ECUADOR'S ECONOMIC SECTORS: MAIN CHARACTERISTICS - ECONOMY - 2025

The economic sectors of the Ecuador 2017, according to the World Factbook of the CIA, were distributed in the global economy of the country as follows: the primary agricultural sector occupied 9.6%, industrial secondary sector 33, 8%, and the tertiary sector of services 56.6%.

For a long time, the Ecuadorian economy relied heavily on primary industries such as agriculture, oil, forestry, and aquaculture. However, changes in global market trends and the development of technology have led to the development of other sectors such as textile, food processing and service sectors.

Ecuadorian oil industry. Source: Kelvin Lemos

In recent years, the Ecuadorian economy grew from $ 18 billion in 2000 to $ 101 billion in 2014, falling to $ 98.6 billion in 2016. Ecuador's economy is the eighth largest in Latin America and the 69th largest in the world by total GDP. It is based on the export of oil, bananas, shrimp and gold.

Late 20th century

By 1999, the CIA World Factbook estimated that agriculture represented 14% of GDP, industry 36%, and services 50% in Ecuador.

Although Ecuador originated as an agrarian society, in the last 30 years the global market shaped the economic approach of the country towards industry and services. Part of this change occurred due to more advanced production practices.

However, despite new technological and production methods, the country experienced severe stagnation in the production of goods and services at the end of the 20th century.

In 1999, the gross domestic product (GDP) contracted 7% from its 1998 level. Imports fell dramatically due to the lack of financial capital in the country.

Political instability and inefficiency prevented the implementation of economic reforms during the 1980s and 1990s. Loose fiscal policies, mounting foreign debt, and rampant inflation culminated in a financial crisis in 1999.

This crisis prompted drastic economic reforms in 2000, including dollarization, the privatization of state entities, and the liberalization of trade and labor.

Current situation

Today, mining and quarrying create 22% of wealth. Construction, water and electricity distribution 11%. The service sector contributes 56% of GDP. Agriculture, forestry and fishing account for the remaining 9% of GDP.

In 2017, remittances made up a growing portion of the country's GDP. Total trade represented 42% of Ecuador's GDP. The country depends substantially on its oil resources.

The agriculture sector includes agricultural seeding, fishing, and forestry. The industrial sector includes mining, manufacturing, energy production, and construction.

The decade has seen non-oil exports rise to 25% of state exports, while petroleum products make up the remaining exports.

However, dependence on oil has left the country vulnerable to fluctuations in the prices of this substance, which spreads to other sectors, causing an unstable economy.

The last decade has seen an effort to develop and encourage investment in non-oil sectors, with the aim of exporting more value-added goods.

Service sector

The largest sector of the Ecuadorian economy is services. The services sector covers retail and wholesale trade, hotels and restaurants, transportation, communications and financial intermediation.

It also covers professional, technical, administrative and domestic services, government services and activities, and all other economic activities that do not produce material goods, representing 56% of GDP.

Non-traditional sector

The payment of remittances, which is the money sent to Ecuadorian residents by relatives or friends who live and work abroad, is an important factor in the economy of Ecuador, which does not enter into the conventional economic sectors.

These people send part of their paychecks to Ecuador in order to support their families or supplement the family income.

With the increase in the poverty rate and the consequent emigration, the payment of remittances has become an enormous force in the Ecuadorian economy and, valued at $ 1,185 billion in 2000, was the second source of national income after the oil exports.

Industrial sector

The industrial sector is concentrated in urban centers. Around 70% of the manufacturing and non-oil sectors are concentrated in Quito and Guayaquil.

Before 1990, much of Ecuador's oil was produced for export, while non-oil sectors focused on the domestic market.

Petroleum

Oil represents 50% of the exported goods and also a third of the country's tax revenue. About 500,000 barrels of oil are produced every day, of which 90% is exported.

Ecuador is considered a medium-sized oil producer, ranking number 31 in the world in production of this material and number 20 in oil reserves.

In the recent past, Ecuador initiated a plan to recover an estimated 900 million barrels from the Ishpingo-Tapococha-Tiputini. However, this plan would see the country flatten a large area of ​​the Amazon.

Processed foods

The processed food industry is the largest non-oil industry in Ecuador. It represents 55% of the non-oil industry, generating an estimated $ 1.8 billion annually. It represents 8% of GDP.

21% of this industry consists of shrimp processing. Meat represents 18%, while fish represents 16%. The industry is also made up of other minor services, such as beverage processing and packaging, sugar processing, and grain processing.

Textiles

The textile industry contributes about 15% of the non-oil industries. It is the second largest employer in the country, after food processing.

It is one of the oldest industries in the country. It was considered until the 1990s as an activity focused on the domestic market.

The economy was dollarized in 2000, and as a consequence, the industry experienced a sudden boom that has not yet come to an end. Since 2007, the export of textiles has increased at a rate of 30.5% per year.

Automotive

In the last decade, several automotive companies have increased their investments in Ecuador to meet domestic demand and thus build a stronger regional market. Between 2010 and 2015, production grew 37%, while the domestic market grew 45%.

References

1. Nations Encyclopedia (2019). Ecuador - Economic sectors. Taken from: nationsencyclopedia.com.
2. Index Mundi (2018). Ecuador GDP - composition by sector. Taken from: indexmundi.com.
3. Victor Kiprop (2018). The Biggest Industries In Ecuador. World Atlas. Taken from: worldatlas.com.
4. Wikipedia, the free encyclopedia (2019). Economy of Ecuador. Taken from: en.wikipedia.org.
5. Ecuador (2019). Ecuador's Economy, Currency. Taken from: ecuador.com.