Official Name: Republic of Ecuador
National Symbol: Andean condor
Internet Domain: .ec
International Dialing Code: +593
|Location and Size||Credit and Collections|
|Legal System||Business Climate|
|Ten Interesting Facts||Business Protocol|
|Economy||Other Sources of Information|
|Comparative Economic Indicators|
Ecuador is located in western South America, bordering the Pacific Ocean at the Equator, between Colombia and Peru. Its land area is 276,841 sq. km., which is about the size of Colorado, and includes the Galapagos Islands.
Ecuador’s government is a representative democratic republic with 24 provinces.
- Executive: Chief of State and Head of Government - President Rafael CORREA Delgado; Vice President Lenin MORENO Garces; cabinet appointed by the President
- Legislative: unicameral National Assembly including 124 seats with members elected through a party-list proportional representation system to serve 4 years
- Judicial: National Court of Justice; Constitutional Court
Ecuador’s has a civil law legal system based on the Chilean civil code with modifications.
The Ecuadorian judicial system is inefficient and vulnerable to political interference. Court delays are significant, and judgments are inconsistent.
- Ecuador uses the metric system; however, gasoline is sold by the gallon.
- Garbage trucks play music, as ice cream trucks do in the United States.
- The official currency of Ecuador is the U.S. Dollar.
- Ecuador was part of the Inca empire before the arrival of the Spanish in 1534.
- The majority of balsa wood in the world comes from Ecuador.
- Ecuador was the first nation (2008) to declare that nature has constitutional rights.
- Ecuador is one of 17 megadiverse countries in the world with: 25,000 plant species, 1,600 bird species, 6,000 butterfly species, 106 endemic reptiles and 138 endemic amphibians.
- The Panama hat originated in Ecuador.
- Ecuador’s Cotapaxi Volcano is the highest active volcano in the world (19,357 feet/5,900 meters).
- Ecuador exports more bananas than any other country in the world.
The Ecuadorean economy is very dependent on a limited number of commodities including oil, gold, copper, seafood, flowers, coffee, cocoa, sugar, which represent 90% of Ecuador's exports. Its petroleum resources have accounted for more than half of the country's export earnings and approximately two-fifths of public sector revenues in recent years.
The dollar was adopted as Ecuador’s national currency in 2000, following a major banking crisis and recession. Dollarization led to stability, which helped Ecuador achieve solid economic performance through 2006. However, by the end of 2008, the global financial crisis and economic downturn resulted in the government defaulting on debt issuances with a total face value of approximately U.S. $3.2 billion.
As the global economy began to recover in 2010, Ecuador’s economy rebounded with a 3.6% growth rate. However, limited access to international financing forced the government to reduce expenditure levels and cover a budgetary financing gap with loans from international financial institutions, funds from Ecuador’s Social Security Institute, and financing from China. Ecuador has negotiated financing worth almost $7 billion from China since 2009, often with interest rates above those generally charged by international financial institutions, such as the World Bank.
