Publication: Innovation for Productivity Growth in Ecuador: Unlocking Constraints through Horizontal and Cluster Development Policies
Date
2017-06-13
ISSN
Published
2017-06-13
Author(s)
Rubalcaba Bermejo, Luis
Slavova, Stefka
Kim, Maria Deborah
Merino De Lucas, Fernando
Franco-Temple, Ernesto
Victor, Jessica Michelle
Abstract
Over the last decade, Ecuador
experienced inclusive growth fueled by a favorable external
environment that financed a vast expansion of the public
sector. The country is now facing severe external and fiscal
challenges due to the significant extended fall in oil
prices and the appreciation of the U.S. dollar. Since
mid-2014, Ecuador has lost almost half of its merchandise
export income due to the decline in oil prices. Oil revenues
averaged 13.2 percent of GDP between 2011 and 2014 and
one-third of total fiscal revenues. The fall in oil and
other commodity prices on global markets has opened broad
macroeconomic imbalances and exposed Ecuador's
pre-existing vulnerabilities. As a fully dollarized economy
with limited savings from the boom years, Ecuador cannot
soften adjustment via a nominal depreciation or a drawdown
of macroeconomic buffers. The strengthening of the U.S.
dollar and the major currency depreciations in neighboring
trading partners also place pressures on external
competitiveness. Furthermore, access to foreign borrowing
has become more limited. Consequently, the burden of the
adjustment falls on fiscal and income policies.
Citation
“Rubalcaba Bermejo, Luis; Slavova, Stefka; Kim, Maria Deborah; Merino De Lucas, Fernando; Franco-Temple, Ernesto; Victor, Jessica Michelle. 2017. Innovation for Productivity Growth in Ecuador; Innovation for Productivity Growth in Ecuador : Unlocking Constraints through Horizontal and Cluster Development Policies. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/28295?show=full License: CC BY 3.0 IGO.”