Tropical Ag- Ecuador

Economic Overview
Endowed with substantial petroleum resources, Ecuador’s economy is dominated by the oil industry, which accounts for 40 percent of the country’s export earnings and one-third of central government revenues. Ecuador’s economy is heavily dependent on exports, including oil and agricultural exports. Consequently, the economy is vulnerable to external shocks such as the fluctuations in world oil prices and other commodity prices. In the late 1990s, Ecuador suffered a severe economic crisis attributable to sharp declines in world oil prices and natural disasters that damaged oil pipelines and affected agricultural output. The economy was driven into recession, and Ecuador's inflation rate became the highest in the region while its currency depreciated substantially. In early 2000, Ecuador adopted the U.S. dollar as legal tender, and that helped stabilize the economy.

In recent years, economic stabilization and high world oil prices have contributed to Ecuador’s generally favorable macroeconomic performance. However, the overall competitiveness has not seen improvement, reflecting the deficiencies of the business environment, including inefficient and costly utilities, legal insecurity, a rigid labor market, and low skill levels. Moreover, further efforts are needed in fiscal consolidation to endure long-term macroeconomic stability.

Economic Performance

Ecuador’s macroeconomic performance was generally positive in recent years, having largely been supported by a favorable external environment. The opening of a new pipeline in October 2003 boosted oil production significantly. As a result, real GDP expanded 6.9 percent in 2004 from 2.7 percent in 2003. Growth remained robust at 4.7 percent in 2005 and 4.2 percent in 2006, driven by high oil prices and strong domestic demand. Inflation has remained in check owing to dollarization, standing at 3 percent in 2005 and 2006. The overall fiscal balance has been in moderated surplus (below 1 percent of GDP in 2005 and 2006), helped by high oil revenues.

Regional Situation

In the context of regional economic development, Ecuador should benefit from structural reform efforts aimed at enhancing external competitiveness to achieve higher, sustainable growth. Despite strong economic and export growth it has experienced in recent years, Ecuador’s overall competitiveness has not improved. In 2006, its position in the World Bank’s Doing Business Index slipped from 120 in 2005 to 123. Also, its position in the World Economic Forum’s Competitiveness Index dropped to 90 in 2006 from 87 in 2005.

As Ecuador is highly dependent on oil exports, mostly to the United States (about 50 percent of its oil exports goes to the U.S.), a free trade agreement (FTA) with the U.S. will be crucial to Ecuador’s efforts in structural reforms to improve competitiveness. However, FTA talks with the U.S. have been frozen since mid-2006 with Ecuador mandating revisions in contract terms and seizure of the assets of Occidental Petroleum Corp., the largest U.S. investor in the country.

2002 2003 2004 2005 2006 Real Gross Domestic Product (GDP) (billions of US dollars) 21.718 22.304 23.843 24.630 25.665 Total Population (million persons) 12,921,234.00 13,074,082.00 13,212,742.00 13,363,593.00 13,547,510.00

Agricultural Exports 1997 1998 1999 2000 2001 Meats and Meat Prep ($1,000) 1,474.00 2,196.00 5,409.00 6,057.00 6,330.00 Cereals & Preps ($1,000) 80,172.00 28,156.00 27,680.00 23,357.00 51,203.00 Dairy Products and Eggs ($1,000) 1,276.00 1,720.00 3,508.00 5,728.00 6,590.00 Fruits and Vegetables ($1,000) 1,419,977.00 1,169,443.00 1,087,093.00 924,876.00 966,247.00 Sugar and Honey ($1,000) 18,423.00 20,131.00 31,357.00 31,639.00 47,560.00 Animal and Vegetable Oils ($1,000) 11,319.00 10,898.00 34,340.00 18,318.00 22,206.00 Coffee, Tea and Cocoa ($1,000) 246,721.00 152,345.00 166,476.00 122,979.00 132,198.00

Production of Primary Crops 2000 2001 2002 2003 2004 Banana Production (Metric Tons) 50.020 146.000 160.000 153.000 n/a Barley Production (Metric Tons) 6,477,039.00 6,077,040.00 5,528,100.00 5,882,600.00 6,038,077.00 Cocoa Production (Metric Tons) 99,875.00 76,030.00 87,986.00 87,599.00 123,623.00 Coconut Production (Metric Tons) 22,038.00 24,887.00 21,572.00 20,973.00 23,711.00 Coffee Bean Production (Metric Tons) 138,030.00 164,790.00 79,149.00 82,720.00 86,522.00 Maize Production (Metric Tons) 611,269.00 337,057.00 386,320.00 677,479.00 733,482.00 Potato Production (Metric Tons) 239,715.00 441,413.00 349,400.00 396,639.00 431,492.00 Rice Production (Metric Tons) 1,246,630.00 1,255,990.00 1,284,504.00 1,235,967.00 1,345,751.00 Soy Bean Production (Metric Tons) 94,100.00 113,324.00 107,000.00 111,423.00 109,000.00 Sugar Beets Production (Metric Tons) 2,786.00 2,277.00 2,590.00 4,810.00 4,900.00 Sugar Cane Production (Metric Tons) 5,402,380.00 5,402,380.00 5,653,940.00 5,669,900.00 5,690,895.00 Wheat Production (Metric Tons) 12,958.00 13,631.00 13,635.00 12,589.00 13,543.00

