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APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 B7 /GS /E li r 1 Ecuador 1 UlY 1973 i r R NA LINAL INTELLIGENCE SURVEY FOR O,=FI CIAL USE ONLY APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 WARNING The NtS is National Intelligence and may not be re- leased or si:own to representatives of any foreign govern- meet or international body except by specific authorization of the Director of Central intelligence in accordance with the provisions of National Security Council intelligence Di- rective No. I. For NIS containing unclassified material, however, the portions so markad may be made available for official pur- poses to foreign nationals and congovernment personnel ti provided ne attributian is mc-caa to Notional Intelligence or the National Intelligence Survey. Subsect ?om and gr -phks are individuolly classified according to content. Classification /con'.. of designa- tions are: WOU) Unclassified /For Official Use Only (C) Confidential (S) Secret r i APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP0l- 00707R000200110032 -8 Page Page C. Economic policy and development 17 D. Inter.- .4tional economic xelatians 23 I. Policy 17 1. Foreign trade 23 a. Government participation in the a. Composition of trade 23 economy 17 1 Direction of trade 24 b. Public finance 17 c. Trrde. regulations 25 c. Banking, money supply, and prices 19 2. Balance of payments 26 2. Development planning and investment 20 3, 21 Glossary 28 FIGURES Page P Fig. 1 Economic activity (map) 2 Fi 13 Composition of manufacturing output Fig. 2 Use c: resources (chart) 3 table) 15 Fig. 3 Gross domestic product (chart) Fig. 14 Gocrnmcnt revenues and expendi Fig. 4 Land use (chart) turns (table) IS Fig. 5 Land tenure table) 5 Fig. 15 Government deficit (ciuir[ 19 Fig. 16 Money supply (table) 20 Fig, 6 Principal crops table) 7 Fig, 17 Cost of living (table) 2G Fig. 7 1 ivestoek numbers table) 9 Fig. 18 Bank credit (fable) Fig. 8 Livestock products (table) 9 Fig. 19 Domestic investment (table) 22 Fig. 9 Fish cateb; (table) Fig. 20 Labor force table 22 Fig. 10 Petroleum (ta>>le) 11 Fig. 11 Balance of trade (chart) 2.3 Fig. 11 New investment (table) 14 Fib;. 22 Exports (table) Fig, 23 Imports (table) 24 25 Fig. 12 Sectoral distribution of manufacturing Fig, 24 Direction of trade (chart) 26 (chart) `I4 Fig. 25 Balance of payments (table) 27 B APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 1 r J a i y y� r tom Top j 4k i A .1 Ecu ador tF S -y4 of bananas, has been heavily dependent on agriculture, and Is one ',)f the least developed countries it, America I South Mo but the emeigence ot petroleum as major export has, considerably improved 0- the country's prospects for eiconomic +r Y Jf ice� 1 rte' 1 1 r;,.e 'I yy S t't k S 'a' f Iii\- '''s" V 1 i �.'artsu r j vy" v 5 f t s. r r'S lkwl i i Spy I n M fit 3 a s ti p OL APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 ,t, lfrnra [Ser1Ct3 Iswaa AMCULTURE Il Cglfce qutto R Ce .S.q.)rc .o: "4 Crna!s, won. Mlata's, and Arelloc4 ff tlrll ap INDUSTRY ssxsa a,; i F llrmragcs A! poco"'n mfm'ng l UKhW Fa4ti prpp�.Rr1 ^y E t iu9b pnun+aOeulrC:ds ,1 MINING prtic4e m _....p'Pvrrnq;' Z Gou An d l.:Srr_ FISHING Shwop t}tTuna otm erg FIGURE 1. Economic activity i v ul nerable to fl uctuating worl mar prices for t h is Jinp diversificatiOn, prograins tliat have be i commodity. While gross don-u -stic product (CDV) has supported by loans fron, international :,genvias. l gmun at all average annual rate of.about 555 suite The d isLove ry (if petroleum in the. Oriente $n 1967 1950 and 9% annually since 1069. per capita anti its subse(laeut development by a U.S. cn n.nrlilt li,' i Cc'ononiic gains have. been small" b ecause. of rapid have improved Ectiado s fortunes considerably. population growth. Per capita COF- w- estiniated at Croide oil export%, Which n'cre illitiatcd iti Attgmt 1972 USS260 i:. 1971 ---is low even by Latin American upon the eompletion of a M150. trillion ir alls- standards, and income is very unevenly distributed. Andean pipeline; will bee -Pine" t he countr%''S chief Ecuador has kw principal a gricultural are as �the sovirc'e of foreign CXCII'llkgC in 1973. Letiador. is also fertile coast al plains l y ing West of tilt Antics and the cly wit It v ttrfilier nNerv (in the irite and high basins and valleys of the mountains. Production ric O ff shor e fishilig gro un ds, but t res(lilrces are and export Of bananas, coffee, COuva, and sugar :ire only ill the prdm:lry. stages of d eve l opm en t. KWIl'fl the ma economic activities in the'Loastal area, whi m eta ll ic mineral reserves, unlike those in tivi mring the highlands are more suited to lit production of Andean .countries, are $111.111 alid poor in .a grains, vegetables an Other temperate climate Crops quality, (Figure 1). Export errip .production and livestock Manufacturing and construction Fre fairly rapidly raising are conce tin larger farni units; but in the 1960's in response. to favoral4c 4 much agricultural activity is of the sul>_ristencr type. promotion legislation. the creation of. finaticiA Factors impeding agricultural gro wth includ the intermediaries, and increased goverilment sledding limited amount. of .,rabic land, the small size and for ueur infrastructure Although one -third of [Ile pri .te of most farms, and inadeq+Iate 10all nfaettiring nmt i Still IMKIIIVI' by handivraft trallSpOrtation a n d m ar keting facilities. N ew s the factory seclor is ex r:ll)l( an g overnment p rogranis are aimed at dive ul g manufacturin as a i whole has grows, at all average a g ri cu ltura l' ou i mpro vi ng the water supply amltt:ll rate of nearly 756 sitif -V 106. F(HI( processing system, and expanding credit facilities and extension and textile rnantlfacturing are file I.n:t in,p'..+rialII s e t v i ces. Livestock raising and. the cultivation of indtiatrics, but new plants have also }leer, established African puim on banana plantations are two for the pmcluction of hollwhold appliances, naperaud APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 EW U:160:11l;167:Jll:01 [:3t91 File 011IIZQiIly fly /:11I1I1101111bI119M.] w products, and gl ass rubb pn) d licts. 1.l of 1960 sucres Cnnsr!ICtiorl activily doubled ill 2 years as a result of BODO ailficld.dcvelopment in the hinlerlands and a honsiug TOTAL boolt1 ir) Quito and Cli.q. Ittlli[, the colmtrv's two 26,008 ayslraTO NET Inajol titles: IMPORTS e"S'pite these advances. Em iador renwins iitrg all GDP agrarian society. The c)utilry is gellenilly self- sufficicn, in agricultural commodities (except fur wheat, vegetable oils. and dairy products) ati(I in most 22000 111 1111fact tired cimsi ltit:r pods [)tit most import mats raa� nimeri:ds and itltermcdiate goods. as well as 0 nearly all of its Capital etltliptneitt. inr e de�eloprlleetl ct)ntillucs to be restricted by irladelluate 18.000 fillaucia! re'smi low levels of education and t;orernmmane ;udustrial skills, and a small domestic market. Between 16,000 cesnsumpeioa anc thi rd and one -half of the total population, including; a large percrntage(if the 111(liall population,. 