Mining, tourism and agriculture, sectors that Ecuador should promote according to the World Bank

The formal mining and environmentally responsible, tourism and agriculture are the three sectors with the greatest potential identified by the world Bank so that Ecuador diversify your economy and maintain sustained and resilient growth that allows you to create employmentreduce poverty and become a high-income country, all accompanied by changes that encourage innovation and competitiveness in the private sector.

The agricultural sector, which represents more than 40% of total exports and employs about a third of workers, can expand into high-value products and climate-smart practices, the World Bank said in its report.Ecuador: resilient growth for a better future’presented this Thursday.

Formal mining is currently the fourth exporting sector, while tourism represents the 3% of the gross domestic product (GDP) and close to 5% of current employment.

So far, the attempts of the current government of President Daniel Noboa to promote large mining projects have met with strong resistance from indigenous and environmental organizations, although the authors of the report believe that in Ecuador there is room for mining and ecotourism. develop with mutual respect.

“Inclusive and resilient growth in Ecuador means reducing poverty and creating more opportunities. “The transition towards clean energy and decarbonization represents a way to encourage competition, strengthen the growth of companies and improve the income of the country and its workers,” the director of the World Bank for Bolivia, Chile, Ecuador and Peru, Issam Abousleiman, indicated in a statement.

In the past, Ecuador has been one of the fastest growing countries in Latin America, with an average annual growth rate of 4.6% between 2002 and 2014, but in recent years the average growth has only been 0.5% between 2014 and 2019 and 0.2% between 2014 and 2022.

“Without accelerated growthEcuador “It will have difficulty preserving its per capita income and will not be able to achieve the status of a high-income country to improve the quality of life of its inhabitants,” warned the World Bank.

Challenging economic context

The report highlights that the country has had to respond in recent years to a challenging economic context, in which it has overcome obstacles such as fiscal deficit, debt, market distortions, low growth and low productivity, while maintaining confidence in the use of the dollar as currency.

In this sense, the World Bank pointed out the need for Ecuador to modernize and make the Ecuadorian labor framework more flexible, which is “extraordinarily rigid”; and promote the growth and productivity of companies, which would boost the demand for labor and create more jobs with better remuneration.

The authors of the document highlighted that, despite being the second country in Latin America and the Caribbean with the highest minimum wage (US$ 460 in 2024), this increase has not translated into a significant increase in productivity.

In addition to the need to control the recent upsurge in insecurity and crime, on which a “internal armed conflict” against organized crime, this report proposes “unlock the potential of Ecuador’s private sector.”

Sustainable fiscal path urgently needed

In order for the sector to become the greatest engine of the Ecuadorian economy for sustained growth, he highlighted the importance of maintaining sustained actions on a sustainable fiscal path, eliminating rigidities for the development of the private sector in all sectors and unleashing opportunities in the identified critical sectors.

“These policy areas interact with each other, and are critical to protecting dollarization and supporting any efforts to address insecurity,” highlighted the international institution.

The director of the equitable growth, finance and institutions practice of the World Bank for Latin America and the Caribbean, Óscar Calvo-González, stressed that “Balancing public finances and stimulating private sector growth encourage the creation of more jobs and opportunities for future generations”.

This World Bank report is the first in a series on Ecuador, which will be followed by another dedicated to climate change and the transition to a carbon-free economy, which will focus on the country’s potential for the development of renewable energy, a sector where has been in favor of reducing fuel subsidies.

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