Economic Struggles and Eco-Tourism | Galapagos Unbound

Banana Crush and Oil Rush 

Ecuador’s economy has forever had a tendency to boom or bust, largely due to its dependence upon export commodities. In turn, the wavering economy makes it difficult for the country to sustain stable political or social structures. Up until the 1970s, Ecuador’s economy was sustained in large part by its impressive exportation of bananas—more than any other country in the world—that was first established early in their colonial era. As a veritable banana republic, Ecuador’s economy relied on this sole export until the discovery of oil in the depths of the Oriente in 1967.

Oil exports quickly overtook their fruitful competition in the 1970s and supported much of the economy. However, the oil rush quickly drew the attention of the liberal politicians and indigenous rights groups who argued against the despoiling of the Amazon rainforests, the disproportional power and wealth the oil boom spread throughout the country, and the new vulnerability of previously obscured indigenous tribes.

With this new division, the 1980s and 1990s continued to see a contentious political rivalry between liberals and conservatives. Although Ecuador borrowed money in the 1980s in the hopes of further improving their economy through oil, the oil market worldwide precipitously declined and Ecuador itself suffered from a damaged pipeline that impaired the economy as well as its environment.


Dollarization and the Rise of Eco-Tourism 

To aid its struggling economy, Ecuador began the campaign for dollarization in favor of its original national currency. The plan was met with vehement disapproval by many parties, however. Strikes, protests, and closures broke out across the country, culminating into a march in early 2000 that not only closed down the capital but which left the protestors overrunning the legislative palace. This legislative failure, and the strength of the protests, compelled President Mahuad—who first introduced and championed the plan—to resign. The coup was met with international disproval and the triumvirate who briefly ruled the country relinquished the presidency to the former Vice President Gustavo Naboa. Of course, President Naboa proceeded with the plans for dollarization and put the change in currency into effect by 2000. The protestors were therefore thwarted and, due to excessively inflated exchange rates, many people suffered severe financial losses.

Although the turn of the century in Ecuador was fraught with further protests by unions and indigenous groups against dollarization and further exploitation of natural resources, the economy eventually stabilized. Furthermore, President Noboa phased in various austerity measures that allowed the country to receive aid from the International Monetary Fund (IMF) as well as other international lenders. These measures helped finance the country’s debt and paved a path toward eco-tourism, one of Ecuador’s newer elements in their economic infrastructure.