Leading Markets (2011): US 45%, Peru 7.7%, Venezuela 6.5%, Colombia 4.6%, Panama 4.6%, Chile 4.2%
Leading Exports-commodities: petroleum, bananas, cut flowers, shrimp, cacao, coffee, wood, fish
Leading Suppliers (2011): 25%, China 9.4%, Colombia 9.1%, Brazil 4.2%, Venezuela 3.9%
Leading Imports-commodities: industrial materials, fuels and lubricants, nondurable consumer goods
Top Industries: petroleum, food processing, textiles, wood products, chemicals
Top Agricultural Products: bananas, coffee, cocoa, rice, potatoes, manioc (tapioca), plantains, sugarcane; cattle, sheep, pigs, beef, pork, dairy products; fish, shrimp; balsa wood
|Population growth rate (%)||1.4||1.7||0.9||1.1||1.0||1.5|
|Age Structure (%)
(15 to 64 years old)
|Age Structure (%)
(65+ years old)
|Unemployment rate (%)||4.2||5.5||6.9||10.8||7.7||7.3|
|Population below poverty line (%)||28.6||51.3||11.5||37.2||31.3||27.4|
|GDP** (USD billions)||125.8||51.5||281.0||470.7||301.5||373.7|
|GDP real growth rate (%)||6.5||5.1||6.5||5.7||6.9||4.2|
|GDP per capita** (USD)||8,300.0||4,800.0||16,100.0||10,100.0||10,000.0||12,400.0|
|Public debt (% of GDP)||22.1||36.6||9.4||45.6||21.7||36.3|
|Industrial production growth rate (%)||1.9||3.6||5.3||4.9||5.6||1.4|
|Exports (USD billions)||22.3||9.1||86.1||56.5||46.3||92.6|
|Imports (USD billions)||23.6||7.6||72.3||54.7||37.0||46.4|
|Reserves of foreign exchange and gold (USD billions)||3.0||12.0||41.3||32.3||48.8||29.9|
|Exchange rates (per USD) 04/25/2012||1.0||6.9||487.5||1,762.7||2.6||4.3|
|Exchange rates (per EUR) 04/25/2012||0.8||9.0||642.1||2,321.5||3.5||5.7|
|Rating in 2011 Corruption Perceptions Index***||2.5||2.8||7.2||3.5||3.5||2.0|
|Rating in 2012 Index of Economic Freedom***||48.3||50.2||78.3||68.0||68.7||38.1|
* July, 2012 estimates
** PPP – Purchasing Power Parity
*** 2011 Corruption Index: 10=Very Clean; 0=Highly Corrupt
**** 2012 Index of Economic Freedom: 100-80=Free; 49.9-0-Repressed
Ecuadorian Statutes of Limitations:
- Open Account: n/a
- Promissory Notes: 3 years
- Written Contracts: 5 years
- Oral Agreements: 5 years
An ongoing problem in Ecuador is receiving full and timely payments.
On July 6, 2009, the Ecuadorian government submitted written notice of its withdrawal from the World Bank’s Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). Ecuador’s withdrawal from the ICSID international arbitration body became effective on January 7, 2010.
In September 2009, the Ecuadorian government requested approval by Ecuador’s National Assembly to terminate 13 bilateral investment treaties (BITs), including one with the United States, claiming the treaties’ international arbitration provisions for resolution of investor-state disputes conflicted with the country’s 2008 Constitution. Article 422 of the 2008 Constitution states that “Ecuador will not enter into international agreements or instruments under which the Ecuadorian State would have to cede sovereign jurisdiction to international arbitral tribunals in contractual or commercial matters between the State and individuals or corporations.”
In general, the legal complexity resulting from the inconsistent application and interpretation of its existing investment laws complicates enforcement of contracts and increases the risks and costs of doing business in Ecuador.
Systemic weaknesses in the judicial system and its susceptibility to political and economic pressures constitute important problems faced by U.S. companies investing in or trading with Ecuador. The Ecuadorian judicial system is hampered by processing delays, unpredictable judgments in civil and commercial cases, inconsistent rulings, and limited access to the courts. Criminal complaints and arrest warrants against foreign company officials have been used to pressure companies involved in commercial disputes. There have also been cases in which the courts have prevented foreign company officials from leaving Ecuador because of pending claims against the company.
Ecuadorians involved in business disputes can sometimes arrange for their domestic and foreign opponents to be jailed pending resolution of the dispute. Concerns have been raised in the media and by the private sector that Ecuadorian courts may be susceptible to outside pressure and are perceived as corrupt, ineffective, and protective of those in power. Neither legislative oversight nor internal judicial branch mechanisms have shown a consistent capacity to investigate effectively and discipline allegedly corrupt judges.
The resource-starved judiciary continues to operate slowly and inefficiently. There are over 55,000 laws and regulations in force. Many of these are conflicting, which contributes to unpredictable and sometimes contradictory judicial decisions. Enforcement of contract rights, equal treatment under the law, IPR protection, and unpredictable regulatory regimes are major concerns for foreign investors.
