Ecuador

THE REPUBLIC OF ECUADOR traces its roots to the Kingdom of Quito formed by natives on the northern highlands in western South America. Later, Ecuador became part of the Inca tribe through conquest and marriage. In 1532, Francisco Pizarro claimed the land for Spain, and two centuries of exploitation of the land and the people followed. After revolting against Spain in 1819, Ecuador, Venezuela, Colombia, and Panama formed the Gran Colombia. When the confederation collapsed in 1830, Ecuador, Colombia, and Venezuela emerged as independent nations. Since the late 1970s, Ecuador has been under civilian rule, characterized by political instability and a rapid succession of presidents.

Petroleum is Ecuador's most valuable resource, generating 40 percent of export earnings and one-fourth of budget revenues. However, the market is dependent on global petroleum prices and on international events. Other Ecuadorian resources include fish, timber, and hydropower. Services dominate the economy, employing 68 percent of the labor force. Almost a fourth of the workforce is engaged in industry, and 10 percent are involved in agriculture. Unemployment stands at 11.1 percent, and 47 percent of the labor force are underemployed. Because of this, around eight percent of the population have migrated, mostly to Spain, Italy, and the United States.

Ecuador is subject to frequent earthquakes, landslides, volcanic activity, floods, and periodic droughts. In 1998 in the aftermath of El Niño, which caused $3 billion in damage, Ecuador suffered an economic collapse that resulted in bank failures, an inflation rate of 43 percent, and loan defaults on external debt. The poverty rate soared to 70 percent. After a coup in 2000, the vice president assumed power and began working with the Ecuadorian Congress to implement structural reforms designed to stabilize the economy. He was subsequently replaced.

Despite some growth, the economy has not completely recovered, in large part because chronic corruption serves as an obstacle to true progress and stymies efforts to improve the quality of life in Ecuador. Vast inequalities also negatively affect the standard of living. The richest 20 percent of the population claim 58 percent of the nation's wealth while the poorest 20 percent survive on only 3.3 percent. Ecuador is ranked 43.7 percent on the Gini Index of Human Inequality.

Ecuador is a lower-middle-income country with a per capita income of $3,700. While the poverty rate has declined from the 70 percent of the late 1980s, 45 percent of Ecuadorians currently live below the poverty line. Some 40.8 percent live on less than two dollars a day, and 17.7 percent live on less than one dollar a day. Over half of the Ecuadorian population is unable to meet basic needs, and 57.8 percent of this group live in rural areas.

Women and children are more susceptible to poverty than other groups, and poverty is worst in rural areas. The United Nations has estimated that 70 percent of children in Ecuador are poor. That number rises to 90 percent among the indigenous and Afro-Ecuadorian population. Cultural barriers continue to prevent efforts to end gender discrimination in Ecuador. As a result, women are more likely to be unemployed, and those who do work earn lower salaries.

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