Ecuador Trade Relations with Other Countries on Total Trade and Specific Products: A Quantitative Analysis using Trade Indices

The above section were on trade in climate smart goods of Ecuador and its comparative analysis with other trading partners. This section will deal with Ecuadorian total trade and some identified specialized products. Such specialized products and markets will be identified using Revealed Comparative Analysis and Export Specialization index at two digits and at 6 digit HS levels given in the WITS data base. Export share in World Exports, Export Diversification and Hirchman-Herfindahl indices for trade concentration, Trade Intensity Index(intensity of trade relations), Market Concentration index(share of markets in total exports), and Trade Complementarity Index will be worked out for Ecuador on the basis of its total trade. Product Concentration will tells us the share of Products (identified specialized products) in Ecuador's total exports.

Trade Indices to Understand Ecuador's Integration to World Markets

We work out export share of Ecuador's total Exports in World Exports from 2002 through 2010. Table VII shows the export share in percentage terms for Ecuador. It has increased from mere 0.0867 % in 2002 to 0.12% in 2010. The positive trend is a healthy sign but is too low to have its substantial presence in the international markets.

Table VII: Export Share of Ecuador in World Exports 2002 through 2008

Year

Export

Share(%)

2002

0.0867

2003

0.0864

2004

0.0873

2005

0.0998

2006

0.1095

2007

0.1039

2008

0.1224

2009

0.1158

2010

0.1218

Table VIII shows the export share of some of its trading partners. The table will indicate how other countries have progressed as far as their integration is concerned with the outside world.

Table VIII: Export Share of Some Selected Trading Partners of Ecuador in 2010

Reporter Name

Share in World Exports

Argentina

0.4656

Bolivia

0.0478

Brazil

1.3737

Chile

0.4916

China

10.9722

Colombia

0.2771

Ecuador

0.1217

European Union

11.9287

India

1.5048

Japan

5.0800

Peru

0.2441

Paraguay

0.0316

United States

8.0979

Venezuela

0.4661

Source: Author's work in WITS

China's export share has increased over the years and it has reached to 10.97 % in 2010. EU, Japan and the US share's are respectively 11.92%, 5.08% and 8.09% in 2010. It is to be observed that the share of the developed nations is going down from what it were in 2002 to what it is in 2010 while for most of the developing nations including the Latin American countries, the share although not much is moving up(see Table IX below). China's share has increased at a much faster pace than some of its counterparts (see Table IX below). Mexico share has marginally declined from what it were in 2002 to 2.06% in 2010.

Table IX: Export Share in 2002,2005 and 2010 of Some Selected Countries and Regional Groups

Year

2002

2005

2010

Argentina

0.4377

0.3993

0.4656

Bolivia

0.0235

0.0283

0.0478

Brazil

1.0213

1.1767

1.3736

Canada

4.0663

3.4825

2.6086

Chile

0.2908

0.4035

0.4916

China

5.5874

7.6901

10.9718

Colombia

0.2046

0.2143

0.2771

Ecuador

0.0867

0.0998

0.1217

European Union

14.1610

13.0957

11.9282

Hong Kong, China

3.4684

2.9516

2.7860

India

1.0036

1.5047

Japan

6.8724

5.7526

5.0798

Korea, Rep.

2.7935

2.8766

3.2552

Mexico

2.7620

2.1613

2.0660

Malaysia

1.5992

1.4129

1.3777

Peru

0.1318

0.1731

0.2441

Paraguay

0.0167

0.0316

Singapore

2.0735

2.2347

2.2756

Thailand

1.1363

1.0977

1.3595

Uruguay

0.0320

0.0344

United States

11.5305

8.8747

8.0976

Venezuela

0.4661

Source: Author's work on WITS

Table X works out the market concentration of Ecuador's exports. US has been the top most importers of Ecuador's Exports in 2002, 2005 and 2010. However, it is also observed that the share of the US has declined from 40% or more to around 34 % of Ecuador's exports in 2010. The shares of Ecuador's Latin American partners have increased in 2010 from what it were in 2002. Peru ranks second in terms of Ecuador's exports in all years 2002, 2005 and 2010. Venezuela has become the third important importer. The third rank was of Columbia in 2002. Columbia has become the fifth important trading partner in 2010 after Chile. China has gained entry in top 12 importers of Ecuador while Japan's share in 2010 has increased from what it were in 2002. The table shows the regional orientation of Ecuador's export.

