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President Correa and Ecuador's Economy
June 24, 2013 2:35 AM   Subscribe

Rafael Vicente Correa Delgado was first elected president of Ecuador in Nov. 2006 and most recently for his third presidential term in Feb. 2013. Ecuador is sometimes identified as joining the Latin American leftist "pink tide" movement by electing Correa, and Correa in turn joined the Bolivarian Alliance for the Americas (ALBA) economic bloc in 2009, which also includes the countries of Venezuela, Cuba and Bolivia, and which was explicitly conceived by Hugo Chavez as an alternative to US-lead economic partnerships in the region.

Correa acquired a PhD in economics from The University of Illinois at Urbana-Champaign in 2001 and has deliberately rejected the so-called "Washington Consensus" in crafting economic policy in Ecuador.

A February 2013 report by the Center for Economic Policy Research [pdf] identifies the following economic reforms implemented by Correa:

* A 2009 stimulus spending package equal to nearly 5% of GDP
* Increases in government spending on housing and health care, a 25% increase in the cash-transfer program known as the Bono de Desarollo Humano, and a doubling of education funding as a percentage of GDP
* A 2011 anti-monopoly law prohibiting consolidation of different types of financial institutions
* A 1.2 billion liquidity fund for banking system emergencies funded by bank taxes
* A doubling of cooperative and credit union loans, to 19.6 percent of total lending
* A tax on capital leaving the country, increasing as a share of government revenue from less than 1 percent in 2008 to over 10 percent in 2012

Many of the economic results according to the CEPR study have been positive, including:

* Unemployment falling to to 4.1 percent in the 4th quarter of 2012, its lowest level on record in Ecuador, and the lowest in Latin America
* The national poverty rate falling to 27.3 percent as of December 2012, 27 percent below its 2006 level
* A mild 2008 recession in which Ecuador lost only 1.3 percent of GDP during three quarters and returned to its pre-recession level of output in seven (this took four years in the United States).

Bill Black at naked capitalism further highlights that:

* Ecuador's GDP in 2012 increased 7.8%
* A million Ecuadorians have been brought out of poverty (in a nation of 15 million) during Correa's time in office
* Significant emigration of Ecuadorians prior to Correa's leadership has been replaced by net immigration
* 2012 real wages grew by 3.0%
posted by airing nerdy laundry (34 comments total) 14 users marked this as a favorite

 
Sounds like what the US needs.
posted by 3.2.3 at 3:39 AM on June 24, 2013 [3 favorites]


Regional context, from an article about a World Bank Nov. 2012 study:

Income inequality is falling in Latin America even as it rises elsewhere in the world, according to a World Bank study that encourages government intervention to reduce the wealth gap.

Over the past 15 years, more than 50 million people have risen into the middle class, which is now – for the first time – about the same size as the population of poor in the region, says the report ...

For decades, Latin America was notorious for some of the widest income gaps in the world, but a combination of favourable economic conditions and interventionist policies by left-leaning governments in Brazil and other countries has brought it more closely in line with international norms.

"This is not just a statistical anomaly. It is a significant reduction in inequality," said the World Bank's regional chief economist, Augusto de la Torre.

posted by airing nerdy laundry at 3:40 AM on June 24, 2013 [2 favorites]


Ecuador's economy reminds me of the Dodgers. At least the Dodgers are playing better baseball than the Brewers and the Marlins.
posted by otto42 at 3:46 AM on June 24, 2013


Snowden makes a request for asylum in Ecuador...no wonder.
posted by hal_c_on at 4:39 AM on June 24, 2013


Irony abounds.

Ecuador Legislature Approves Curbs on News Media
On Friday the Legislature took up the law without debating its contents and it passed easily. It is packed with controversial measures. The law creates a Superintendency of Information and Communication, with the power to regulate the news media, investigate possible violations and impose potentially hefty fines. It creates a five-member Council for the Regulation and Development of Information and Communication, led by a representative of the president, to oversee the news media.

The law prohibits “media lynching,” which it defines as the repeated publication or broadcast of information intended to smear a person’s reputation or reduce one’s credibility. And it bans content that incites violence or promotes racial or religious hatred.

Carlos Lauría of the Committee to Protect Journalists, a group that promotes press freedom, said the wording of such measures was vague enough that it left ample room to define a variety of content as being in violation of the law, opening the door to censorship.
posted by BobbyVan at 4:42 AM on June 24, 2013 [3 favorites]


they do roll with the Washington Consensus when it's in their interest: they are pushing pretty hard for renewals of trade agreements with both the EU and the US.
posted by jpe at 5:29 AM on June 24, 2013 [2 favorites]


Ecuador auctions off Amazon to Chinese oil firms
Indigenous groups claim they have not consented to oil projects, as politicians visit Beijing to publicise bidding process


At least the auction is for a good cause, or US Private Equity shops are not in the auction, or evil capitalists are not exploiting the local tribes, or Chevron is not poisoning the water, or a million other incidents that usually fit the liberal narrative espoused on the Blue.
posted by otto42 at 5:37 AM on June 24, 2013 [3 favorites]


Maybe you should wait for someone to actually make those arguments before criticizing them for making them.
posted by Elementary Penguin at 5:40 AM on June 24, 2013 [13 favorites]


Almost any measure that actually distributes resources more evenly increases the velocity of money, thus improving the economy. You create economic problems when you slow money by centralizing resource control under monopolies and banks (capitalism) or government authorities (communism). And obviously our current austerity measures are nothing but kleptocracy.
posted by jeffburdges at 5:41 AM on June 24, 2013 [4 favorites]


The law prohibits “media lynching,” which it defines as the repeated publication or broadcast of information intended to smear a person’s reputation or reduce one’s credibility. And it bans content that incites violence or promotes racial or religious hatred.