Coface Country Rating: C -- A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high.
Coface Business Climate Rating: C -- see above.
Ducroire Delcredere Political Risk Rating: 4 -- average risk
Ducroire Delcredere Commercial Risk Rating: C -- high risk
Private investment has shrunk due to costly regulations and uncertainty. The trade regime has become more restrictive, reducing competition and eroding productivity. Ecuador’s underdeveloped and state-controlled financial sector limits access to credit and the overall investment climate is becoming increasingly risky.
Economic Freedom (2012 Index of Economic Freedom): Ecuador’s economic freedom score is 48.3, making its economy the 156th freest in the 2012 Index. Ecuador is ranked 26th out of 29 countries in the South and Central America/ Caribbean region, and its overall score is far below world and regional averages. The government’s policy of continual expansion into economic sectors has considerably undermined economic freedom forcing the private sector to compete with a growing public sector in what has become a restrictive entrepreneurial environment.
Market Access: In 2011, Ecuador embarked on a program of import substitution and voluntary import restraints to reduce its trade deficit. Further suppressing trade, the trade weighted average tariff rate rose to 6 percent. The investment regime is complex and non-transparent. The financial sector remains poorly developed with increased state interference.
Regulatory System: Ecuador's regulatory system is not transparent. Government officials and private Ecuadorian businesses have used regulations and questionable legal maneuvers to affect foreign company operations. Some foreign companies have been required to make additional payments not negotiated in original agreements.
Intellectual Property Rights: There is a widespread local trade in pirated audio and video recordings, computer software, and counterfeit activity regarding brand name apparel in Ecuador. Enforcement against intellectual property infringement, which is the purview of the national police and the customs authority, has been ineffective.
Corruption: The rule of law in Ecuador is undermined by pervasive corruption. Illicit payments for official favors and thefts of public funds are common. Transparency International consistently ranks Ecuador near the bottom among countries it surveys in the region.
Political Violence: Ecuador does not have a tradition of substantial guerrilla activity, nor of frequent violence as a result of demonstrations or political instability. Crime, however, is a serious concern, especially in the larger cities. Violent crime has significantly increased over the last few years, with American citizens being victims of crimes, including homicides, armed assaults, robberies, sexual assaults, and home invasions.
For more detailed information on these topics, visit the 2011 Investment Climate Statement - Ecuador, U.S. Department of State
- Ecuadorians are more formal in their business dealings than many other cultures. Shake hands when meeting someone, also when leaving.
- Professional or academic titles with the surname are used in business. Common titles are "Doctor" (medical doctor or Ph.D.), "Ingeniero" (engineer), "Arquitecto" (architect), and "Abogado" (lawyer). If someone does not have a title, the honorific Señor or Señora is used with the surname. Always wait until invited before moving to a first-name basis.
- Business cards are exchanged during the initial introductions. Although most business executives speak English, it is a good idea to have one side of your business card translated into Spanish.
- The Ecuadorian culture is reliant on relationships, trust and non-verbal cues. Being distant or protective of personal information can, therefore, be construed as being rude.
- Ecuadorians are indirect communicators who speak diplomatically and with courtesy. They view blunt communication as extremely rude.
- Ecuadorians are essentially concerned with the people they are doing business with, not the company.
- Avoid confrontation and be careful not to embarrass people or publicly place them in awkward positions. Calling attention to someone’s error demonstrates a lack of finesse.
More information on Business Protocol: Kwintessential
Doing Business in Ecuador, Corporate Conversations, Atlanta Business Radio (podcast)
Doing Business in Ecuador, U.S. Commercial Service
Ecuadorian-American Chamber of Commerce-Guayaquil
Embassy of Ecuador, Washington DC
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This report represents a compilation of information from a wide variety of reputable sources.
Comparative Economic Indicators: CIA World Factbook
Exchange Rates: OANDA.com The Currency Site.