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Ecuador
Searching for car hire is never much fun. That is why
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What
is now Ecuador formed part of the northern Inca Empire
until the Spanish conquest in 1533. Quito became a seat
of Spanish colonial government in 1563 and part of the
Viceroyalty of New Granada in 1717. The territories of
the Viceroyalty - New Granada (Colombia), Venezuela, and
Quito - gained their independence between 1819 and 1822
and formed a federation known as Gran Colombia. When Quito
withdrew in 1830, the traditional name was changed in
favor of the "Republic of the Equator." Between
1904 and 1942, Ecuador lost territories in a series of
conflicts with its neighbors. A border war with Peru that
flared in 1995 was resolved in 1999. Although Ecuador
marked 25 years of civilian governance in 2004, the period
has been marred by political instability. Protests in
Quito have contributed to the mid-term ouster of Ecuador's
last three democratically elected Presidents. In September
2008, voters approved a new constitution; Ecuador's twentieth
since gaining independence. General elections, under the
new constitutional framework, are expected in April 2009.
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 contracting by more than 6%.
Poverty increased significantly, the banking system 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 imposed a windfall revenue tax on foreign
oil companies, leading to the suspension of free trade
negotiations with the US. These measures led to a drop
in petroleum production in 2007. President Rafael CORREA
raised the specter of debt default and followed through
on those threats in December 2008 by defaulting on some
commercial bond obligations. He also decreed a higher
windfall revenue tax on private oil companies, then renegotiated
their contracts to overcome the debilitating effect of
the tax. This generated economic uncertainty; private
investment has dropped and economic growth has slowed.
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