Table X: Market Concentration (Share of Each Markets) of Ecuador's Exports, 2002, 2005 and 2010: Top 12 Importers

Partner Name

MC

Rank

Year

Partners Name

MC

Rank

Year

Partners Name

MC

Rank

Peru

7.4280

2

2005

Peru

8.8040

2

2010

Peru

7.6363

2

Colombia

7.1903

3

2005

United States

50.0689

1

2010

Venezuela

5.5687

3

Korea, Rep.

5.8733

4

2005

Colombia

4.7752

3

2010

Chile

4.8407

4

Italy

5.7441

5

2005

Italy

3.8621

4

2010

Colombia

4.5344

5

United States

40.8605

1

2005

Chile

3.0526

5

2010

United States

34.7486

1

Germany

3.4148

6

2005

Spain

2.1233

6

2010

Italy

3.3300

6

Japan

1.9409

7

2005

Germany

2.0058

7

2010

Japan

2.2983

7

Netherlands

1.7229

8

2005

Netherlands

1.9915

8

2010

Spain

2.0252

8

Chile

1.4764

9

2005

Venezuela

1.2390

9

2010

Netherlands

1.8957

9

Belgium

1.4222

10

2005

France

0.9109

10

2010

China

1.8796

10

Spain

1.3040

11

2005

Brazil

0.9019

11

2010

Germany

1.8311

11

Venezuela

1.2840

12

2005

Belgium

0.7828

12

2010

Belgium

1.3974

12

Source: Author's work in WITS

The study works out RCA index for all the 2 digit industries (out of total of all 96 industries at two digit level, HS system, given in WITS7). Table XI gives the RCA index for industries for which the value of the index is greater than one in 2009. 20 Industries are identified. Ecuador seems to have comparative advantage (produce goods at lower relative costs and prices) in production of 20 industries out of 96 industries. These are potential sector for inviting FDI into Ecuador. Table XII gives the list of industries with their names. Appendix Table III lists the trade of Ecuador of such 20 specialized products with the MERCOSUR and ANDEAN regional group. Ecuador has positive trade balance with the above mentioned regional groups, China, Mexico, United Sates, Japan and India.

Table XI: Identification of Specialized Products: RCA Index for Ecuador in 2009

Industry Code

Revealed Comparative Analysis

2 Digit Industry

RCA

24

1.0263

65

1.1843

17

1.2034

78

1.2807

14

1.4324

07

1.5326

09

1.5355

44

1.5724

23

1.7712

18

10.7363

03

11.9698

16

16.4153

21

2.0354

06

27.5896

08

27.8566

15

3.6040

27

4.0286

20

4.3668

53

4.9427

58

5.2376

Source: author's work on WITS

Table XII: Identified 20 Specialized Products (through RCA analysis) of Ecuador, 2009

HS 2002 Product Code

HS 2002 Product Description

03

Fish & crustacean, mollusc & other aquatic invert

06

Live tree & other plant; bulb, root; cut flowers

07

Edible vegetables and certain roots and tubers.

08

Edible fruit and nuts; peel of citrus fruit or me

09

Coffee, tea, mati and spices.

14

Vegetable plaiting materials; vegetable products

15

Animal/veg fats & oils & their cleavage products;

16

Prep of meat, fish or crustaceans, molluscs etc

17

Sugars and sugar confectionery.

18

Cocoa and cocoa preparations.

20

Prep of vegetable, fruit, nuts or other parts of

21

Miscellaneous edible preparations.

23

Residues & waste from the food indust; prepr ani

24

Tobacco and manufactured tobacco substitutes

27

Mineral fuels, oils & product of their distillati

44

Wood and articles of wood; wood charcoal.