Telecommunications 1999 2000 2001 2002 2003 Telecommunications - Number of Main Telephone Line (Mobile Lines (1000s)) 1,129.50 1,224.00 1,336.00 1,426.00 1,549.00 Mail Lines Per 100 Persons (Main Telephone Lines Per 100 Persons) 8.700 9.788 10.518 11.036 11.848 Telecommunications - Population of Cellular Subscr (Mobile cellular subscribers) 391,063.82 476,448.27 847,212.66 1,551,840.20 2,393,864.41

Economic Performance Index

The Economic Performance rankings are calculated by CountryWatch's editorial team, and is based on criteria including sustained economic growth, monetary stability, current account deficits, budget surplus, unemployment and structural imbalances. Scores are assessed from 0 to 100 using this aforementioned criteria as well as CountryWatch's proprietary economic research data and models. Country Economic Performance 2007 Economic Performance 2008 GNP growth forecast 2007 (%) GNP growth forecast 2008 (%) Ecuador  41.3  41.0  2.3  2.96 United States 96.7 89.1 3.8 2.72 Equatorial Guinea 92.9  95.1  9.8  10.17

Political Overview
In the late 1800s, world demand for cocoa tied the economy to commodity exports and led to migrations from the highlands to the agricultural frontier on the coast. A coastal-based liberal revolution in 1895, under Eloy Alfaro, reduced the power of the clergy and opened the way for capitalist development.

The end of the cocoa boom produced renewed political instability and a military coup in 1925. Populist politicians such as five-time president Jose Velasco Ibarra marked the 1930s and 1940s. In Jan. 1942, Ecuador signed the Rio Protocol to end a brief war with Peru, thus agreeing to a border that conceded to Peru much territory in the Amazon that Ecuador previously had claimed.

After World War II, a recovery in the market for agricultural commodities and the growth of the banana industry helped restore prosperity and peace. From 1948 to 1960, three presidents, beginning with Galo Plaza, were freely elected and completed their terms.

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, a nationalist military regime seized power and used the new oil wealth and foreign borrowing to pay for a program of industrialization, land reform, and subsidies for urban consumers.

With the oil boom fading, Ecuador returned to democracy in 1979, but by 1982, the government faced chronic economic crisis, including inflation, budget deficits, a falling currency, mounting debt service, and uncompetitive industries.

Environmental Issues
General Overview:

Ecuador is considered ecologically unique, with a variety of eco-systems and a diversity of species. It is home to more plant species than any other country in South America, and its breadth of ecological variation is largely attributable to the bio-diversity on the Galapagos Islands.

Ecuador 's major environmental challenges seem to be as a result of economic development activities and enterprises, as exemplified by the arenas of petroleum exploration, lumber production, and agricultural cultivation. The unsound environmental practices within these industries have contributed to considerable environmental degradation.

Current Issues:

-Deforestation, as a result of petroleum exploration and lumber production -Soil erosion, as a result of over-grazing and poor agricultural cultivation practices, and deforestation -Desertification -Water pollution -Deterioration of bio-diversity

Total Greenhouse Gas Emissions (Mtc):

10.9

Country Rank (GHG output):

79th

Natural Hazards:

-frequent earthquakes -landslides -volcanic activity -periodic droughts

Regional Synopsis: Latin America and the Caribbean

The Latin American and Caribbean region is characterized by exceedingly diverse landforms that have generally seen high rates of population growth and economic development in recent decades. The percentage of inhabitants residing in urban areas is quite high at 73.4 percent; the region includes the megacities of Mexico City, Sao Paulo, and Rio de Janeiro. The region also includes the world's second-highest mountain range, the Andes; significant expanses of desert and grassland; the coral reefs of the Caribbean Sea; and the world's largest contiguous tropical forest in the Amazon basin. Threats to the latter from subsistence and commercial farming, mineral exploitation and timbering are well publicized. Nevertheless, of eight countries worldwide that still retain at least 70 percent of their original forest cover, six are in Latin America. The region accounts for nearly half (48.3 percent) of the world's greenhouse gas emissions derived from land clearing, but as yet a comparatively minuscule share (4.3 percent) of such gases from industrial sources.