14.000 re mains outside t16 111011C' econ0niv. Sit)(.e Illc rnic l9G0's. the g overnment has pla ye d a 12.000 P consum More active role Ill file development procrs ant[ has pursued ilimietary aild fiscal policies (l('SlgteCel to t)rolilotc industrial growth. A vilal exogenous growth 0 fael(rr }las the large -scale infitix of I)rivalc f o re i g n 1966 6 7 68 69. 70 71 lrtvest)neril ill lite petnActlm lrldtistrw. Total f;xe([ Ava;labreirsoarcrs capital Formation alm dot ibled dnriug 1970 -71 bi equal GOP pins net im ports efpoods and suriees, since about half of the new capital forinalion va ftlreigpl- fillanCtId, it did not impallge oil culsurner. l:[GURtc 2, Use of available resources exllentlitures, and tie I.itterrosc in line with cur. The for ei gn f illv 'wer reflected Ill C :i ti11Lil'ssfllllx' negotiated a USS�t0 hicreased nut imports of rmtlrces (Figure 1). million private b ack l oad and, later ill tike yea a T he 'in ipe nd tll g putrolemn boom also fueled public $17.9 mi l li on _s agreemen wilt the Intema. exlHCtations :old led to:a lmnature acceleration in CJ tltlnal 1Unetilr Fund. a,5 a fCSidt of new cap y l 9(7vc'rnment Spending during the 1967 -7 1)Criod. Altl)cnigh revemics grow rapidly; they ii ere iiisufficient inflows and :ill improved trade balance, net to crner.thc ?O 20% atnlual Increase ]p ex1)L'rtd1l11rCS, intern atiorldl reserves We re buill up fro -1 M Inilliun 1\101111tilig- final deficits were flounced largely by in F'ebmary to $128 million by ;be erld of lice year.. Central B.&O. borrowing, precipitating, strong pelroletlin exporls we initiated livi liti- August, and inllationary presst)res after malty years of relative priCV th n e govennent, confident that tile financial crisis had slahilily. 'rile dellland for imports not cove by p am ed l) c:gan to case impor, an cre restrictions in foreign capital inflows also rose, and Evoiador hovered an effort to_ mollify d omestic husinc -s)neu and spur Ilia the brink of a bahinec elf payments crisis during the, economic activity. lash year of tie linage) lhami, administration. rile Ecuador is clearly .at a ermsToads in its g ov e rnment re sponded to reserve los ses with imp ort deve l opt n erit. T h e military' g ove r nment is com restrictions, credit controls on commercial bank+, and to reform Ect iadllr'S arrl)aic soc';OCLY)nOr11tC StrltClllrC, devalilatioll of the sncre: however, the fundarnelltal and new petr0culn nveililes can finance a re asanahli problem of excess .liquidity, attributable largely to ambitious program: Like its Peruvian counterpart, fiscal irresvim% persisled. how ever, til R o drig ttc' x reg ime is beco a wafo In February 1972, the nlilit:lry, headed by Cen. that widespread. social, reform and rapid canurn;c Cuillcrri)o llodrigucz;(, ousted tilt Vclasai reg;rlie gramdi ,do. not always go Hand -in- laud:. 'rile nc atld immediately initiated .l stabilivation p ro g ra m It regime is i ll the pn) ems of ass prioritiL s t(1 its lightened controls oil private sector crcciif, .raised sometimes co :levelopmcnt goals: D espite advance import delxisils, and curbed govenrnmelit rising poiblic expectations, it is. unlikely that social 3. APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 I_1 �:160:1 M161:x:1 :1 3993/_ a: 911 11ZQlI lyflf /:11I1I1101111bI119M.] r wry, .WrrM,iH1.Mf .:+.....w..r.�wr... vci.ure Hill iroprove markedly in the sl+ort roll, given ovefall growth rite and acco)uuted for about 4 4 5 7 Of (he [nagnitude of 1116 task and the military GDP In 1411 I; or about the S:Inte as ill .19)w. government's strong desire to push l;cnador substantially further along the pa of economic 1. Agriculture, forestry, and fishing dcvclopnlent. Agricultui l output rosy, b an uunu uyeragc of B. Structure of the economy 3_a[r duri tlh. l960's. appnixim ltillg tale poptilatioll gmvth rate, but substanti;allr bp[ o)v alai 3.7; :ncr: +g(� Relatively rapid grov!h in lli :wlufactlirirtg :uld annual growth in CUP. Agrictihitral output is I)OW consIrtidiun durin, [he last decade an(] thc.dlsCIMI about e venly divided heEaccn [export products and large (fllpantllies of netroleutl) h ave reduced domestic crops. I olnestic [ntptit Supplies about Wr' l.coador s dependence oil agrielrlture and oil [if f'"Cl requirements and man 9f the agricultural ram traditional expo crops.. Although E cuador .still is materi,:ls rectnlred by lnlustry. Deniand is OR1111 [Cing basically a rural society with inorc than Italf its labor production, however, even though per c:kpita food force employed in the agricultural sector, agriculture cornst,mption iit Ecuador remains %yell below the Latin aud fishing together aecotint far less tharl a third (if Anwric::n average. Agricultural imports curtoinarly, CDP (Figurc 3). Manufacturirig noiycoolndbutes more include wheat, full a oils, lokricco, and dam' than 17% of CDP, and factory pa)duclinn is products. diversifying rapidly in respc;slse to high protective a band 434P tariffs and othe ind +lstrial incentives. Constructi(i1% activity bctaccu t9ti9 and !t)7I, slirnulatcd Agricultural prwhiction in l:euador is almost `L by oil exploration in the Oricn #e as yell as a hnusin, exclllsi'ely confined to lvo anus thc fertile� coastal boom in the larger cities, and it n'lw contrikiutes rltarc plain f talc {'osta) a nd 9916 (Call })Cr highland region than 8% of GDP. Commerce, public a #ililies, and (tire Sierra). The Costa contains almilt W. of the tither services expanded nlore or less in line with the c'nllnlry total land aTva :and about 60% (if lE;7 cropland. Because of its proximity to the sea, 111ILCIN of Ehe Costa is pat :ntcd to exlinrtable tropical crops. liainfall 'varies wict-el}, however, Ind coffee growing 1%0 9971� requircti irrigation in alai dria�r areas. '['he Sierra l29S5 Mllliansa! 146osucres 22.9!6 e( inlprises only ?7So of the total land area and most Of the reinainink cropland. but it contallis ;about half cif.:: the population. The region consists of the e astern and y: :7+ Agriculture. forestry, sod weStCrtl ridges of the Andes and the interniontaue fis3sing basins and valleys. Maicla of the crop .production for domestic c usumptiors and nos! liv[h production is(% l Manu 11.3%. take p lace in the Sierra. 11ursli 1opogr poor soil Iniln.l;r.mcrtt, alit extreme fragmentatran of the l and Construction alb�� do to population pressure have pniduee widespread soil erasion n reduce a crop yields. Transpoi atlon The vvo remaining areas �the Oriente (East) and spy. i eommunlotion electric power E Gat u [7s fs la sds --t ge ther eo rn rise sonle. 