Dollarization in Ecuador. An interpretation of the facts and results after two decades. Period 2000-2020

Abstract

The objective of the investigation was to interpret the dollarization process in Ecuador, what were the events that led public policy makers to such an extent and what have been its main results. The theoretical developments that support the object of study refer to categories and theories on dollarization, exchange rate regimes, sociology of money, inflation, economic growth, and fiscal policy. A comparative theoretical and statistical analysis (1990-2020) of the pre and post dollarization behavior of the indicators was carried out: macroeconomic, inflationary, productive sectors, labor market, external sector, monetary-financial sector, budgetary fiscal sector, labor market and social indicators keys, which show the most outstanding results of the process. Among the positive aspects, we can point out: Monetary stability with sustained economic growth basically in the first 14 years of dollarization; better performance of the labor market, mostly not adequate; improvement in wages and social indicators. Being the most significant achievement to contain and reduce inflation to one digit. This generated confidence in the different social actors who, beyond the legal provisions, concentrated the possibility of using money only in the dollar, consolidating their hegemony in the imaginations and practices of the population. However, GDP growth does not sustain itself -as evidenced by the crisis that began in 2015 aggravated in 2019-2020 by covid-19; because dollarization is only a policy strategy and, on the other hand, because GDP growth is not supported by an exportable productive structure, in turn depends on the conjunction of other variables such as fiscal policy and in particular on fiscal income, of public spending and indebtedness. Which basically depends on oil exports, variables that are vulnerable to external events.

Keywords: dollarization, inflation, economic growth, macroeconomic variables, fiscal policy Ecuador.