council. The National Court of Justice is composed of 21 judges elected for a term of nine years. Judges are renewed by thirds every three years pursuant to the Judicial Code. These are elected by the Judicial Council on the basis of opposition proceedings and merits. The justice system is buttressed by the independent offices of public prosecutor and the public defender. Auxiliary organs are as follows: notaries, court auctioneers, and court receivers. Also there is a special legal regime for Amerindians.

Electoral branch Edit

The electoral system functions by authorities which enter only every four years or when elections or referendums occur. Its main functions are to organize, control elections, and punish the infringement of electoral rules. Its main body is the National Electoral Council, which is based in the city of Quito, and consists of seven members of the political parties most voted, enjoying complete financial and administrative autonomy. This body, along with the electoral court, forms the Electoral Branch which is one of Ecuador's five branches of government.

Transparency and social control branch Edit

The Transparency and Social Control consists of the Council of Citizen Participation and Social Control, an ombudsman, the Comptroller General of the State, and the superintendents. Branch members hold office for five years. This branch is responsible for promoting transparency and control plans publicly, as well as plans to design mechanisms to combat corruption, as also designate certain authorities, and be the regulatory mechanism of accountability in the country.

Human rights Edit

A 2003 Amnesty International report was critical that there were scarce few prosecutions for human rights violations committed by security forces, and those only in police courts, which are not considered impartial or independent. There are allegations that the security forces routinely torture prisoners. There are reports of prisoners having died while in police custody. Sometimes the legal process can be delayed until the suspect can be released after the time limit for detention without trial is exceeded. Prisons are overcrowded and conditions in detention centers are "abominable". [47]

UN's Human Rights Council's (HRC) Universal Periodic Review (UPR) has treated the restrictions on freedom of expression and efforts to control NGOs and recommended that Ecuador should stop the criminal sanctions for the expression of opinions, and delay in implementing judicial reforms. Ecuador rejected the recommendation on decriminalization of libel. [48]

According to Human Rights Watch (HRW) President Correa has intimidated journalists and subjected them to "public denunciation and retaliatory litigation". The sentences to journalists have been years of imprisonment and millions of dollars of compensation, even though defendants have been pardoned. [48] Correa has stated he was only seeking a retraction for slanderous statements. [49]

According to HRW, Correa's government has weakened the freedom of press and independence of the judicial system. In Ecuador's current judicial system, judges are selected in a contest of merits, rather than government appointments. However, the process of selection has been criticized as biased and subjective. In particular, the final interview is said to be given "excessive weighing". Judges and prosecutors that have made decisions in favor of Correa in his lawsuits have received permanent posts, while others with better assessment grades have been rejected. [48] [50]

The laws also forbid articles and media messages that could favor or disfavor some political message or candidate. In the first half of 2012, twenty private TV or radio stations were closed down. [48]

In July 2012, the officials warned the judges that they would be sanctioned and possibly dismissed if they allowed the citizens to appeal to the protection of their constitutional rights against the state. [48]

People engaging in public protests against environmental and other issues are prosecuted for "terrorism and sabotage", which may lead to an eight-year prison sentence. [48]

Foreign affairs Edit

Ecuador joined the Organization of Petroleum Exporting Countries (OPEC) in 1973 and suspended its membership in 1992. Under President Rafael Correa, the country returned to OPEC before leaving again in 2020 under the instruction of President Moreno, citing its desire to increase crude oil importation to gain more revenue. [51] [52]

In Antarctica, Ecuador has maintained a peaceful research station for scientific study as a member nation of the Antarctica Treaty. Ecuador has often placed great emphasis on multilateral approaches to international issues. Ecuador is a member of the United Nations (and most of its specialized agencies) and a member of many regional groups, including the Rio Group, the Latin American Economic System, the Latin American Energy Organization, the Latin American Integration Association, the Andean Community of Nations, and the Bank of the South (Spanish: Banco del Sur or BancoSur).

In 2017, the Ecuadorian parliament adopted a Law on human mobility. [53]

The International Organization for Migration lauds Ecuador as the first state to have established the promotion of the concept of universal citizenship in its constitution, aiming to promote the universal recognition and protection of the human rights of migrants. [54] In 2017, Ecuador signed the UN treaty on the Prohibition of Nuclear Weapons. [55]

In March 2019, Ecuador withdrew from Union of South American Nations. Ecuador was an original member of the block, founded by left-wing governments in Latin America and the Caribbean in 2008. Ecuador also asked UNASUR to return the headquarters building of the organization, based in its capital city, Quito. [56]

Administrative divisions Edit

Ecuador is divided into 24 provinces (Spanish: provincias), each with its own administrative capital:

