Economic Overview
Ecuador is substantially dependent on its petroleum resources, which have accounted for more than half of the country's export earnings and one-fourth of public sector revenues in recent years. in 1999/2000, ecuador suffered a severe economic crisis, with gdp contracted by more than 6%, with a significant increase in poverty. the banking system also collapsed, and ecuador defaulted on its external debt later that year. in march 2000, congress approved a series of structural reforms that also provided for the adoption of the us dollar as legal tender. dollarization stabilized the economy, and positive growth returned in the years that followed, helped by high oil prices, remittances, and increased non-traditional exports. from 2002-06 the economy grew 5.5%, the highest five-year average in 25 years. the poverty rate declined but remained high at 38% in 2006. in 2006 the government of alfredo palacio (2005-07) seized the assets of occidental petroleum for alleged contract violations and imposed a windfall revenue tax on foreign oil companies, leading to the suspension of free trade negotiations with the us. these measures, combined with chronic underinvestment in the state oil company, petroecuador, led to a drop in petroleum production in 2007. palacio's successor, rafael correa, raised the specter of debt default - but ecuador has paid its debt on time. he also decreed a higher windfall revenue tax on private oil companies, then sought to renegotiate their contracts to overcome the debilitating effect of the tax. this generated economic uncertainty; private investment has dropped and economic growth has slowed significantly.
Environmental Issues
Deforestation; soil erosion; desertification; water pollution; pollution from oil production wastes in ecologically sensitive areas of the amazon basin and galapagos islands
Government Type
Republic
Population
13,927,650 (july 2008 est.)
Location
Western south america, bordering the pacific ocean at the equator, between colombia and peru
Area
Total: 283,560 sq km
land: 276,840 sq km
water: 6,720 sq km
note: includes galapagos islands
Slightly smaller than nevada
Country Aliases
Conventional long form: republic of ecuador
conventional short form: ecuador
local long form: republica del ecuador
local short form: ecuador
Capital
Name: quito
geographic coordinates: 0 13 s, 78 30 w
time difference: utc-5 (same time as washington, dc during standard time)
Military Service
20 years of age for selective conscript military service; 12-month service obligation (2008)
International Disputes
Organized illegal narcotics operations in colombia penetrate across ecuador's shared border, which thousands of colombians also cross to escape the violence in their home country
Sources: Central Intelligence Agency (CIA)
