Latin America: The Importance of Breaking the Tradition
Historically, Latin America and the Caribbean has been characterized by being suppliers of raw materials and, on the contrary, importers of goods and services. Raw materials that are transformed have higher value due to the application of technology, in the case of Ecuador it exports cocoa beans and imports the best chocolate in bars.
This model of economic development has for decades affected economic evolution at the regional level, causing vulnerability in the economies of the countries of the region. Particularly in Ecuador, the development of internal economic growth, as a result of the repeated patterns of production, energy and consumption, has impeded sustained development for both farmers and entrepreneurs. In addition to low productivity, poor technological infrastructure, limited education budget, they have generated inequalities that undoubtedly widen gender gaps and social exclusion, depriving the population of free access to education, health, and protection systems social.
(Orellana, 2011) “Ecuador suffered from 1980 a series of economic recessions but the most important to describe is the 1999 crisis where the financial and exchange system reduced by approximately 7.3% and inflation at the end of the year reached 60%, the monetary issue in 150%, and depreciation rose 190%. As a consequence, domestic demand decreased by 10%, leading to an increase in unemployment of (16%) and underemployment (57%), increasing the fiscal deficit by 4.2%, plus the high burden of external debt service, and the conversion of a private debt that the local businessmen gave to all Ecuadorians as public debt”.
After this macabre scenario of freezing of savings and investments, Ecuadorians observe how the authorities decided to replace the sucre that was on circulation since March 22, 1884, by the US currency called the dollar, that is, anyone who owned a savings account and its deposits in sucres in the financial system by government resolution were transformed into dollars by applying the factor of 25,000.00 sucres for each dollar. The social commotion was such that a wave of Ecuadorians emigrated to Spain as the first destination because Ecuador had migratory privileges without ruling out other countries due to their proximity, causing a chain of social problems that can still be seen within several families.
While in the world, Ecuador was considered one of the pioneer countries in the use of the dollarization scheme as official currency, within the country it was submerged in supposedly necessary legal and institutional reforms (Nacional, 2000) “Law for transformation economy of Ecuador” which protected the state assets as well as the involved administrators such as Managers, Secretaries and other authorities of higher ranks granting it court jurisdiction. (Fernández, 2003) “Leaving aside long-term issues, such as institutional strengthening or development planning that took second place; the first priority was to make economic reforms viable (market liberalization, deregulation and privatization)”.
To achieve the consolidation of the dollarization process, “the H. National Congress issued on March 13, 2000”, a series of laws that gave way to changes in the monetary and exchange regime, as well as financial and legislative, among others. This is how the (Banco Central del Ecuador, 2001) passed “Law for the Promotion of Investment and Citizen Participation”, aimed at reforming a series of laws focused on producing adjustments to the State based on its new currency, so it begins on April 4, 2000, through brochures and Other communication matters an advertising campaign called “Know the Dollar”, both in Spanish and Quichua.(Banco Central del Ecuador, 2001). This is how Ecuador gives way to the dollar.
In September 2000, 189 member countries of the United Nations, including Ecuador signed the Millennium Declaration, in which they committed to eradicate extreme poverty in all its forms until 2015 by meeting the Development Goals of the Millennium (MDG).