4 p g t, P of the laud area but are of little agricill(tiral Mining s 1.9% significance. "rhe wet and.'ain1id Oriente region lies cast of the Andes and slopes gently toward the a Commerce and other. services ATna7dnl Diver basin. It, is, lied 'il' forested, spars ,x p[ p lll a te d, anti largely tindev Nonet heless, ca ttle raising is of some im :ulce, and fertile snits in Fsttrnoud. "includes road anj Pipeline carseruedari some parts of thr region offer land colonization for petrotearrl development. possibilities that are 1)eiFig lnadc M feasible through the colnstrtictiou of aeress niads by foreign oil Colllpatli['S. !'ale Galapagos Islands co 151St .[if :l t;Tt7ik13' FIGURE 3. Gross domestic product, of and rocky, volcanic islands lying about 600 rlliles by sector of origin off the Ecuadorean coast: a APPROVE6 R RELEASE: 2009/06/16: CIA- RDP01- 007078000200110032 -23 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 {p Putures and meac!ows Arable land .r IV s5p/, Foraits Built -up arm. 267 woste +and. and other NOTE: This destrihu0;n cmdudes the Oriente and the GorapoEm Islands. for which information is not araildhre. FIGURE A. Land use Exclrlding Oriente and tike Calap:kgos Islands, mlv aboul of the laud area is devoted to agricullure, ;lad over half is forest eovenKl (Vig tire -1). The ruggedness of the terrain and the high cost of Clearing forests. elnlstrueling roads, and improving irrigation facilities are formidable obstacles to agricultit rti eximosiom Population pressure o11 the la� d is par �icalarty Lwow in parts of lire Sierni, where the olua itily of cullivaled 4,.11d per inlwbilatil is as low as 1.2 acres. h. Lantl lentlre a nd agrarian reftlrin I.:tnd (e nure (I"i 5) is .characterized by the predominance of small sulisistcot-e farlits {rr1�11f- FIGURE 5. Changes In Land tenure (Area irr acres) rrHCt:JTeRl; t11ST11111tTIOS ftrrldios) and a Sill-Lill tnturber of large rirnitifulidly farms Ualifroldlos). Most of like minifluidios :rte loemed ill the Sierra and areengoged ill domestic food prilduction. I"cunls of 250 acres or more made ill) only 2Sfi of tolal farm units loot necupied over .I 7 S of (lie farm land ill 196S. Included ill this categor� are titer cvrnnicreiul t1l:uliatians ill the Costa. which Iz�rodne'er rnaiu;y export croln, and manage+r�oper:tted estates in the Sierra, engaged nt :tlttly in livest;wk rtising and fond crop production. About 20% of the farms ill F,etiador am conrlrollc d by absentee im,ne-rs. Although pressure for agrarian reforuilnrs not been severe. ale govvmmenl initiated :t modest reform prol;ranl in 196-1. Its goal~ ittelimed the abolition of unfair temmey and labor systems: cY>loniving public lands, .subdividing and resettling goverutllellt -owned es tales, and e xpropriating and subdividing tinder titili ed private holdings. The Itistitute of Agrcrian Reform and Colouizatioll {II'.ltrlC:) was establislred as the (main illiplerllenting agency. IEHAC was autllorizcd to cxpro)riulc avid redis(ribute privalc held left idle for 3 years or used "inefficietktly." and tc) set (04x1(1111111 size limits for .111 landitolditigs. Covenrnterrt bonds wcrc to be issued as compe:ilsalion for expropriated lauds. 1i,cmpered hr a luck of financial rtsources aml the organ4cd oppositii)n of the l ;ulticd gentry, the ag arias. reforu4 p.- grails bas done little to alter traditional patterns of halt! (enure, Iiy 1972 less thaw 44.600 acres lmd been redistribuled to 31,503 families: most of this land had been held by governtoent agencies rather than private landowiters. Ill addition, about 1,J00,000 -crex had been opened odder ?.lie colonization program and siome 1.1.300 families were seltled on the licw ]itnd. Perliaps the nlo�t 11otable achievement of the 1964 luw been 7 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 NUMISVIe Or rA10 rt T[f'r,11. A1111.e 1`Umber of arms '101:11 area I'A"m stzr 10;14 lOttB 105 1!hiti i 4 10titi 1931 100'1 Le>vl than 12.5 251,680 �170,347 1,0SU,e100 1,772,5(111 73.0 :;.2 7.2 10.2 12 .a162 36,180 68.52i 078,7511 1, 165. 1,).:i 10.8 y.ti b.e 05 to 40.9....., 21,400 30.228 73:1,750 1,213,930 11,x7 5.7 ;.0 7.17 5U. to 121.0 111,�11S 32,7411 1,478,750. 2.S 1a 7S8 5.0 4.m r+.7 125 to 1 8.3 �_7 15,555 1. 3118,980 2.4.11,433 2,4 ..G v.1 1s.1 250 to 1,'2451.0....... 3,787 5,467 2,SOr1,750 4,119,7(11) 1.7 1:3 19.= 23.S 1.250 to 2,490.9....... 4364 922 1 1111.750 1, .1'30,384' 0, 0.2 7,$ +.1 2 705 -1_13 5.t1m,On 2,499,om 0.1 A.1 37.4 Total .1..... 344,234 633.218 14,90!4,750 17,344.847 100.0 100.0 100.0 (00.0 7 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: NUM N111l111111 Llf /:ilIlIlYlIlZfi[lIlkY:3 the abolition of httasiumtgwje, a fort[[ of 1woll:tge under which the Indians worked on la rge estates in return fora small pit-Ou of !arid: Under the laW. the Indians were given title to their, land parcels and were to be paid wages for their work on the estates. To date, the govermn tit has been less sscccssfui in eliminating sharecropping :ind other unsalaried farm labor bCC4LUNC such workers have been unablC to make the necessary cast paytrtcitts to purchase their pmts. c. Agricultural inputs and productivity Agricultural productivity is aunkng the IOWCst ill the 1'estcrn lienlisphere. Most of the past rixe ii1 at',rieulhlral ()kaput Itas I)eetl attribulcd to i ncreased farm acreage, although the use of modern inputs I 'Whinery, fcrtiliztrs, irrigation. and improved seeds also has increased, (mpriT 'e(l icchnologr Ims been litrtitc(l mainly to large estates and collllnereiII FarrIls. In the snbsistencesector, odicsm size o farms, a lack of credit, and insufficient extension services have prevented large productivity gains. lnfrastrm- hire development has liven held back by the van� limited firlancial and tCChuical nsuurCps IV, ilablC to the governnicnt. A1nong the most pressing ne(Kls are farm -to- market roads, access roads to colonization areas. told expanded irrigation facilities. Primitive me thods of Sowing wid harvesting prevail alt the slopes of the Sierra and in parts of tile. Costa; oxen and hand itttlflcnrcnts are used on mint will i. The lose of rrtccklarlir d eclttiptnent is cortfined to few large fauns. Consumption of ehernical fertilizers has more than tripled since 1965, but their roes of use is still low� and largely restricted to commercial farms, The lisp of insCeticides is also limited main1v to commercial faruls. The National lnslitUtC of Agricnllural lleseareli (INIAP) has sonic pre,,;ress iu seed intprovoment� notably wheal. Corn. tied some otter d omestic crops ---but yiehls have reittained low even by Lilin American standards. Poor soil matt;tgen +ettt in the Sierra Itas rc'sultcti in Widespread erosion, which bas reduced productivity is sarnc a rcas. Althmigh agricultural credit has been increasing fairly` rapidly, it is still inadecluatC. As might be ext)ected, a large proportion of ii Ilas hcen absorlted by the large commercial farms and the export svetor..The lack of credit for small farmers is linked to the `laod terwre problem; since instituliolia! credit is 2 :01 generally available act farmers that lack clear to. their ];tied, despite legislation requiring private banks to invest some 15 of their deposit liabilities in 16c agriculti ral sector and despite increasing :,mo!lnts of, external assistance. only recently has nit attewipt been i APPROVED FOR RELEASE: 2009/06/16: made tO increase credit to small farmers. The U.S. Agelley for Irtlernational Development (All)) hits esttblish:.