And they\’re bloody boasting about this performance?

By rejecting the neoliberal recipes of privatisation, structural adjustment and curtailed demand, we have grown by 4.3% over the last five years despite the global slowdown. Central to this growth, and to the reduction of unemployment to the lowest rate in the region, has been public investment, which at 14% in 2011 is the highest in Latin America.

Dear God. Sub-Saharan Africa is growing by 5.5% a year without much if any public investment in anything.

With 14% of GDP in said public investment Ecuador should be roaring away at a much higher rate than that. They\’re boasting about the figures that show what a poor job they\’re doing.

And that\’s even being kind and assuming they\’re talking about 4.3% each year: if it\’s over the five years then they\’re really doing a shite job.

9 thoughts on “And they\’re bloody boasting about this performance?”

  1. Do be fair, Tim. Ecuador has higher GDP per capita than any sub-saharan country except Seerth Efrika. So we’d expect it to grow slower (relatively).

    Not to say it couldn’t be faster than it is.

  2. According to the CIA fact book growth was:
    6.4% in 2008
    1% in 2009
    3.3% in 2010
    8% in 2011
    4% in 2012

    That means over 5 years its grown by 24.6% or 4.93% on average. If you just add up the numbers its 4.54%.

    So it looks like the 4.3% is meant to be annual but its not clear where it came from.

    There’s also the post hoc erg proctor hoc fallacy at work because we don’t know what it would have been with those neo liberal recipes.

  3. The best year in there is 2011.
    – Oil prices rose 40%

    The second best year is 2008
    – Oil prices rose 34%

    Just a quick and dirty calculation, but I make it an 85% correlation between changes in oil price and GDP growth

  4. @ Simon F
    4.3% is, coincidentally, the 5-yr growth rate quoted in the CIA factbook – except it is for the five years 2002-6 before Correa came to power.
    Oil production is 14% of Ecuador’s GDP, so a 40% rise in the oil price would translate into a 5.6% rise in GDP, a 34% rise would translate into a 4.8% rise in GDP. So the rise in oil prices in the two good years accounts for 70-75%of GDP growth in those years.

  5. Richard,

    Yes. I probably should have done that rather than working out compound growth and dividing by the number of years. Too much haste between other jobs!

  6. Basically they just stole a load of money from creditors. If I was spending 24% of my income on a mortgage and I could unilaterally reduce this to 4%, my economy would do very well in the short run. The problem is that further external financing is going to be difficult. The Ecuadoreans ran a current account deficit in 2010 and 2011 and a trade deficit between 2008-2011 (latest World Bank data). So sooner or later they are going to run into financing constraints.

  7. Pingback: Quick, a post about anything other than Thatcher: Ecuador’s performance is even more impressive that you realise | Left Outside

  8. Since their population growth rate has been 1.5%, growth in GDP per capita has been ~2.8%. Which is only slightly above the long-run average for developed countries. It’s nothing to write home about.

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