53

Other vegetable textile fibres; paper yarn & wove

58

Special woven fab; tufted tex fab; lace; tapestri

65

Headgear and parts thereof.

78

Lead and articles thereof.

Source: Author's work in WITS

Table XIII below gives the RCA index for Ecuador in 2002 , 2005 and 2010 to indicate whether there is any substantial shift of comparative advantage in production of goods.

Table XIII:RCA Advantage of Ecuador in 2002, 2005 and 2010

Year

Industry Code

RCA

Year

Industry Code

RCA

Year

Industry Code

RCA

2002

12

1.1637

2005

44

1.0141

2010

56

1.0449

2002

14

1.1903

2005

24

1.0381

2010

17

1.0864

2002

44

1.2165

2005

78

1.0458

2010

78

1.1264

2002

65

1.3479

2005

69

1.1481

2010

07

1.3540

2002

15

1.7219

2005

09

1.5366

2010

65

1.4449

2002

69

1.7308

2005

07

1.9223

2010

44

1.7301

2002

09

1.9534

2005

16

17.8527

2010

09

1.7969

2002

03

11.6883

2005

53

2.1746

2010

23

1.9058

2002

18

13.6834

2005

21

2.3173

2010

03

12.6097

2002

07

2.0565

2005

17

2.3346

2010

16

14.2116

2002

21

2.3609

2005

15

2.4418

2010

21

2.0172

2002

17

2.8140

2005

08

24.1755

2010

14

2.0453

2002

16

24.9969

2005

06

27.5877

2010

15

2.6877

2002

53

3.4165

2005

20

4.1036

2010

08

24.0915

2002

06

36.6455

2005

27

5.0944

2010

06

28.5055

2002

20

4.2868

2005

18

8.5724

2010

59

3.4449

2002

08

43.8400

2005

03

9.8650

2010

53

3.6912

2002

27

5.8441

2010

27

4.2451

2010

20

4.2816

2010

18

9.6605

Source: Author's work in WITS. Please see Appendix III for the entire list of HS2002 Product codes mentioned in the Table above.

It seems that industry code 56(Wadding, Filtered and Non-Woven Yarns) and 59(Impregnated, Coated, Covered, Laminated Textile Fabrics) are added in 2010 while industry code 24(Tobacco and Manufactured Tobacco Substitutes), 69(Ceramic Products), 58(Special Woven Fabrics and Tufted Textile Fabrics) and 12(Oilseeds, Olage, Fruit) were not present in 2010 list. There were 18 industries in which Ecuador had an advantage in 2002, 17 in 2005 and 20 in 2010. There is not much substantial observational shift of comparative advantage from 2002 through 2010.

RCA is worked for industries disaggregated at 6 digit levels. Appendix Table IV and V lists 213 and 238 industries out of more than 5300 industries in which Ecuador has comparative advantage for production of industries disaggregated at 6 digit level in 2009 and 2010 respectively. Appendix Table XI lists the products in which Ecuador has advantage at 6 digit disaggregated level. For the complete list of more than 5300 industries disaggregated one would need to log on to the WITS. It is also available with author on demand.