�d an agricultural trust fiend for this purlwsc to he administered by the Central Balih. d. Principal crops Ecll tldor prodnees both tropical acid temperate crops for export and is self- sufficient in most domestic food crops: Its farm development pro};rant is designed to increase doniestic food pr(xinction� especially NOVIM:n1S, peanuts, lentils, beans, peas, African fialm, and Fief ---mid to divcnify agricultimil exports. Wide variations in weather and in export I)riCeS.have had a major impact on bath the agricultural sector mud t he cconrnn as a whiffle. (I) Export crops� Prod tiction of the tradiliort:tl export crops, li:manas, coffee, migar, ant :'ncoa. has Varied according to wealher Conditions and increases in planted area. mwage. yields have not cha nlark since 1960 (Figure W. The most inilxtrtaut export crop is hanaims,:wIlich. suppliml about half of total czparts in 1971. yetis than half of.the banana production is exportmi, and oho remZU -der is eithe used for domestic consomption or w'iksted..o was a reword -1 million tort_� in 1971, even though the arc;, under banana production declined by.5% afterthe gOyerntttl-'nt l :lunc llctl its crop diversificati-,n program in WK. '['his program has fostered a I shift to the higher yielding Cal-,w1ish variety, which is more WONIMR to Plata diseases and more readily acceptable in international markets; the !ow�cr wielding Gros ,Mirlwl variety still.predominat.:s, however, iek terms of total planted a:creake: Soil sand climate conditions--- liartical:;rly in th Provinces of, LOS Rios;' 1:l Oro, Guavas, and Cotopaxi� would allow ntiich higher banana production beet a momithig world surplus has limited sales lxtrsiliilities. Although Ectiador rcrnains, tI!e world'% leading banana exporter, its market share has declined steadily %iliac 1964 becatise of stiffening competition from Celttral America, Ta alit. the Philippines. In retvnt rears, Fctiador has offwtsizahle losses in U.S.. and WCSIe m European markets by lterletrating other areas, nowlily japan; however. ce MpAition in those markets is also intensifying. To rninintize the economic impact of a potential reduelion in carniltgs from battana sales.. the goyernme is, attemotirlg tO diversify pro doctioli in the major growitig areas. Sma,l producers already have been hit !lard by the virtual exclusion of the 'F'or diacritics on plate rsatncs %w the list of ts:;mrs at the end of the chaplrs. CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 r T r 11 U 1 C7 0[1 lY 1'7 Q O ^t C W I a 1 a wr- o a 10 cD CJ GI cr G p... c 1 f 4 1 4: 9'7 l CI E0 o 1_ ^I v 1 F 1 r l O C jr P ec 4 d G x C M A oc GIY' N CG r 07 49 Co CI L CI Q Q V o C4 Cl M I x cl a o M Q.ti N 9 N Y c u m v g CD 0 L el q w d L G R�r wrw.. ws.�..7�. }tLlsl'as'' "r: yam APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 tr ;cclitianal (;TOO Jklichcl variety from world warkets. Ahhoug;h the African palm appears to be well suited to the Maroc sails atud could vase the production defivit is vegetabie ON, ucither it te other m4table crops Would provide as =utrch entployotvut anti itivotm� as banarta production. 'floe government is s1xinson119 development of n mixture: of bautatr,ts autd corn for sale ns and chicken feed. Ecuador also. has* an ovvnttpply of coffee. 't'ltis commodity, which ;icevtemtvti for UV of 1971 exgxuls: is grown liriucipally in thevoastal province of Ntaoa bi eat inefficient orte- fault'. t� lawns. Over the tears, coffee production has fluctelated widely, dt gx�nclingt on weather cond,tiolls in 1970. coffee production substantiullt� exceeded the export quota fixed 'under the Ittternattional Coffee Agreement, and sizable� sirwks accrued despite a quadrupling; in ,-,ties to nonquota markets. lit 1971, output rematinrd high, while Ecwidt r s cxlmrt iluola was cut ;tit([ nooquota market prices fell from their 1970 Ieyel. Although ;ill ""imaged Otte third of the 1972 coffee crop was lost becantse Of bad weather. Ecuador s sopplics are expected to be tttttre 111:01 sufficient to fill its exixirt (Moot. of (i M}0 bags. Cuvua production in 1971 reached the near record level of fi0,0lH) tolls; oulr Iwo-thirds of the outpu! ax exported because of rising; domestic cons. urnptiou. 1�:cnmdur's cow a is ire strong, demand ire internaition:d rttarkets because Of its special aron)alic flavor. Although it is very susceptible to disease, producers have beers reluctant to change to cm disease- resistant trees that du not yield the arorrttic yariMV. COML. which accuttnled for IOrn of exports in 1971 is growil mainly in the constatl proviim s of Guayas, le>s Rios, null ,lfatsabt. With govenunent incentives, cocoa production is expected partly it) replace banana eullivalion oil souse coastal, pl;mtations. stn increasing; portion of this unlput will he domestically processed into powdered 1cocoa. Sugare�anr production has more lhaut doubled since 1 1960. easily keel :og boleti with rapidly rising; dorticslic c onsttr np tion and export demand. S ugar exports, w hich accounte for 5.6 of total exports ill 1971, fluctrialc ill aveordalim with the U,S. strg;ar duola, I'nithtclion ecsts g;euvrally acre too high to I)crntit sales outside the I U.S. market, but Eenador brew Ort, accumula stocks to take advantage of abnormally high world inaerket, pHecs ill 1971. Sugar deliveries let llte United State rose considerably in lire first half of 1072 because cf air ioerease in 1'sc111ad0r's quota. Productioo o', centrifugal sugar in 1972 t( 1. ?1;5,000 shor:'tolls. Pyrelltrtint, a flower that is dried aaml txwdered into :o Outstral in�tetieide, w as introdetcrd as out export crap fi in the- early 1960's. Lower world tnarkel prices a higher iMiljtretion. casts reclncvct profit tnarg;im for domestic producers, Icadiltgt to a sixthly dcc�rease in i}te area itlanted to pyrclluutn in suhwtluent yeah. An increase in thesupport price: paid to fartnen resstited ill ioerc ;-Std planting s. but output fruut the young; plants is small; total mitim, is 1971 was only about 7(H) lolls. Otlter mitsor ag;riceel;trral exporls irtcletdtr lea, .fruits. uutshutorns, castorlwolls. and cut flowers, (2) 1)omes1fc vrolm� Protltrctimi of clarnvstic crops espeehilly corn. cotton, rice. wlivat, hcans. barley. and potatoes �lias la;~g{ed behind detrtatrtd, which has increased rabidly I)ei'anM7 of the high population growth rate and rising; incorrte Ievels. Aithoug it so ;itc Progress has been Made �since the ttiid- 1960's to�ard increasing; yields of seimc atop;, they growth ill output is largely altribntablc to expanding at�rcag v. CLOTH, which traditionally ha. been grown in the Itighland., is Fv11.r;3ors most intlwrt ;trot food crop. Both the ureto harvesled and total outpnl reached record levels in 1971, ill part because of inere:ssed l,,auti,ts in the Costa and the Oriente �here yields are itig;hc :r, With :ut autltul opltro 0!),0!