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Doing Business in Ecuador: Being less developed than many countries in the region while having one of the fastest rates economic growth in Latin America makes Ecuador a very appealing spot for foreign investment and for companies wanting to expand to new markets in the region.
In general, Ecuador is very friendly to foreign businesses and offers several benefits such as an educated, low cost work force, ample natural resources and in MetroZona, exceptional tax benefits. Living in Ecuador: The Quito area offers an exceptional quality of life. A spectacular natural setting, excellent educational institutions, and low cost of living are but a few of the characteristics that attract North Americans and Europeans to the region. Geography: Ecuador is located on the Pacific Coast of South America dissected by the Equator. Although it is only 271,000 square kilometers in size (similar to the US state of Colorado), Ecuador is a culturally diverse country with a wealth of natural resources. The country is divided into four geographical regions: El Oriente (the Amazon Rainforest) in the East, La Sierra (the Andes mountains) in the center, La Costa (the Pacific coastal lowlands) in the West, and the majestic Galapagos Islands off the Pacific coast.
Demographics and Language: Ecuador's population is estimated to be 12,646,095, with a less than 2% annual growth rate. The population is ethnically mixed: 55% mestizo (mixed Indigenous - Caucasian), 25% Indigenous, 10% Caucasian, 9% African, and 1% other. Although the population was heavily concentrated in the Andes highlands region a few decades ago, today it is divided about equally between that area and the coast. Migration toward cities - particularly Quito and Guayaquil - in all regions has increased the urban population to more than 50%. The rainforest region to the east of the mountains remains the most sparsely populated area of Ecuador's three continental regions and contains only about 3% of the population. The official language of Ecuador is Spanish. Quichua, Shuara, and other native languages are also widely spoken. Ecuador is a very "English-friendly" country, with many Ecuadorians studying English as their second language.
Economic Environment: In 1999, faced with a severe recession and a currency that was being devaluated daily, President Jamil Mahuad decided to take the drastic measure of dollarizing the Ecuadorian economy. At the time, this was a step that was vigorously debated by economists throughout the world. The principal argument for dollarization was to restore currency stability to the country and to bring devaluation-induced inflation (60.70% in 1999) under control. A major argument against dollarization, meanwhile, was that it would cause Ecuador to surrender control of its monetary policy as well as an escape mechanism for ensuring that its exports remain appropriately priced in world markets - free currency fluctuations (and the too-often-used currency devaluation). Following much debate, both inside and outside of the country, the dollarization program was finally approved and put into effect in 2000. Recently the GDP growth rate has been moving in the right direction. After contracting by a stunning 7.3% in 1999, GDP growth climbed into the positive territory in 2000, registering a growth rate of 2.3%. In 2001, the GDP picture has become rosier still. For 2001, the GDP growth rate was 5.40% - the highest in Latin America.
In spite of the healthy GDP growth figures, however, various other macroeconomic indicators have not been nearly as positive. For example, it was once hoped that a single-digit inflation rate would be achieved in 2001. Inflation, however, ended up registering at 22.40% for that year. Although this is down significantly from the inflation figure at the time when the dollarization plan was conceived, it is nevertheless quite far from the targeted rate.
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