Topic > Impact of the macroeconomic policies imposed by the Correa government on the Ecuadorian industry

The macroeconomic policies of the various countries of the world "have as fundamental objectives price stability, sustainable growth, full employment, the sustainability of the balance of payments, among others”; consequently, the evaluation of the management of the economic authorities is carried out according to the objectives obtained in these same areas. Ecuador is currently considered an “upper middle income” nation, with adollarized economy dependent on oil revenues and a gross domestic product (GDP) of 98,614 million dollars (2017) which places it eighth in Latin America and Caribbean (LAC)”. This territory has 16.6 million inhabitants, yet “per capita income measured by purchasing power parity is estimated at $11,185 (2017), lower than the ALC average of $15,649.” To analyze the economic behavior of Ecuador's industrial sector, it is of great importance to first analyze its political-economic trend over the last ten years. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay In mid-2007, economist Rafael Correa assumed the presidency of the country. The main leader and promoter of the Revolución Ciudadana political movement, he brought about many legal and socioeconomic changes during his presidential period; for example, Ecuador has gone through a process of redefining the Development Model approved in the Carta Magna (2008) and in the National Plan for Good Living (PNBV). This project primarily addressed social spending and state investment as aspects of achieving greater development, which involved extensive financial and regulatory reforms. Although improvements such as that of infrastructure cannot be denied, there are great doubts as to whether all the measures applied have been the best to achieve a sustainable economy and generate development in the country. Likewise, with the aim of achieving each of the objectives, the government of the last decade has attributed the primordial basis of fiscal policy to tax collection; for this reason "taxes represented 65% of central state revenues while the sale of oil and derivatives constituted 23%, the remaining 12% corresponds to non-fiscal revenues and transfers". Considering this fact, it is effectively understood that most of the expenditures and investments made by the Correa government were actually the result of all the monetary activities of the Ecuadorians. The macroeconomic policies adopted under this 10-year regime, which from the beginning aimed at improving tax revenues, have been harshly questioned by the civil and business sectors. Analyzing taxes and their consequences, analysts can say that the commercial sector has been the most affected; furthermore, we often talk about the productive discouragements caused by taxes. However, there are two whose impact has generated the most disruption: the “Capital Outflow Tariffs” and, in particular, the “Safeguards”. In March 2015, the government adopted a temporary balance of payments safeguard, following the Trade Organization rules, in response to the collapse in oil prices, the appreciation of the US dollar and, the resulting reduction in revenue tax. This economic measure allowed Ecuador to impose tariffs on imports; initially "guarantees of 7% and 21% were imposed on Peru and Colombia respectively. Subsequently, global guarantees were imposed for a third of the imported products. The tariff increases were 5%, 15%, 25% and 45% at depending on the type.