}0 metric tour, writ amotrats for about nuc -third of all cereals cKinsanicd by the local ]x,pul:ttion ,and hats become increasin0y important as a live feed. Wiaat production hus declined as a result of two successive poor crop years. Oulpul dropped from 9.1.0Q.) tons i;: 1969 to 70,000 losts in 1971, requiring; imports of about tWjXK) toils to satisfy local deittand. Prodoet:on hats Well held down h hoar wea lher. shortages of scc'cl and fertilizer, and the tsutycrsion of some wh eat acreage to barley for the m1 utding; brewing industry_ tin sorts cif barley ond are also required to supplemen m t doestic output. Mice production has risen sharply sbtce� IMS as.a resell of higher yields friin improved euliMitiou, methods, imp"wed seeds. and increasei ttse of fcrtilirer and irrigation. Despite heavy rains it) the cvatstal growing; areas, 1972 omipetl was expected to exceed the 1971 re( of 200.000 metric tons. I'otatoes and cassava afire the major root crops g;ro%vii. Potato production, which is concentrated ill the Sierra. ex"Veded a00,M) toils in 1071. Yield's hays� increased as ;t result of plattttittg improved varieties, better cttltivatimi practices, and greater use of fertilisers and iriserticidcs.. Cassava is [lie* basic root crop grown ill the Costa; atmitatl production averages 1I,0[)0. tons: Prudctetiort of pulses has doubled since 1962, and tile aarcu Planted to Mesons has increased markedly. Bcans mainly ccttmnon rlry, hcauls, arc grown chiefly APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 a APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 FIG1 7. Livestock numbers (in thousands) t n1u1 11037. Ilurses, tiluivs,and users 50130 510 Cattle... 2,20(1 2.300 Flogs 1 1,27x: 1 t1'r 1.: jf1 C oals 170 IN I'auliry. 0,5010 'i,S:3t1 TotaI 1 1 359 11, 5S8 1 Ms 196 1 5111 ri 31 +03:3 3.393 2.400 2,4441 1,294 1,300 1,330 1,511 1 1,2100 184 123Fi 181 5,537 I'l 511 5, 5 11,73- 11,783 11.11113 ill the Sierra and are an imp minor food cr rC and. calming faellitleti dls r n p tS 111131 e or beans a alstz iieing [lC'CIUI1LYl ;1ti. a. ininor distribution to.11eban areas. i�'lo cr, Periaviiin cattle r export crop. Cotton is all important nonfood elt> hovers have been conipeti fig. wit It local hovers for live crop.. Expanded acreage and inlprllved seed% )}lave Clittle, rL'Stllling in a rising con(raband traf:ec.''rhew made Ecua almost self sufficient in cotlot hllt su constralktits and a using del laild' fv red meat damag Frailly i n 19 1' twCess la rger im I[1 h av e d ri veii pricvs stead '+i pwarc l in the nlatin tikllinlY the dom estic (CSt1lL' ifldllstry.. colls11111I)tioll [Y'llte of Quito .1t1[l Goa va[lllil. c. l it eafock Marge portioll of tit, milk supply :I I(1 most of (lie beef are ol)laillc& froill local Criollo cattle. although Despite vroving demand for liw'sttck products, 7.cbu, 111creford, firal[tllan, arid: Holstein cattle l) avc particularly red rtleut, livestock uklrobers and toca; bee it imported for lire ding pit oscs..l'ovilcre(I milk production kwitinile to increas(: at a von S10' rate is li nporled to Su pp l ement donl e StIC n lll k pro(IIH;titlll. (Figures 7 and 8). 'rh catt pop[ilation. Which has which has generally failed I ke pace with hccn growing at an average annual late of about 2fe', pi)pillatioti growth. Factors impeding the expansion of is distribllted;anlollg dairy Perms in the Sierra and beef the dairy iedtistry include the inability to transport rallelles, I oil the coastal plaills. Developmerit [if the milk over long distances, tine expausioli 0f Crop indts has been ham p ered byioa C'111t1Vallnn at the expense o f. I) a stlrrel: l rt( l, an and _storage facilities, animal losses from foot atid- artificially low wholesale price ceilings. ulolith d"seuse and cholera. and the ponr quality of )lore intensive development of the. cattle irldilstry. a ilirnal feed. licpro(fuctic efficiency is lov, has beers the` aitil of three I' T- Bank for Focal meat prGdtiCtiQIl ill 1971 Was estimated at 'Zectnistruclion and Development (IMD) loans only 86,000 tons, or 33 pounds per capita. totaling US$15 million. The first two loans were Slaughtering facilities are limited, and butchering earmarked for improving the coastal 1-eef. cattle Outside of licensed facilities is coininun. The lack cif industry..1Wiinly b y L�unverting banana acreage and FIGURE 8. Livestock products (hr thousands of mofr ;c fans) I9titi IM7 111([13 1111000 0117[1 Beef and VPId' 42 4:. 11 42 42 Mution and larnhO. 7 7 7 7 7 Pork........... 21 23 �t 36 3; Pntllir)�.. a.4 f.3 6.o 7.41 na Milk a4o cats 480 450 X93} Is' c.......... E0.1 10.2 30.2 10 :2 10 4 3.1 3 2.4 2.4 2:4 'T'n1ul:. 520.8 b�18.2 570 :0 -55.2 ss581i.9. na Data not n�uilable.. 'Con[merrial production from indilprnous natlnnls. 00 1970 tolal doex not include puttltry meat. S APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 wastulaild into pasturelaml. '1'be. third loan gas I':cu:lc;.or iid lime (I a long rang^ program for_ exlen:lc(i iii laic 1870 to finance iulports of c }u;llity t)iltullled exploilaIioti of its forest areas Sn iK, �.01etl bee anti dAry cattle--- ilrlinir from the Uoittx! 13 timher (oocessians were gra fitted on 840.000 acres 'sn States -as well as. the creation of new pasturJaud. Esmeruldas. Provistice, Under like terrrls of the Research hi livestock mitrition and inanagement, 19rcxmcnts, each c'ompativ was obliged to pay rental InCitid kilt! deve.`lopillelit (if nev feeds, is uririg fells for like! otlli %alioli of l:lrid alld timber. to.erelplov C:Crle(l out 1)y �t'lsll'. 