Development Policy and Agriculture

This chapter reviews the evolution of the principal economic policies of Ecuador during this century and assesses their impact on agriculture. The import-substitution industrialization period has been heavily affected by two other major economic events: the petroleum boom of 1972-1981; and the period of austerity and structural adjustment following the international financial crisis and falling petroleum prices since 1982. The shift in the external terms of trade against Ecuador&s;s primary exports, with the resulting overvaluation of the Sucre and loss of government revenues, precipitated a major and significant change in development policy by the government. The petroleum boom was an exogenous event that made it possible to sustain rapid economic growth via the import-substitution industrialization model during the 1970s and early 1980s. Negative sectoral policies and macroeconomic policies all greatly reduced incentives to invest in agriculture during the petroleum boom.