Administrative divisions of Ecuador
Province Area (km 2 ) Population (2020) [57] Capital
1 Azuay 8,189 881,394 Cuenca
2 Bolívar 4,148 209,933 Guaranda
3 Cañar 3,669 281,396 Azogues
4 Carchi 3,790 186,869 Tulcán
5 Chimborazo 5,999 524,004 Riobamba
6 Cotopaxi 6,085 488,716 Latacunga
7 El Oro 5,879 715,751 Machala
8 Esmeraldas 14,893 643,654 Esmeraldas
9 Galápagos 8,010 33,042 Puerto Baquerizo Moreno
10 Guayas 15,927 4,387,434 Guayaquil
11 Imbabura 4,611 476,257 Ibarra
12 Loja 11,100 521,154 Loja
13 Los Ríos 7,100 921,763 Babahoyo
14 Manabí 19,427 1,562,079 Portoviejo
15 Morona Santiago 23,875 196,535 Macas
16 Napo 12,476 133,705 Tena
17 Orellana 21,691 161,338 Puerto Francisco de Orellana
18 Pastaza 29,068 114,202 Puyo
19 Pichincha 9,692 3,228,233 Quito
20 Santa Elena 3,696 401,178 Santa Elena
21 Santo Domingo de los Tsáchilas 4,180 458,580 Santo Domingo
22 Sucumbíos 18,612 230,503 Nueva Loja
23 Tungurahua 3,222 590,600 Ambato
24 Zamora Chinchipe 10,556 120,416 Zamora

The provinces are divided into cantons and further subdivided into parishes (parroquias).

Regions and planning areas Edit

Regionalization, or zoning, is the union of two or more adjoining provinces in order to decentralize the administrative functions of the capital, Quito. In Ecuador, there are seven regions, or zones, each shaped by the following provinces:

  • Region 1 (42,126 km 2 , or 16,265 mi 2 ): Esmeraldas, Carchi, Imbabura, and Sucumbios. Administrative city: Ibarra
  • Region 2 (43,498 km 2 , or 16,795 mi 2 ): Pichincha, Napo, and Orellana. Administrative city: Tena
  • Region 3 (44,710 km 2 , or 17,263 mi 2 ): Chimborazo, Tungurahua, Pastaza, and Cotopaxi. Administrative city: Riobamba
  • Region 4 (22,257 km 2 , or 8,594 mi 2 ): Manabí and Santo Domingo de los Tsachilas. Administrative city: Ciudad Alfaro
  • Region 5 (38,420 km 2 , or 14,834 mi 2 ): Santa Elena, Guayas, Los Ríos, Galápagos, and Bolívar. Administrative city: Milagro
  • Region 6 (38,237 km 2 , or 14,763 mi 2 ): Cañar, Azuay, and Morona Santiago. Administrative city: Cuenca
  • Region 7 (27,571 km 2 , or 10,645 mi 2 ): El Oro, Loja, and Zamora Chinchipe. Administrative city: Loja

Quito and Guayaquil are Metropolitan Districts. Galápagos, despite being included within Region 5, [58] is also under a special unit. [59]

The Ecuadorian Armed Forces (Fuerzas Armadas de la Republica de Ecuador), consists of the Army, Air Force, and Navy and have the stated responsibility for the preservation of the integrity and national sovereignty of the national territory.

The military tradition starts in Gran Colombia, where a sizable army was stationed in Ecuador due to border disputes with Peru, which claimed territories under its political control when it was a Spanish vice-royalty. Once Gran Colombia was dissolved after the death of Simón Bolívar in 1830, Ecuador inherited the same border disputes and had the need of creating its own professional military force. So influential was the military in Ecuador in the early republican period that its first decade was under the control of General Juan José Flores, first president of Ecuador of Venezuelan origin. General Jose Ma. Urbina and General Robles are examples of military figures who became presidents of the country in the early republican period.

Due to the continuous border disputes with Peru, finally settled in the early 2000s, and due to the ongoing problem with the Colombian guerrilla insurgency infiltrating Amazonian provinces, the Ecuadorian Armed Forces has gone through a series of changes. In 2009, the new administration at the Defense Ministry launched a deep restructuring within the forces, increasing spending budget to $1,691,776,803, an increase of 25%. [60]

The icons of the Ecuadorian military forces are Marshall Antonio José de Sucre and General Eloy Alfaro.

Army Edit

The Military Academy General Eloy Alfaro (c. 1838) located in Quito is in charge to graduate the army officers. [61]

Jungle Commands Group (IWIAS) Edit

The IWIAS is a special force trained to perform exploration and military activities. This army branch is considered the best elite force of Ecuador and is conformed by indigenous of the Amazon who combine their inherital experience for jungle dominance with modern army tactics.

Navy Edit

The Ecuadorian Navy Academy (c. 1837), located in Salinas graduates the navy officers. [62]

Air Force Edit

The Air Academy "Cosme Rennella (c. 1920), also located in Salinas, graduates the air force officers. [63]

Other training academies for different military specialties are found across the country.