Oh heaven forfend, BobbyVan - poor Ecuadorans, deprived of gutless, slavering media composed of special interest-fuelled witchhunts and speculative slander. Not to mention your gaping ellipsis of the attempted coup in Venezuela which was spurred through media stations owned by the elite and helped by the CIA.

Please, when they start abusing the laws, let's chat about it, okay? Your rush to condemn others of a different ideological belief - and blithely ignore the literal millions their policies have lifted out of poverty - is as distasteful as it is predictable.

We could have an interesting discussion here about the flaws of neoliberalism, the way developing countries are working for their people by adopting models that were mostly abandoned by the West in the eighties (and how that's playing out in the West), and how much economic consensus actually relies on small flocks of anecdotes and cherry-picking.

But of course, the fact that Correa seems to have done something very good in Equador - along with much of South America - through policies that will have literally saved lives and lifted thousands up from poverty, is overshadowed by the potential for a newly registered body to censor the media - though there is no evidence as such at all.

I don't know whether to feel more embarrassed or disappointed disgusted with your comments in threads like this.
posted by smoke at 5:43 AM on June 24, 2013 [14 favorites]


You can be against neoliberal bullshit AND censor-enabling laws you know.

If it was in the NYT only, then I'd be inclined to dismiss it as red-scaring, but CPJ, (upon first inspection!) is serious about real press freedom.
posted by lalochezia at 5:48 AM on June 24, 2013 [8 favorites]


Considering the mixed legacy (to put it lightly) of Chavismo in Venezeula, media censorship seems relevant to the overall picture here.
posted by Vhanudux at 5:50 AM on June 24, 2013 [4 favorites]


otto42, the interesting thing about that, is that Ecuador has repeatedly tried to get the West to pay to keep its oil reserves underground and keep the rainforest as a carbon and biodiversity sink. Predictably, the west did not come up with the money.

I am not saying the Ecuador is a hero - nations and real life is far too complex for heroes and villains, and I'm sure the govt there has many policies I agree with, and many I disagree with vehemently - merely to point out that Ecuador has certainly shown an interest in not digging up its rainforest in the past.
posted by smoke at 5:51 AM on June 24, 2013 [4 favorites]


On Friday the Legislature took up the law without debating its contents and it passed easily. It is packed with controversial measures.

You mean, like the PATRIOT Act? The Irony fucking abounds, doesn't it?

And it bans content that incites violence or promotes racial or religious hatred.

Oh, however will they survive?

said the wording of such measures was vague enough that it left ample room to define a variety of content as being in violation of the law, opening the door to censorship.

Meanwhile, in Soviet America, elected members of Congress aren't even allowed to talk about certain laws and government policies to the public that elected them, while government officials are permitted to lie to Congress without reprimand of any kind.
posted by Jimbob at 6:12 AM on June 24, 2013 [13 favorites]


Vhanudux: "Considering the mixed legacy (to put it lightly) of Chavismo in Venezeula, media censorship seems relevant to the overall picture here."

"Dictatorship of the bourgeoisie" "Hegemony"... dig it.
posted by symbioid at 6:41 AM on June 24, 2013


Ecuador has repeatedly tried to get the West to pay to keep its oil reserves underground

"Give us a million dollars or the rainforest gets it" doesn't sound terribly virtuous to these ears.
posted by jpe at 6:56 AM on June 24, 2013 [1 favorite]


"Nice rainforest you got here. Be a real shame if someone... exploited it."
posted by Etrigan at 6:58 AM on June 24, 2013 [3 favorites]


All the Horrible things the US has done to Ecuador.
posted by adamvasco at 7:00 AM on June 24, 2013 [2 favorites]


Amnesty International (July 2011)
A court in the coastal city of Guayaquil on Wednesday sentenced three directors and a former columnist of El Universo to three years in prison and imposed punitive damages totalling US$40 million.

