We continue without building sustainable economic development in dollarization. Twenty-three years later, we have not been able to make economic performance depend more on us than on the price of oil and the primary products we produce, the rain, the price of the dollar, etc. We have gone back and forth without success.

After the initial costs due to the exchange of currencies, there followed a favorable period of external factors on which our development of public spending and debt was based. As these external factors and public debt capacity have disappeared, recent governments have reduced macroeconomic policy to reducing the fiscal deficit. Is there a path between both extremes to build economic development in Ecuador?

Dollarization with and without SSXXI

Let’s implement a macroeconomic policy for competitiveness, since there will be no sustainable economic development in dollarization without competitive improvement of its productive sectors with the greatest potential. Francisco de Paula Gutiérrez in his proposal for economic policy for competitiveness (CLACDS – INCAE, 1999) recommended that macroeconomic policy synergistically articulate actions in four fields: build a long-term vision so that economic subjects “know where they intend to go”; create appropriate signals and incentives to achieve long-term goals; to create the foundations, an environment for the efficient functioning of production systems, and to expand and facilitate access to the platform of resources needed to improve competitiveness.

That we have a fundamental agreement on the nature and priorities of the national and sectoral development strategy, which should be continuously improved through public-private interaction, from the sectoral to the national level. That it contributes to the creation of regulatory frameworks that give efficiency to private intervention in the provision of public services. This would avoid the transfer of monopolies from public to private; the size of the state would be adapted to the needs of growth; Reasonable levels of fiscal deficit would be maintained and long-term availability of funds would be ensured.

That incentive systems reflect the optimal balance between production support and competitive pressure. That interest rates develop towards real levels, strengthening the relationship between greater competitiveness and lower risks. Let this dynamic lead us to a neutral, non-discriminatory, simple and broad tax structure.

That these signals and incentives are accompanied by external processes of opening that encourage the competitiveness of domestic companies, because the productivity of local production resources increases and their transaction costs decrease. To achieve this, it is inevitable to make the labor regime more flexible, as dollarized economies adjust to employment and lack of growth. In addition, we must build a platform of human, technological and environmental resources on a solid foundation of the rules of the game and entities committed to that national plan. (OR)