Ecuador Trade Balance 1960-2021

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Ecuador Trade Balance 1960-2021
Macrotrends
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Ecuador is heavily dependent on its oil resources, which account for more than half of the country's revenue from exports, and a quarter of the public sector's revenue. Ecuador faced a deep economic crisis in 1999–2000 that led to a 6% decrease in the country's GDP and also an increase in the number of people living below the poverty line. The banking sector also collapsed and Ecuador also missed its external debt payments that year. Many structural reforms were approved by the National Congress in 2000, which also provided for the adoption of US dollars as a legal tender. The economy was strengthened due to dollars and the growth accelerated again in the coming years thanks to high oil prices, remittances and increase in unconventional exports.

Most Ecuador speak the Spanish language as their first language, with its ubiquity being allowed and dominated in most areas of the country, although there are many who speak an Amerindian language, such as Kichwa (also spelled Quechua), Which is one of the Quechuan languages and is spoken by about 2.5 million people in Ecuador, Bolivia, Colombia and Peru.


Ecuador Government Overview & History

Ecuador’s political situation today is deeply rooted in the country’s tumultuous history. The Republic of Ecuador’s political system is a representative democracy. The Government is divided into three branches: executive, legislative, and judicial. There is also an autonomous electoral agency called the Tribunal Supremo Electoral. Ecuador is separated into 24 provinces each of which is further divided into administrative cantones and parroquias.

In 2008, President Rafael Correa dissolved the Congress and convened a special constitutional assembly, which wrote a new Ecuadorian Constitution. The proposed constitution went to referendum in September of 2008, and was approved by a wide margin.

The President of the Republic presides over the executive branch and represents the State. He is elected for a 4-year term by popular vote – one ballot for President and Vice-President. The President determines the number and functions of the ministries that comprise the executive branch and appoints the ministers of each bureau that he creates. He is also the Commander-in-Chief of the Armed Forces. The president as of January 15, 2007 is Rafael Vicente Correa Delgado.

Legislative


Central Bank Building, Quito.

Ecuador’s unicameral Congress passes laws, levies taxes, and approves International Treaties and an annual budget proposed by the executive branch. Congressmen are elected during multi-party elections and represent one of Ecuador’s 21 provinces.


The President of the Congress, which had previously been elected by Congress as a whole, according to the new Constitution, will be chosen by the Party that received the highest percentage of the national vote. The President of Congress ranks after the President and Vice-President of the Republic, and essentially has the same powers and responsibilities as the Speaker of the House and Leader of the Senate majority in the United States.

The judicial system is comprised of administrative courts, trial courts, appellate or Provincial Superior Courts and a Supreme Court. The supreme judicial power is vested in the Supreme Court, which has 30 Justices divided among ten chambers of three Justices each. Supreme Justices are elected for life terms.

The people of Ecuador directly elect the nation’s President and Congressmen. Voting is a constitutional right for all Ecuadorian citizens and is compulsory for literate Ecuadorians between the ages of 18 and 65 years old residing in Ecuador. Voting is optional for the illiterate and for senior citizens over the age of 65. Also, active members of the military are not permitted to vote.


Elections are organized and supervised by the Tribunal Supremo Electoral. The Tribunal is an agency independent of the government and is vested with special enforcement powers. The Tribunal has the final word on all electoral matters. Observers of political parties and international organizations may be present during vote counting. In Presidential elections, if no candidate achieves a majority, the Constitution provides for a second round run-off between the two top candidates.

Ecuador’s economy depends heavily on petroleum production and exports, along with exports of agricultural commodities and seafood. According to the Central Bank of Ecuador, the country’s gross domestic product (GDP) reached nearly USD 129.1 billion in 2011. The state oil industry makes up almost 20% of GDP, constitutes over 50% of total exports, and provides about 40% of government revenue. Agriculture contributes 6.5% of GDP. Ecuador’s major agricultural and seafood exports are bananas, flowers, cocoa, coffee, shrimp and tuna. In recent years industry has become increasingly important to Ecuador’s economy, though it still lags behind commodities in importance.

In the 1990s, Ecuador committed itself to addressing remaining obstacles to trade and a functional free market economy. An unsustainable fiscal deficit and all the associated problems have made it difficult for the country to achieve any meaningful change to date, though it seems to be moving in the right direction: in 1995 Ecuador acceded to the World Trade Organization in 1998 the government passed comprehensive legislation to protect intellectual property rights and canceled subsidies on electricity, cooking gas, and fuel and in 2000, to help stabilize the economy, Ecuador adopted the US dollar as its national currency – a plan known as dollarization. In 2008, Ecuador abandoned payments on foreign loans, in order to meet the nation’s social needs.


Watch the video: The State of Ecuadors Economy