Ecuador’s President Rafael Correa sued the newspaper for criminal libel after a February 2011 column called him a “dictator”.
Techcrunch: Ecuador, Where Edward Snowden Seeks Asylum, Is No Utopia For Journalists
So, not everyone is convinced that Ecuador is protecting Assange for purely principled reasons. ”There is a huge gap between what Correa says about press freedom and reality,” said César Ricaurte, head of press watchdog group, Fundamedios. “If Assange were Ecuadorean, I dare say he would already be in jail.”
posted by BobbyVan at 7:00 AM on June 24, 2013 [3 favorites]


I'm wondering if promoting an anti-American economic system is the best course when your own economy is dependent on the US dollar as it's currency. Though maybe weakinging the dollar would be in their interest?
posted by The 10th Regiment of Foot at 7:03 AM on June 24, 2013


Correa is an interesting figure, but I've yet to be convinced that he's really anything different than the other charismatic figures of Ecuador's past, and that his agenda really goes further than securing his own prominence and political future in the usual ways, whatever the ideological window dressing currently in effect. I should note that my perspective is almost entirely filtered through study of the Texaco/Chevron case, and Amazonian oil exploration more generally (with some context from when I studied anthro), in which Correa has been a net positive but sort of nakedly malleable from year to year to benefit where possible and retreat where not.
posted by snuffleupagus at 7:38 AM on June 24, 2013 [2 favorites]


He was a media darling before his inauguration in 2007, but President Rafael Correa’s adversarial relationship with the press has counted among the defining characteristics of his six-year rule.
Reporters without boders reports on Ecuador's new Organic Law on Communication - a mix of good principles and bad provisions.
posted by adamvasco at 8:01 AM on June 24, 2013 [2 favorites]


"The populist president owes his landslide most of all to high oil prices. Incomes per head in Ecuador have not grown as fast during Mr Correa’s presidency as they have in the rest of Latin America, partly because foreign investors have been alienated by his nationalist, interventionist rhetoric and decision to default on the country’s sovereign debt." The Economist.

Still, if you're going to have an oil windfall, better it's spent on anti-poverty measures than corruption or war. Good for him.
posted by alasdair at 8:26 AM on June 24, 2013 [3 favorites]


Being able to capture revenues from resource booms and use them to deliver social services is a pretty huge accomplishment. Canada hasn't figured it out yet.
posted by mek at 8:32 AM on June 24, 2013 [1 favorite]


EnCana got involved in new OCP pipeline construction in Ecuador for a while, but pulled out after things went south for them. (No pun intended.)

Slippery Business: Canada's Role in the Ecuador Pipeline [Verge]

Documentary: Between Midnight and the Rooster's Crow [positive review , mixed review ] -- used to be on SnagFilms, but appears to be gone. Not currently available on Amazon streaming, either.
posted by snuffleupagus at 8:43 AM on June 24, 2013


Being able to capture revenues from resource booms and use them to deliver social services is a pretty huge accomplishment. Canada hasn't figured it out yet.

What's more interesting is doing it in a way that allows social services provision to survive the end of a resource boom.

Basically wait to see what happens if/when the resource boom ends before you judge how politicians have handled an economy.

Just based on history I'd guess we'll see a few major emerging economies pretty much implode. History rhyming and all that. No real idea who though.
posted by JPD at 9:05 AM on June 24, 2013 [1 favorite]


[A couple comments removed, maybe take the generic Mefites Talk Like X argument to email if you want to have it.]
posted by cortex at 10:18 AM on June 24, 2013 [2 favorites]


Why journalist-jailing Ecuador would open its arms to Edward Snowden
posted by homunculus at 4:07 PM on June 24, 2013 [1 favorite]


Just based on history I'd guess we'll see a few major emerging economies pretty much implode.

Including Canada's.
posted by klanawa at 4:08 PM on June 24, 2013


Honestly, if you're using your resource extraction windfalls to invest in social services, you're much better off than a modern neoliberal state, which just uses windfalls to cut taxes. (Again, Canada) Both economies would find themselves in trouble when the resources run out, yes, but one would have a robust safety net and well-educated, healthy workforce and the other would have gross income inequality and a deranged elite hellbent on maintaining their power.

Tale as old as time, really.
posted by mek at 4:19 PM on June 24, 2013 [1 favorite]


HE IS THE BEST!

http://www.youtube.com/watch?v=tY5ylIWWFB4
posted by zscore at 5:23 PM on June 24, 2013 [1 favorite]


Both economies would find themselves in trouble when the resources run out, yes, but one would have a robust safety net

Well no, that's sort of the point - outside of Norway most of those robust safety nets won't be able to survive the end of the resource boom - especially those countries (like ecuador) that have traditionally been unable to issue local currency denominated debt during times of financial stress.

This isn't to say that investing the windfalls in social service provision is bad - its obviously good, just that its sustainability can be an issue if some of those windfalls are not being set aside for the bad times. That said I'm sympathetic to the view that in countries without robust states and democratic institutions, saving those monies for a rainy day just maybe setting it up for the next plutocrats to steal and all.

I guess my point is - judging a governments economic results at the top of a resource boom is not good analysis - you need to see an entire cycle of results.
posted by JPD at 7:16 AM on June 25, 2013


And my point was that an economy with safety nets & public services will be more prepared for the end of a resource boom, as it is more adaptable to new methods of production. We're not disagreeing.
posted by mek at 12:27 AM on June 26, 2013


Ecuador Risks Trade Problems With U.S. if It Grants Asylum to Snowden
posted by BobbyVan at 7:07 AM on June 26, 2013 [1 favorite]


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