Key Points:

Although Latin America is one of the most biologically diverse regions of the world, this biodiversity is highly threatened, as exemplified by the projected extinction of up to 100,000 species in the next few decades. Much of this loss will be concentrated in the Amazon area, although the western coastline of South America will also suffer significant depletion of biological diversity. The inventory of rainforest species with potentially useful commercial or medical applications is incomplete, but presumed to include significant numbers of such species that may become extinct before they are discovered and identified.

Up to 50 percent of the region's grazing land has lost its soil fertility as a result of soil erosion, salinization, alkalinization and overgrazing.

The Caribbean Sea, the Atlantic Ocean, and the Pacific Ocean have all been contaminated by agricultural wastes, which are discharged into streams that flow into these major waters. Water pollution derived from phosphorous, nitrates and pesticides adversely affects fish stocks, contributes to oxygen depletion and fosters overgrowth of aquatic vegetation. Marine life will continue to be severely compromised as a result of these conditions.

Due to industrial development in the region, many beaches of eastern Latin America and the Caribbean suffer from tar deposits.

Most cities in the region lack adequate sewage treatment facilities, and rapid migration of the rural poor into the cities is widening the gap between current infrastructure capacity and the much greater level needed to provide satisfactory basic services.

The rainforest region of the Amazon Basin suffers from dangerously high levels of deforestation, which may be a significant contributory factor to global warming or "the greenhouse effect." In the late 1990s and into the new millennium, the rate of deforestation was around 20 million acres of rainforest being destroyed annually.

Deforestation on the steep rainforest slopes of Caribbean islands contributes to soil erosion and landslides, both of which then result in heavy sedimentation of nearby river systems. When these sedimented rivers drain into the sea and coral reefs, they poison the coral tissues, which are vital to the maintenance of the reef ecosystem. The result is marine degradation and nutrient depletion. Jamaica's coral reefs have never quite recovered from the effects of marine degradation.

The Southern Cone of Latin America (Argentina, Brazil, Chile, Paraguay, and Uruguay) suffers the effects of greatly increased ultraviolet-B radiation, as a consequence of more intense ozone depletion in the southern hemisphere.

Water resource vulnerability is an increasingly major concern in the northwestern portion of South America.

People
Cultural Demography The total population of Ecuador numbers over 12 million (some estimates suggest that the population is as large as 13 million). Although Ecuadorians were heavily concentrated in the mountainous central highland region a few decades ago, today's population is divided about equally between that area and the coastal lowlands. Migration in all regions toward cities, particularly larger cities like Guayaquil, Quito and Cuenca, has increased the urban population to about 55 percent. The tropical forest region to the east of the mountains remains sparsely populated and contains only about three percent of the population. Identity Considerations Ecuador's people are ethnically mixed. The largest ethnic groups are indigenous and mestizo (mixed native South American and European), although there are also European and African minorities. Spanish is the official language, while Quichua, the Ecuadorian dialect of Quechua, and other indigenous languages, are also spoken. The major religion is Roman Catholicism.

The division between the mestizo population and the native population is acute, not only culturally, but also in terms of the concentration of economic and political power. It is fair to state that the native population is marginalized in comparison with the mestizos and Europeans.

Education

According to the 1979 constitution, the central government is required to allocate at least 30 percent of its revenue to education, but in practice, it allots a much smaller percentage. The government is striving to create better programs for the rural and urban poor, especially in technical and occupational training. In recent years large increases in the student population, budget difficulties, and the extreme politicization of the university system have led to a decline in academic standards.

Still, the public education system tuition is free, and attendance is mandatory from ages six to 14. Public universities have an open admissions policy. In practice, many children drop out of school before age 15, and, in rural areas only about one-third complete elementary education. Regardless of these trends, according to estimates in the last year, 92 percent of Ecuadorians over the age of 15 are literate. This level of literacy is relatively high for a developing Latin American country. Enrollment in primary schools has been increasing at an annual rate of 4.4 percent, faster than the population growth rate.

Human Development

In terms of health and welfare, the infant mortality rate is 22.1 deaths per 1,000 live births. Life expectancy is 76.6 years for the entire population. The birth rate is 21.91 births per 1,000, while the death rate is 4.21 deaths per 1,000.

One notable measure used to determine a country's quality of life is the Human Development Index (HDI), which has been compiled annually since 1990 by the United Nations Development Programme (UNDP). The HDI is a composite of several indicators, which measure a country's achievements in three main arenas of human development: longevity, knowledge and education, as well as economic standard of living. In a ranking of 177 countries, the HDI placed Ecuador in the medium human development category, at 83rd place.

Note: Although the concept of human development is complicated and cannot be properly captured by values and indices, the HDI, which is calculated and updated annually, offers a wide-ranging assessment of human development in certain countries, not based solely upon traditional economic and financial indicators.

