The Intersection of Economics and Politics in a Small OPEC Country: the Case of Ecuador, 1990 - March 2014
Date of Thesis
Today, crude oil remains a vital resource all around the world. This non-renewable resource powers countries worldwide. Besides serving as an energy source, crude oil is also the most important component for different world economies, especially in developing countries. Ecuador, a small member of the OPEC oil cartel, presents a case where its economy is oil dependent. A great percentage of the countryÂ¿s GDP and governmentÂ¿s budget comes from oil revenues. Ecuador has always been a primary exporter of raw materials. In the last centuries, the country experienced three important economic booms: cacao, bananas, and, ultimately, crude oil. In this sense, the country has not been able to fully industrialize and begin to export manufactured goods, i.e., Ecuador suffers from the Dutch disease. The latter has deterred Ecuador from achieving broad-based economic development. Given crude oilÂ¿s importance for the Ecuadorian economy, the government has always tried to influence the oil industry in search of profits and benefits. Therefore, this thesis, explores the question: how and to what extent have political interventions affected the oil industry in Ecuador from 1990 until March 2014? In general, this thesis establishes an economic history context during the last twenty-four years, attempting to research how political interventions have shaped EcuadorÂ¿s oil industry and economy. In the analysis, it covers a period where political instability prevailed, until Rafael Correa became president. The thesis examines EcuadorÂ¿s participation in OPEC, trying to find explanations as to why the country voluntarily left the organization in 1992, only to rejoin in 2007 when Correa rose to power. During the Â¿RevoluciÃ³n CiudadanaÂ¿ period, the thesis researches reforms to the Law of Hydrocarbons, variations in the relations with other nations, the controversy surrounding the YasunÃ-ITT oil block, and the Â¿RefinerÃa del PacÃficoÂ¿ construction. The thesis is an Industrial Organization detailed case study that analyzes, updates, and evaluates the intersection of economics and politics in EcuadorÂ¿s crude oil industry during the last 24 years. In this sense I have consulted past theses, newspaper articles, books, and other published data about the petroleum industry, both from a global and Ecuadorian perspective. In addition to published sources, I was able to interview sociologists, public figures, history and economics academics, and other experts, accessing unique unpublished data about EcuadorÂ¿s oil industry. I made an effort to collect information that shows the private and public side of the industry, i.e., from government-related and independent sources. I attempted to remain as objective as possible to make conclusions about the appropriate Industrial Organization policy for EcuadorÂ¿s oil industry, addressing the issue from an economic, social, political, and environmental point of view. I found how EcuadorÂ¿s political instability caused public policy to fail, molding the conduct and market structure of the crude oil industry. Throughout history, developed nations have benefited from low oil prices, but things shifted since oil prices began to rise, which is more beneficial for the developing nations that actually possess and produce the raw material. Nevertheless, Ecuador, a victim of the Dutch disease due to its heavy reliance on crude oil as a primary product, has not achieved broad-based development.
Ecuador, Oil Politics and Economics, OPEC, Yasuni, ITT Initiative, Chevron, Ecuador's Economic History, Refineria del Pacifico
Bachelor of Science in Business Administration
Sierra Lana, Paúl Andrés, "The Intersection of Economics and Politics in a Small OPEC Country: the Case of Ecuador, 1990 - March 2014" (2014). Honors Theses. 255.
Dr. Esteban Santos
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