111 addition, thegoverituient has loCal tt-el r1]Ci.Uls acid hllmr. to vstahllsli Integral(A plans for. establishing cattle breeding cro(ers and luttiher oper:ltions, and to reforest harvested :ircas. In ltulderniring slauglACT110usc 17361ities- It also has given '1970, 11 of the 13 C011C r sS10115 %'ere C.LTIMIed hCCaUSe high priority to developilig beef Cattle r:atlellltlg ill the tll eolllpanies had faile to hiit1ato corvArlktai0l) alld tipper regions of the Am 1 %oit Bashi, aii area that is Illstall:ktioll of, rzeilit'ies. withiii [fit-, si- w6fied I tulle heilig opined by I)CtrolethlTl (1C 'e1c1 })II1CIlt. period Despite t set b ac k, 1 -1 additimial s- imeessiolis The sheep :Intl hcg populations lluve hi-ell Covering 1.1 million acres were g.,raiited ill neighboring ipicreaslhig- soille1'hat more rapidly thaii cattle. Ilie areas in 19 Prospects for accelerati the sheep popnlatioil, esiitllated at 2 million in 1972, is kploitatiort of timber resources were, improved by the (Y1E1CCIitriltet! in the Sierra -about equally divided 1971 Law for Foresiry Devcloplilclli which O ffers tax b etween larg and su bs istence f arms. 1 TT1}HOved .s heep a nd impo il1C1'Tlti'CS for lrll't�4mellts iti this sector. breeds have sleek imported from both the United The otllt' imporl'arll forest ilidostry is saa�Illilling. States and Australia uildera government development Sioce t he mid-.1960 the aimual'tinlbc Cut totaled pm g ran l: t f irA phase of ibis progi -Wo emphasize r a b out 850 miliio cubic feet, of chich et} r v as used the pro1 half of direct in'esttltell(' from. non -U.S. r generate employment and provide a nglllar fltse of The small si--m of the dmiestic market limits raw materials for agmindustrv. The IBRD. estimales sources. 1xn5il}ilities For ftireign investment, bnt gt >vernmcnt i that project ctonlmitrments from international agencies politics: and the degree of lxllitical stability will be should average US$80 milliori .annually in 1973 -76, mo re importan factors o%�er the i1ext few }'cars. necessitating a c�[ona)mitunt increase in domestic counterpart funds.:.. 3. Manpower Private capital forulation has been the most dynamic force in investment gr owt h since the lilte Tile lubor force In 187 comprised uboul 2 million 1960's. Sparked by large capitol inflows fmnr foreign persons, or 31 m bf the total population-Because Iiecausc of the ail companies, private capital Fnrmatieon increased an high birth rote, about 11 llf of the population :s iltuler 21 2222 _:,::..,....:,k- :.a:: first: APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 FJGtIW 19. Gross domestic. Investment (Millions of 1960 sucres) 11167 Fixed eupital forinntion.. 2,277 Public.........: Privstte 1. 1 111 Changes in taek t4 312 Total domemia inveRUUent.... 2,617 Fixed enpitnt fornintion nx a percent of (MF...... !!.R Financing of capital foriwition (in herevnt): D oatestic mwingx 78 Foreign capital........... Vroukional. ��loll: ertiniatc. 13 )'ears of age. Nolore Ill. 5.150' of the la bor force is ernpl6vtA ill agriculture, agroilid auul related. services (Figure ?tl); liver 20% is uugaged ill Ills l;rctiink Sall exporting elf hananasslollrt. Manufactur- ing is the second ranking sector ill provitlilig cngllovitl^nl: while govcnuneitc and other i-crvicws, cutrinlemv. and cmistruction eniploy the bulk of tits reinainder. Factor eniplovnt@]lt has illcrea'w'd very rapidly. Urbanuuemplovinent has increased witli the rising z influx of unskilled peawints from rural areas. The 1 National Planning Board estimates that WO of Ilia total labor farcc is unemployed or 1111d6reinployed. The predominance of small scale operations and q 111titlllal labor restills ill relatively low pniductivily ill both agriculture and nuluufacturillg. Low edue:ition levels, poor health, and insufficient teclinicatl avid managerial skills also restrict pwiltictivity. The government is al icinptlnfg to reorganize ..tid linpTove tlle..,educatiou systcra, and loth A113 aid the lllli8 1969 i9 -P tire1�� 2,775 3.276 .19h 6,009 (932) (1,1413) S 1,2:37) (1, 103) (1.843). (2,.17:3) (s.b.%r9} I,5�lli! 371 �101 it) I 120 :3.1.16 3,USU. 1,,i1iU 13,1''r 13.7 15.4 18.2 2".1 36 39 47 :i 1 vocational tmininr programs. The h1diall llopulut'too. which comprises rough1v 40'c' of the lot:tl popiilatioit, is I:argeh' unskilled and participates ornt y3narginallv.irt lite uaamey ecollotny.. )ob rllohility is ilnprdcd b% traditional attitudes, poor trousportiatinn, and ignorancti' of rruploylllcnt d, ltortuititics. Geographically. the labor force is distributed very lillevtriiv. Ill 1962, the Sierra volitaiacd ahoiit 3�t r. of the labor force :oar! the Costa :niothNr I.M. At th time, itiore than one third of the labor force t�as c mcantr:ktled in Quito :aid Cti:ty shc�rc Ill( "I of the larger nlalirifacturing firlus are located, The rti: t'S sii'c irlflux of nnskillud w into Quito a Gusyagitil has increased unetnployrnent and the dcttiaud fair h6kising .aid other services. Ecuador alsa suffers from a "brain drain,"� as the vouligcr, better educat"d. and mare skilled wor seek better euiploviricut opiwrturilties abroad. Labor iegislation, which is c'ontaiiied it lite 19313 labor Cor!c, the 19.6 Constitution, a ind�subsccluenl 1 lntematu l.Amer Orgarurltion are assisting in laws, provides for :rtl 0 -hour weirking d:rv. a t t hour .i FIGURE 20. Distribution of Inbur force, by economic activity 3 11140 11165 1971... r 'Total labor farce (thousands) k i37 1,651 2.007 Permntagr diatribut4n; Agriculture, aoraladsustry, related aen�ices i,7.7 SB.7 55 -R i hrsufr.e ISrinJ(.. i... 1.4.0' 1Y.l 13.3 t Commerce.:...... 6.4 L.11. 7 .0 Trannport.und communications.. 2.8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 '1ltnfr3. 3 Construction 9.1 3.6 4. Electricity..:. 0.3 0.3 0.4 f Public udministratiaa... s Other services........ 14-2 12.5. 1119 Total !0'a o !0'a a Iaa o APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 work week, minitntim wages to he set by the government, oth er worker benefits such as vaeation> Pldl nnrJor U,5 dalius. and I)rofit- sharing, :tlld regulated wooing et)II litielrl%. Workers and ernployers' associations have the right to strike, and. procedures hove been es, for 1 settling Libor disputes through a special tribunal 11r, in Elie .16miee of a negotiated agrm-- ntcltt, through a =3W government appoinled laWr administrator. The 19.12 Compulsory Social Security Law provides.for'sickness, 24ti Im Inaterriit {lisallility, and all{} age and (feath benefits for widoWN and orphans. At the end of 1969. hutivever, less thilll Of the labor force was insured under the 210, program. There. are three major labor confederations and IN r large number of independent unions; hilt less than sptx 17rn of the labor fares: is organized.. Ire mid -1972, 1lie ibp E.cuadore C nifederation of fret' Labor Org ;itii%'k- tians (CEOSI.) Ii5ted .10,M) m embers, starpussing (lie 30,t]W "live members of the Conimunist-CllntrolINI Ijp Confederation of Ecuado rean IYorken f C1'sy. fhe lscuadorcau Central of Class Organivationv;: CEDOG} eo' claims 18,000 mcinben and Followers. Labor unions it re ci %ncentrated ire Qnito. and Guayaeluil, wjilt membership drawn primarily frcin manual laborers white- collar workers. and artisans I employed in industry, government, Viand ecmtrncrM. '1'ite lgricul- T Wd8 tural Sector remains largely, unorganized. +982. 