Cultural Dos and Taboos

1. A firm handshake with direct eye contact is the customary form of greeting. Men will need to wait for a woman to extend her hand first if she wants her hand shaken. Friends and relatives will often greet each other with a kiss and/or a hug -- called the abrazo in Spanish. Men, however, do not usually hug other men. A pat on the shoulder is a sign of friendship. In rural areas, some men will touch their hat and nod instead of shaking hands.

2. Generally, greetings among Latin Americans are lengthy endeavors involving both greetings and many inquiries about health, travels, relatives, friends or acquaintances. Quick greetings are interpreted as disrespectful and thoughtless.

3. As in all parts of Latin America, formality is the norm. Always address people by their title and last name until invited to do otherwise.

4. Yawning or coughing in public, especially while in conversation, is very rude. Always cover the mouth if you must yawn or cough. Eating in public is also not advised. Note also that pointing one's fingers may be perceived as an obscene gesture.

5. Never stand with your hands on your hips, as this will be perceived as a sign you are angry. While such aggressive stances are normal in North America, they do not translate well elsewhere. Of course, one should also expect that the bodily space between individuals during conversation is likely to be far less than in North America. Try not to be too uncomfortable with this distinction.

6. Sightseeing, culture, literature, dance, music, family and travel make excellent topics of conversation. Try to be informed about the local cultural life in this regard.

7. Avoid discussing politics, however, especially Ecuador's relationship with Peru.

8. Like other Latin Americans, Ecuadorians have a tradition of hospitality and may invite guests to their homes. Dinner is normally eaten between 7:00 and 9:00 P.M., but a dinner party will begin and end later. A dinner party will end soon after the meal, but a cocktail party may go until 5:00 A.M. One should not, however, drop in for an unscheduled visit at someone's home.

9. Dining is formal with diners keeping wrists on the table and elbows off the table. The fork should remain consistently in the left hand and the knife should be used in the right hand. The "fork flip-over" from left-to-right, common in North American usage, is inappropriate in Latin America.

10. Note that business is not usually discussed at social dinners, although business dinners at restaurants do occur frequently. Know the difference between a social occasion and a business lunch and expect differences in conversation accordingly.

11. If you are invited to dinner, it is appropriate to bring a gift for the host or hostess. Exotic flowers, expensive and imported chocolates, pastries, cognacs, whiskey and other upper tier brands of liquor make fine gifts. Inappropriate gifts include knives (they symbolize the dissolution of a friendship) or flowers (such as lilies) which are used at funerals. A wrapped gift may not be opened in the presence of the giver for fear of appearing greedy, but if you are the recipient of a gift, profuse appreciation is expected.

12. Dress is generally casual but fashionable and one should always dress with good taste. Latin Americans are very conscious of self-presentation. Business attire is somewhat more orthodox, including suits for both men and women. Shorts should be confined to private homes and are not generally worn on the street.

Health
Health Information for Travelers to Ecuador

Currently, there is increased yellow fever activity in Brazil in the states of Minas Gerais, Rondonia, Goias, and Bahaia. For more information and recommendations, see the following websites:

Yellow Fever Disease and Vaccine Information (http://www.cdc.gov/travel/yfever.htm)

World Health Organization Disease Outbreak News (http://www.who.int/disease-outbreak-news/)

Food and waterborne diseases are the number one cause of illness in travelers. Travelers' diarrhea can be caused by viruses, bacteria, or parasites, which are found universally throughout the region and can contaminate food or water. Infections may cause diarrhea and vomiting (E. coli, Salmonella, cholera, and parasites), fever (typhoid fever and toxoplasmosis), or liver damage (hepatitis). Make sure your food and drinking water are safe (see below).

Malaria is a preventable infection that can be fatal if left untreated. Prevent infection by taking prescription antimalarial drugs and protecting yourself against mosquito bites (see below). Malaria risk in this region exists in some urban and many rural areas, depending on elevation. For specific locations, see Malaria Information for Travelers to Tropical South America (http://www.cdc.gov/travel/regionalmalaria/tropsam.htm).

A certificate of yellow fever vaccination may be required for entry into certain of these countries. For detailed information, see Comprehensive Yellow Fever Vaccination Requirements (http://www.cdc.gov/travel/yelfever.htm).

If you visit the Andes Mountains, ascend gradually to allow time for your body to adjust to the high altitude, which can cause insomnia, headaches, nausea, and altitude sickness. In addition, use sunblock rated at least 15 SPF, because the risk of sunburn is greater at high altitudes.

Dengue, filariasis, leishmaniasis, onchocerciasis, and American trypanosomiasis (Chagas disease) are other diseases carried by insects that also occur in this region. Protecting yourself against insect bites (see below) will help to prevent these diseases.

Because motor vehicle crashes are a leading cause of injury among travelers, walk and drive defensively. Avoid nighttime travel if possible and always use seat belts.