Foreign Aid Ecuador

Ecuador- Foreign Aid.

Ecuador is a country divided over the Andean mountains. Its mountainous environment creates high transportation costs which hinder trade. Ecuador has required aid since, among many factors, it is a region that experiences frequent natural disasters that destroy crops and drive the cost of living up. According to balance of payment reports Ecuador has received loans from other countries such as, Venezuela, U. S. and neighboring countries. Foreign aid in Ecuador has been given in many ways including foreign direct investment.

Foreign aid is best, when it is a combination of foreign direct investment and domestic development. Prospects of The nationalized oil company and foreign oil companies have created an expansion of trade possibilities. In The U.S Department of Commerce report on Foreign Economic trends and their implications for the U.S. it states that the state of the petroleum company CEPE is expanding its productive capacity, and 12 foreign consortia are carrying out exploration activities. Investment by these foreign firms may exceed $200 million during 1989. This was a huge addition to the exporting capability of Ecuador then and since then, there has been much development.

Development in LDC’s depends on connecting research with implementation, Democratization, proliferation of markets, civil institutions according to Julious Court.[1]Aid and development have been volatile in the Ecuador region. Records on Ecuador seem to suggest that it is a rich with natural resources, capable people, but that its environment along the Andean mountains offers inhabitants a fair share of obstacles to growth and sustainability. Jeffery sachs offers insight into the problems that Ecuador has faced when he says:

This area has experienced economic decline because 1. Geographical difficulties, such as, impassable mountains, etc, have stood in the way. 2. This regions society suffers from sharp social divisions among ethnic groups. The European descended population tends to be much richer than the indigenous and Mestizo populations. 3. This region is vulnerable to extreme external shocks, both natural (, earthquakes, floods, droughts) and economic. [2]

According to the U.S. State Department in an October 2007 Report:

The U.S. and Ecuador have maintained common goals of fostering democratic institutions, combating narcotrafficking, building trade, and investment. The United States assisted Ecuador’s economic development directly through the agency for international development (USAID) and through multilateral organizations such as inter American development bank and the world bank. The U.S. is Ecuador’s principal trading partner. In 2006 Ecuador exported about 6.7 billion in products to the U.S. for over ten years Ecuador has benefited from duty free entry for certain of its exports under the Andean trade preferences act and received additional trade benefits under the Andean Trade Promotion and Drug Eradication Act (ATPDEA) in 2002.[3]

Foreign aid is needed in a country when production within that country is below the level that it need to remain sustainable. Some trade and sharing of technology are beneficial in order for the Ecuadorian quality of life to rise. This is a principal that is gained from Adam Smith’s writings about the wealth of nations. Each country will benefit from trading with others. Less Developed countries will especially gain from trade if it engages in trade with a technologically advanced one. It learns techniques and practices that were developed over long periods of time. So, foreign trade takes place in many ways. Weather a neighboring country’s business invest in Ecuador or of they loan useful equipment to them there is benefit. When Ecuador’s neighbors assist in helping to find sustainable ways to meet production demands, that is best. It appears that Ecuador is now a major exporter of banana and other agricultural crops. The European Union, and North Atlantic Trade Agreement are to major forces that have been organizing trade with Ecuador.

Works Cited

Court, Julius. Hovland, Ingle, Young John. Bridging Research and policy in development: Evidence and the Change Process. Oversees Development Institute. Bourton on Dunsmore, Rugby, Warwickshire, CV23 9QZ , UK

John S. Odell, Negotiating Trade Developing Countries in the WTO and NAFTA

Cambridge University Press, The Edinburg Building, Cambridge, UK 2006

Lancaster, Carol.; Van Dusen, Ann. Organizing U.S. Foreign Aid : Confronting the Challenges of the Twenty-first Century Washington, D.C Brookings Institution Press, 2005. Sachs, Jeffery. The End of Poverty; Economic Possibilities for Our Time. Pengui Books Ltd, 80 Strand , London WC2R ORL, England 2006. U.S. Department of Commerce. Foreign Economic Trends and Their Implications for the United States. U.S. Department of Commerce 1401 Constitution Ave., NW Washington, DC 20230 1989

U.S. State department. Background Note: The Republic of Ecuador U.S. Department of State
2201 C Street NW, Washington, DC 20520

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[1] (Bridging Research and Policy)

[2] Sachs “End of Poverty”(p. 71)

[3] (U.S. State Department)