61 bb fQ 7r In Decemller 1970, .tlte. rlinin nin n) rin tl i ly N' at; e was raised frmn USU-1 to slightly more than &SO for nonagriculturd workers, while the tninimrm wage f or rural worke remained it $24 in the Costa and $118 izl FIGURE 21. t3atonoe of trade the Sierra. I Prevailing labor market conditiolis inflttcncr 1% 9c levels more tll :in fr{lcra! cr,dcs, difficiiltics in other banana- praducing countries however. Industrial Wages generally exceed the (1'iglure 21). Ecuadoes I:kck of export diversification nlinlritllm level, v111 11 gn C Ult l: r:tl Iv ages ar [1 ft C[1 fa has m ade [li colnoray v ul iiera hle to fl ucltla:ing w I iLlotV 1t. 4'Ufl CAI'iliCI for barian.1S :111 {1, to :1 lesse e %tent. CYl e0co an d however, the d eve l op m ent cf r D. International economic relations the petrr)leum itidi:.stry has Substantially reduced E:c'tiadtir s dependenec on tmpic.d ap,tictllt'lral exports: Fareign trade fx 1 Frreign tra is highly important to t Letladoreatl a Comprsilinrt of trade ccilnumy.. Exports e qual about 16% of GD1 and Ru1,; eta coffee, cvco aril sugar provided' rrnrre. fluctuations in exports greatly influence overall tha=t 8051 of total exlxlrts in 1971; bananas alone ecorio rlic performance.. Rect)rd high export levels in actYotantcd for half e,f the total (Figure 22): Ecuador 1i910 an 1971 helped to generate a 9 :il1uual rise in brriefited from a postwar hantina export booth until real output. Ecuador rnccs heavi!y :m imports for C }kr. mid- 1960's, tvIien. increased impetition fn)m various industrial waterials, most capital goods, urd other pr -'Ati began t as to regulate its foreign lleuih weighted in's favor. As result of this trade. Import acid export duties are alwa import ;int i :nitalance, Ecuador has mo its p agreements. with Hungary and Poland to pntvi for revilMIC r rtt casures; irnitort controls ll ;t ve arced periodic selllemenIs ill convertible currency, and lttilized to. onitect domestic industni and (tivourage I l3ul aria plans to disecu g p ltiulll its. ill 1973. uanessential imports. in 1971, ECkla nor. adopted the Barter Crude with the U.S.S;R, alas fa red some what Brussels Customs lvomenclattire and i:tcl+rporated heater; l:cundor bus. irnportcd Soviet cement, tractors, existing specific duties and all ad calure.m surcharge l and #nicks in rxchvngc: for tropical. agricultural into a orw cltsloms tariff. prothiets. Banana deliveries are expected: to increase l moitted imporls are divided into two categories: cightfaltl llctweeIY 1971 and 19 5, and m rcqui List I (esse goods, comprising about 85 of Soviet puymt -tits in :cas as well its mantlfacturetl licensed imlxrts) ut3d list ll {ottr.r imports All items goods: not included on these lists are prethibited, anti license:, Since 1967, Communist 'colon, drs have extended are joired Fitt th bulk of per nitted imports. As a US$15.�l million in Ecuador, of wilkh only requirement for the granting of lic vies, import duties 36.2 millinn hits peen drawn. In 1967; Czechnslovakia and additional tuxes wist Ito prepaid in full and extended It `l�7 million credit for machinery p 5 a ilnporl deposits must he. placed Wil the and in 1y[i9 l'altlnd extended n 85.tnillion credit for Central. Bunk. Certain imparts ialclttdin; some electric generating plants. In 1971, Czerhorlovakia industrial rati mutcriul+.lnd goods financed by foreign 25 o- w.,.�...:,..,.,.:,. a, n.... .....:.we...w...nA.w.,..r.:. s..w:..�vv,.r.:ri APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 IMPORTS EXPORTS August 1970 and set a new official selling rate.of 2.5 Percent {o.b.) SltC res USL 41. Tltisrate al)plitw prirtcipally exports, C O ther ilnlxtrts, guvvrismoot transactiols, aild .transactions Communist related to registered private capital. Approximately .9 countries of all transactio:s take )lace in the paral fret Cher Loin I' American countriesm: tp exchange taarket,, Whew the raw is allowed to 10 Andean Pact L countries flucltiate. During the early rnouths of 1972 the lucre r to Sold at about a 10 o discount iii the free inarket, but )ativan� 1973. the Sucre strengthened,, selling .11 European fro* Trade Amid the official rate. Following the February 197c3 Area 17 dc�alu n atio of the U.S. tIollar, Ecuador's Monetary 2s E o om< u Board set the Batik buying rate for dollar, at. 21 community 2 t 1 7.1.80 sucres and the selling rate :it 2 bill the old o(which Sol late continued to apply lo,netrulcum tt:tusactiotis. The 04) (Well Germany) Lenador!an Government also expressed its intention to unify the offici;E and foe market exchange rates in 1)TaCJ ee. 39 3# United Saccs Ecoador has set up au (nstilute of Forcikn Truk i and Integnttion to coordinate its parti-ipation in the Latin Anterican Free Trade Assoviatian (3 and s the Audeau Ce)mmorl Market (ANCOM), as well as to AW 1971 tld7 trio develop an export promotion Ixolici% Brcauw il,Ey an considered less develOped,. tat�tiadr, Bolivia, FIGURE 24. ircc?on of trade Puraguay, and Unrgtt:t% are arctirded special stattts in f loans --are cwrnpted front advance isuport deposits. 1AFTA. Ecuador :retools preferential trcatmrnt 'to 'These delmsits may also be reduced or eliminaled from imports of approximately 1;7(X) J)foc}ucts from other tile impacts etF domestic firms actiurded high priority [AFTA mernbcls: Ft also maintains reciprocal line of Joy :the Ministry of Industries, Cstmrrtcrce, anti credit with Peres, Colomlfia, Mexic'r. [irolisia, and Integration. Bra zil, Ecuador and 11olivia are also acaor(Icd special :n ,corder t insure th e full surren of ,foreign privileges With ANCOM, whose other memhers exchange proceeds it) the Cenlral [sunk, thr. incletda Colcsmbia, Pent, Chile, and Venezuela. guventmeni requires that altnt>St all cxpurts be Ecuador is a xignatnry' to the International Coffee licensed. Ecuad amM"cS specific and ad rxllomIll A gree me nt but is nut a member o` CATr. cxpurt duties on bartunas, c sugar, eeicYa, and sea�ond. Ban sna taxes are based.on reference prices 2. Bulanct of payments fixed by the gavernment. ivlurny manufactUmd err pr)cessed goodN and Other nnsntraditiional.agric:ultutal. Fcuador s. trade balance, Which Itad been very ctormmn(litics urc exempted from export duties and also fuvorable through �the early 1960s, leas. progrtssiveh� benefit from export subsidies in tile form of tax credit Worsened hecatem of rapidly rising imports and uneven' export performance. ht widening trade gap, tt)gethcr certific:tles. .with a mounting deficit on services, resulted in a lame 1 [n August ii}70,. Ecuador undertook a ct)mprchcn increase in the -current account deficit (Figure 2i). Its sivc reform of its exchange system that included a 2t3ro impact ou the ove balance of payments .as devaluation o� the siicre; it also estal,lished ad nul0rrm mitigated, however, by a tenfold increase iu gross intpnrt an(I export duties. [it .1971; tinder pressure from direct private ins'estment, mainly for petroleum f the private sect� r, t }te authorities reduced- ur dev lnpmcnt. Although tint r)ffleial long term Capital eliminated scvend export taxes and reduced advan[ a infv los were only US$H million to SM Trti]lian import deposits; but these actions hclped to generate annually during this period, totyl Capital inflows mere senows balance of payments problems. In November sufficient 'to avoid any appreciable Icons farolgn l97 i, the 1 eluxrn government rec tal)lished the tl?Ual rrscrves until I9i F: That years balance of payments excllungc onto system that had pmvalled prior to deficit Muted net reservers to plummet in. m S'% AR G APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 FIGURE 25. Balance of payments y (Whans of U.S. dallors) PUMA 190" loss 1900 1970 1 971 Exports, f.o.b.................... 207.3 LIi.B 104.0 233.9 291.1 lmpnrle, c.i�i.