Although Ecuador originated as an agrarian society, over the past 30 years the global market has shaped the country's economic focus toward industry and services. Part of this shift has occurred because of more advanced production practices. Despite new methods of technology and production, the country experienced severe stagnation in its production of goods and services at the end of the 20th century. In 1999 gross domestic product (GDP) shrunk 7 percent from its 1998 level, and imports fell drastically because of the lack of financial capital in the country. The CIA World Factbook estimated that agriculture accounted for 14 percent of the GDP, industry for 36 percent, and services for 50 percent in 1999.
Political instability and inefficiency prevented the implementation of economic reforms during the 1980s and 1990s. Loose fiscal policies , a burgeoning external debt , and rampant inflation culminated in a financial crisis in 1999. The crisis caused drastic economic reforms in 2000, including dollarization, privatization of state-owned entities, and liberalization of trade and labor. These
Remittance pay, the money sent to Ecuadorian residents by family members or friends living and working abroad, is an important factor in Ecuador economy that does not fall into conventional economic sectors. Because of poverty and the lack of well-paid jobs in Ecuador, many Ecuadorians emigrate to countries such as the United States and Spain, where jobs are easier to find. These individuals send parts of their paychecks back to Ecuador to support their families or supplement the family income. With increasing rates of poverty and consequent emigration, remittance pay has become an enormous force in the Ecuadorian economy and, valued at US$1.185 billion in year 2000, was the second largest source of national income after petroleum exports.
Comment about this article, ask questions, or add new information about this topic: