In Latin America, we are fascinated by the word reform. Many heroes of the Latin American republics sought to reform the Catholic monarchy in order to achieve greater autonomy in local governance. The monarchy undertook the project of Bourbon reforms, but in many cases they were unevenly applied to different provinces and in different areas resulted in less local autonomy. This uneven implementation, if not minimal, and/or this disconnect between what was announced and what was implemented has been a constant in the history of reform programs in Latin America.

Closer to our time, the region experienced a significant wave of liberalization during the 1990s, perhaps due to the contagion effect of liberalization that occurred in the world’s major economies, but more likely because the previous reform program, statist from the 1960s to the 1980s, collapsed and became unsustainable.

Ecuador Banana will enter Woqod, a gas station chain with more than 112 stores in Qatar

The reforms of the 1990s, although applied unevenly in different countries—for example, more deeply in Chile, less so in Ecuador, and even retrograde in Venezuela—brought important progress for the region. A 2019 study by William Easterly found that growth improved after reforms in Latin America, compared to the lost decades of the 1980s and 1990s.

Considering the current case of Ecuador, the Civil Revolution reversed the liberalizing reforms of the nineties (commercial and financial opening). In doing so, it destroyed accumulated capital and squeezed out private investment. Only dollarization, Ecuador’s most important structural reform of the last century, could limit the damage.

Maybe they will be able to make progress in business opening, and that would be a structural reform.

In order to return to the path of growth, it is necessary to implement other structural reforms of this caliber. The current administration, the previous one under Moreno, and taxpayers have made a significant effort to clean up public finances, without growth being their goal.

The new fisheries law and the electronic platform, one of the advances that Ecuador will show the European commissioners so that the ‘yellow card’ can be reversed

If the current Administration does not use the time it has left to implement at least one structural reform that changes the incentives in public sector management, its legacy will be to leave the table set for those who bring us back to the beginning of the cycle: the moment when a great leader says save us. It is true that as of 2017, time is no longer wasted defending basic things, such as freedom of expression, dollarization, among other policies that have been congratulated by the administrations that succeeded Correísmo. However, since then, not a single reform has been implemented that would make it significantly more difficult for the next socialists in power to repeat the adventure from 2007-2017.

Maybe they will be able to make progress in business opening, and that would be a structural reform. Let’s hope that this or another government will dare to undertake other pending reforms: reduce the size and scope of the state, make social security sustainable with individual capitalization, make the labor market more flexible, simplify and reduce taxes, and internationalize the financial system. Otherwise, structures with perverse incentives are inherited in order to continue laxity, corruption and waste in public administration. (OR)