� 23�t. 200.0. 301.6 311:6 365.8 Trade balance_. 27 t 75: 8 106.7 74.7 1;-1.7 Services (net)........ -d2.3 -52.3 -00.0 -77.2 -2A.2 Private transrere.. 5.0 4.7 5.3 5.4 5.3 Current areount balamv. 04.7 123.4 162.3 -140.5 205.6. Public lnsnsfers (grants) 7 8.5 7.0 8,3 7. e' Private long -term capital (nett....... 17.8 30.6 75,3 00,(I. 143.3 (Of, which: Direct investment)... MAY j (241.7) (72.0) (90.0). (117.0) Official long -term capital (net).. 21.7 28.6 13.2 25.3 16.7. Capital account balance �17.2, 67.7 95.5 123.0 161.7 $port lerm capital (net) (includes error+' and omlmions).. .2.5.0 40.8 71.3 10.0 10.8 Allocation of SIM's .4.2 3:5 Payments surplus or dMicit +8,4 78.0. +4.5 -1.8 -29.0 Increase ar.decrease in not foreign reserves.. R.�1 +8,9 4.3 I.8 +29.0 Not pertinent. 'Adjusted -for balance arpaymentz purpwAs and thus do not Agree with totals shoran in Figure 70� m illion to $25 rnilLotl^-^the equ of about I e xport ,receipts also wil appre t ext month's imports. debt burden should not reach unmanageable E2ro- Increased import rr+trictions and the initiation of portions� petrolerun exports brought a substantial improvement The U.S. Government, the principal source of in the balance of payments in 1972. I.icrnsed exports foreign assistance, has provided nearly two- thirds of ruse 39%., while liceasetl imports rose only 8%. and the the total of such assistance received bctarecn 19.16 and deficit on the trade account narrowed substantially. 1971. receipts of assistance, by sources, during. that 'Chic smaller deficit, coupled with large inflows of period taco as ftllltlns- in millions of U.S. dollars: long -term capitul, resulted in u basic balance of U.S. Government: payments surplus of about US$100 million, and Economic 310.8 international reserves rose to $12.8 million at the end of :tlilitary (30,0 s Totnl U S. Gtnemm ent 371.4 As of. June 1971 Ecuador's total externu4 public i debt �julstanding. amounted to USS237 an International agencies; .million, International Bank of Reconstruction and f increase of 7091 Over the 1856 level. Of tiffs amaclnt, Development 71.3 nearly 80% represented central government indebted International Finance Corporation 22 Arcs. AlAjut 30% of the total foreign public debt was Interna60nal 11mlelopment Association 24.6 held by in ertial Lunks anti su[?ltars.2fl9b b }'.AID, Inter American Development. Bank 7e.2 20% by 1DB, and 145 by F,cuudors delft United Nations Development Program 21.2 IND. Other Uniletl ifnt[ans 5.8 service: ratio is Ilt high by Latin American standards; estimated debt service payments amounted to only Total intrmationai 203.3 15% of the receipts from exports in 4971. As the result Total 5741 of large now Inans contracted in 1972, Increased use of F s uppliers' credits, and a dru of the $164 million U.S, economic assistance took tile, form !if grunts, in the foreign aid pipeline, total delft service payments development loans repayable in dollurs, and deliveries I are expected to rise.over the next few years. Because of surplus agricultural commodities under P. L. 480. In f 27 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 additimi. iti the US$2(k3 millimi rece frelill CllrhlllitmentS. fr4mi 111ternational n6lc�ie5. Its 1111le IlltlTrtlallfllt aj l)1' i113C 1, (H'e f st7 million V` 7 for example, the IBRD �'i s5 considering it it relllailled ill (lle plllelilke. The rC.alively r ilitprecedentet $130 M illiml Ii lie of Credit (11.I111i11mv Imlicies lltitslted by [lie Hodriple% goveriltlll'ilt and the varitlll5 edtleatioll. port, live%tock fisheries. (illiber, Inure sh ale political outlemik auglar well for irtcn-ased irrigatiflll. and cellt3niiali projects. Glossary AN CO i% I Andean Common Market CE DOC'......: Central kruateriano do Oritoni;acionrs Feuaderean criarnl of Claws Organi -a� Clasistas tionm CE \ME:S,.... Ce n fro de ArwrroNa lnduslrial del Industrial Developmi�nl (,enter of Ecuador. Fruadar C F0,41, t'vafederacian l: cuclorianet de ti ruagiorean Gan[rdrrtttion u[ Free thpani:arionrs Sindieaks Libras l.alror Organixationit CFPE........ Catpuracion Litatal Pttrolera F.cuado State Petroleum Curpo�a. Rtuatarianu tion CF'N Corporation Finanrirra acional..... National Financial Corporation COFIF.C...... Corporation Finencirru 15ruatoriana.. Ecuado Development Finuntr Cur- Potation CTE.......... Cenftderdnion de Trnbajadares Confedernlion of Eettadarrta %Vnrkerx. 13euatoriartae l31 PROFIT.. Emprrsa Naeianat de Produrlw Yitales. National �V ilal Products Compnn} FLOPEC.... Fiala Petrslera Fcualoriona...... Fetiadortan Oil Tuakrr Coalpany IFRAC....... Institute Ecuatorieno de.Reforina Iartitute of .Agrarian Reform and Agroia g Cnlani rocion Cotonlution INF.Ctsl....... Inal li ruatariaau de Fterfrificarion. Ecuadorean E:lpcirifiratiun Institaly I NIAP........ lnsfifulo 'Nacional de I nrtsligariones National institute of Agricultumi He- apropecunriaw search LAFTA.::..._ Latin American Free Trade Amuriation NPF'.......... Fundo de Participatiaa.Natianol.:..... National Partieipation Fund t TAMP,_..... Transpartrs Aercoi .1lilitarrs Eruadoreun Air'!. sport ij F.ruafarianitx i APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8 Places and features referred to in this chapter ruunoisATKK s 'S. r r1Y Amazon :13asin (basin) 1110 75 W A mbata i 15 78 37 Andea (mla) I 2 00 7!i 10 Aauay (prorince) 3 00 711 00 Carchi .(prvrineel.: 0 45 V. 7S 1111 Cotopaxi (prorinee) 0 Mb 78 55 Cuenca 2 b3 78 59 i. El Oro (prorince) 3 30 79 50 Esmeralds.. 0 59 Y. 79 -12 konioaldas (prorince}......... 0.40 X. 79 30 Galapagos Islands 0.30 9D 30 Golfo de Guayaquil (gulf) 3 00 80 30 s Guayas (prorincc).... 2 00 80. 00 Guayaquil.. 2 10 7 50 Isla leabela (ial) 0 30 91 013 L atacungs............................. 0 56 78 37 Loin.., 4 OD 70 13 Lou iilos (prorince).. 1 30 79 25 Atachnia 3 10 70 58. Mambl (prarince)...................... 0 40 80 05 fonts:.. 11 57 80 44 Peninsula do Santa Elena (peninsulo) 2 15. 80 50 Porlovieja 1 03 80 27 Quito 0 13 78 39 i Riobamba 1 40 78 38 Tixdn...: 2 p" 78 NOTE �All latitudes are South unless otherwise indicated. t I FOR OFFICIAL USE ONLY 29 APPROVED FOR RELEASE: 2009/06/16: CIA- RDP01- 00707R000200110032 -8