Abstract

MONTESDEOCA ESPIN, Lourdes; NARVAEZ GOMEZ, Giovanny  and  CHUN LEE, Po. The Return of the Dutch Disease: an Analysis of the Ecuadorian Case. E&c [online]. 2020, vol.1, n.10, pp.141-167. ISSN 2477-9245.  https://doi.org/10.37228/estado_comunes.v1.n10.2020.153.

This document analyses the main stylized facts of Ecuador that provide evidence in favour of the hypothesis that during the commodities’ boom (between 2004 and 2014), the country contracted the so-called Dutch disease. The analytical proposal is based mostly on definitions and statistics of international trade, as well as accounting and data of Ecuador. The diagnosis of this disease is not so simple for this case, given that, out of the three symptoms that the literature recommends analysing, there are difficulties in the study of the exchange rate appreciation, due to the official dollarization of the Ecuadorian economy since 2000. This means that the nominal exchange rate is not appreciated/depreciated endogenously, but that variable is exogenous. Therefore, this paper chooses to analyse the real exchange rate and the variation of the other prices in the economy that define the terms of trade between tradable and non-tradable goods. Complementary to the diagnosis of the disease, the Dutch cure is considered and there is evidence that certain measures were implemented in the country which helped to reduce the symptoms of the disease; however, the most important measures such as counter-cyclical policies and the establishment of stabilization funds are still pending as long-term or development policies.

Keywords : boom of raw materials; Dutch cure; Dutch disease; exchange rate appreciation; no-tradable goods; official dollarization of the economy; tradable goods.

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