Ecuador’s Economy: Oil and Agriculture, Overdependence Essay -- Ecuado

Ecuador’s Economy: Oil and Agriculture, Overdependence One of the main features of Ecuador ’s economy is its dependence on only a few key export commodities, most importantly oil and bananas. Oil accounts for approximately 40% of the export economy, while bananas are responsible for about 17%, and Ecuador is the largest producer of bananas in the world. The rest of the economy is mostly based on less important agricultural exports, such as shrimp and flowers, which account for 6% and 4% of exports respectively. Ecuador is almost completely reliant on the success of these few industries, particularly oil, and so has suffered through a cycle of boom and bust economies over the past several decades, since oil was discovered in the 1970s. Furthermore, in the last six years Ecuador has had four different presidents, and the national office has been dogged by scandals and corruption. This environment has made it very difficult for the government to accomplish the reforms that are necessary to stabilize the nation when the economy faces a serious downturn. There are two main factors that have been very significant in determining the health of Ecuador ’s economy at any given time, and those are oil prices and extreme weather events. Ecuador’s major agricultural exports are, of course, very susceptible to damage from harmful weather; while the oil industry, until quite recently, has been dependent on only one major pipeline for transport, the Sistema Oleoducto Trans-Ecuatoriano (SOTE). In 1987 a large earthquake rocked Ecuador, destroying a large stretch of the SOTE pipeline, which, when combined with a decline in world oil prices, nearly resulted in a complete collapse of the economy. Another devastating weather event, which also... ...gale, Marcelo, and Lopez-Caliz, Jose (ed.), Ecuador: An Economic and Social Agenda in the New Millennium, (The World Bank: Washington DC, 2003). â€Å" Ecuador Country Analysis Brief,† Energy Information Administration, http://www.eia.doe.gov/emeu/cabs/ecuador.html, vie we d on 18 November 2004. â€Å" Ecuador Business > Economic Overview & History,† Ecuador Explorer, http://www.ecuadorexplorer.com/html/business_in_ecuador.html, vie we d on 18 November 2004. â€Å" Ecuador,† InfoPlease, http://www.infoplease.com/ipa/A0107479, vie we d on 8 December 2004. â€Å"Foreign Trade,† Ecuador Exports, http://www.ecuadorexports.com/foreign.htm, vie we d on 8 December 2004. â€Å" Ecuador Country Case Study: Impacts and Responses to the 1997-98 El Nià ±o Event,†Institute for the Study of Society and Environment, http://www.esig.ucar.edu/un/ecuador.html, vie we d on 2 November 2004.