Thanks to the fertility of our soils, we have been able to grow
products like cacao, banana, rubber and other products that in agreement
with difficult periods for the rest of the world, have been highly
The chocolate, banana and most recently, oil booms provided income
that was taken advantage of or wasted-- depending on the use the government
of the time put the money to.
For internal consumption, food has never lacked. Ecuadorians, even
the most poor rarely go hungry. Things turned sour, however, when
trying to meet foreign demand. To meet external demand, Ecuadorians
borrowed money to improve production. However, this money was not
used wisely by corrupt and incompetent officials. Ecuador was left
without a thriving industry and in debt to foreign banks.
Historical Summary of the Ecuadorian Economy
The cacao boom allowed the economy of Ecuador to grow during the last years of the 18th century up to 1925. During this period, Ecuador was the first exporter of cacao in the world and covered 25% of the world demand during the first decade of the 20th century. The chocolate boom allowed the creation of a banking system inEcuador and encouraged the arrival of European investors.
When the First World War began, however, the exportation of cacao decreased significantly. A major contributing factor to the decline was the competition from the European colonies in Africa that began to produce cacao as well.
In the decade of 1960, oil exploration began in the Ecuadorian Amazon and converted Ecuador into a wealthy country compared to the rest of Latin America. Foreign investments quickly arrived and Ecuador grew economically over the next twenty years. The oil boom allowed the country to modernize more quickly than during the past 100 years.
Since 1982, however, the international price of oil has decreased and Ecuador has suffered an economic downfall. Part of that downfall stems from the economic debt amassed by the ineptitude and corruption of Ecuador's military leaders. The debt falls harshly on the backs of Ecuador's most needy citizens who have to deal with a decrease in basic services such as education and health. A fin de siecle banking scandal further decimated the economy as private accounts simply vanished with the failed banks. In an effort to stabilize the economy and halt the slide of the plummeting sucre (Ecuadorian money), Ecuador decided to adopt the dollar as its the official currency in 2001.