Nicknamed ‘the jaguar of Latin America’, Ecuador continues to live up to its worthy title despite global economic slowdown that has affected much of its neighbouring states over the past five years.
The unemployment rate has dropped from 9.82 to 4.71 per cent since 2007, and public investment has been on a steady increase, topping the list in 2011 as the highest in Latin America at 14 per cent. Social security, healthcare and education have all made tremendous strides under President Rafael Correa, who was reelected for a third term this February with 56.9% of the vote.
His closest challenger, banker Guillermo Lasso, won 23.8% and former president Lucio Gutiérrez finished third at 6%, with 57% of the ballots counted. Addressing his supporters in the capital city of Quito, President Correa vowed to deepen the “citizens’ revolution” by continuing to strengthen the nation’s economic growth. So far, he has adhered to this promise.
Ecuador’s robust economy has seen a 5.6% GDP growth in the last year. It has successfully cut poverty by nearly a third and extreme poverty by 45%. Correa, a left-wing economist, has continued to maintain political stability in his nation of 14.6 million people and has been successful in encouraging foreign investments into the resource wealthy state. Profits from oil sales, which amount to 44% of the governments’ revenues, have been safeguarded within the country and have been used to further advance its social and economic agenda.
The most recent development is that Ecuador is planning to auction leases for about three million hectares to Chinese oil companies – a staggering 12% of the country’s total land mass. Such investments depict a continuing trend of China’s growing influence in Latin America. Now the region’s second largest trading partner (next to the United States), China has stepped into the space once held by Washington by providing Brazil’s national oil company $10 billion loans and granting Argentina access to more than $10 billion in Chinese currency. By locking down these deals and deepening its influence in the region, China continues to secure its access to Latin America’s important natural resources for years to come.
In regards to Ecuador’s new endeavor with China, not everyone is on board. China’s lease on Ecuador’s land has met the eye of critics who point to the disastrous outcomes of previous countries like Argentina and Bolivia. Pledging their allegiance to the IMF’s reform agenda and these countries were crippled when they defaulted on their foreign and private loans. Since China’s loan to Ecuador currently exceeds $6 billion, including $1.7 billion to finance 85% of Coca-Codo Sinclair, a hydropower plant which supplies 75% of the country’s energy needs, their concerns are justified. Moving into his third term, Correa must address this matter and provide a game plan for what would happen if bilateral trade relations weakened and Ecuador defaulted on its loan.
Despite this criticism, Ecuador continues to prove itself as a viable contender for investment. There is much to admire about its progress over the last decade; however, there is still work to be done. The country must continue to utilize a pragmatic approach when seeking foreign investment and furthering sustainable development. In addition, it must recognize environmental issues related to its energy production and reduce carbon emissions by expanding to renewable energy options. These changes are cardinal to the continuation of Ecuador’s title as “Latin America’s jaguar”.