Table XIV gives the RCA figures for 20 specialized industries in all years from 2002 through 2010. All industries except industries, 23(Residues and Waste from Food Industries), 24(Tobacco and Manufactured Tobacco Substitutes), 58(Special Woven Fabrics, tufted textile fabrics, lace, tapestries, trimmings, embroidery, 65(Headgears and Parts thereof) and 78 (Lead and articles thereof) show uniform advantage in all years from 2002 through 2010. The figures show that Ecuador gained advantage in industry code 78 in 2009. Before that year, the value of RCA for industry code 78 was less than one. For industry code 58 one can see that RCA has been greater than one in 2008 and 2009 only. One may conclude that for all other industries, 23, 24 and 65, Ecuador has in some years lost its comparative advantage while in some other years it has gained advantage. Ecuador needs to focus attention on such industries so that they remain in advantage permanently. The study identifies the following industries for further diversifying industrial structure of Ecuador for its gain in future. These are Industrial Codes- 61(Articles of apparel and clothing accessories, knitted or crocheted), 62(Articles of apparel and clothing accessories, not knitted or crocheted),42( Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal), 90(Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof), 84(Electronic appliances), 85(Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles),87 (Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof), 83 (Miscellaneous articles of base metal), 73 (Articles of iron or Steel), 69 (Ceramic products), 30 (Pharmaceutical products),29(Organic chemicals), Climate Smart Goods- 840510(Clean Coal Technologies), 850720,853710 and 854140(Solar Photovoltaic systems), 848340 and 848360( Wind Power Technologies), 853931(Energy Efficient Lighting), among others. In services sector, Tourism, IT and ITES, Hospital services, Education and Training Services( training of English), Cultural Services, Knowledge Processing Outsourcing and Financial Analytics, Infrastructure services have lot of potential of bring the necessary foreign exchange and stability into the system .Ecuador need to diversify into the following industries and services for higher and more stable export earnings, job creation and learning effects, and the development of new skills and infrastructure that would facilitate the development of even newer export products.

Table XIV: Revealed Comparative Advantage Index for Ecuador 2002 through 2010 for 20 Specialized Products

Product

2002

2003

2004

2005

2006

2007

2008

2009

2010

03

11.6883

10.5253

9.3944

9.8650

11.0741

11.1779

11.1140

11.9698

12.6097

06

36.6455

29.8957

31.1715

27.5877

25.9361

22.9925

24.7057

27.5896

28.5055

07

2.0565

1.4151

1.6098

1.9223

1.6855

1.8363

1.5647

1.5326

1.3540

08

43.8400

37.6461

30.4610

24.1755

23.0958

22.6919

20.7115

27.8565

24.0915

09

1.9534

1.5805

1.5842

1.5366

1.5669

1.0087

0.7538

1.5355

1.7969

14

1.1903

1.2500

1.1539

0.9840

1.0566

1.0886

1.2185

1.4324

2.0453

15

1.7219

2.0961

2.1892

2.4418

2.0456

3.0358

2.9578

3.6040

2.6877

16

24.9969

24.5522

17.5857

17.8527

18.3532

17.5232

19.6279

16.4153

14.2116

17

2.8140

3.1505

3.1277

2.3346

2.7964

1.8538

1.9903

1.2034

1.0864

18

13.6834

11.5253

9.2092

8.5724

7.1464

8.4223

7.6239

10.7364

9.6605

20

4.2868

4.7454

4.3384

4.1036

4.4902

4.1451

3.3232

4.3667

4.2816

21

2.3609

2.9730

3.1367

2.3173

2.0185

2.8596

2.1022

2.0354

2.0172

23

0.9489

1.0253

0.9881

0.9134

1.4459

1.7928

1.3661

1.7712

1.9058

24

0.9209

0.8379

0.9702

1.0381

0.9252

1.1001

0.7755

1.0263

0.9833

27

5.8441

5.2890

6.0168

5.0944

4.3479

4.9464

3.9622

4.0286

4.2451

44

1.2165

1.3933

1.1123

1.0141

1.0197

1.2192

1.2865

1.5724

1.7301

53

3.4165

2.8811

2.9209

2.1746

1.9975

2.3160

4.3085

4.9427

3.6912

58

0.0227

0.0257

0.0546

0.0376

0.0667

0.0585

1.5798

5.2376

0.7620

65

1.3479

1.1471

1.2946

0.9764

0.9187

0.8605

0.7522

1.1843

1.4449

78

0.2037

0.3321

0.3734

1.0458

0.2919

0.8428

0.6196

1.2807

1.1264

If one does a similar RCA analysis for India in 2009 to find its specialized products one gets a list of 37 industrial products out of list of 96 industries disaggregated at 2 digit levels in 2009. 40 industries are identified in 2010 using RCA analysis (see Table XV below).

Table XV below lists the industries in which India has comparative advantage in 2009 and 2010.

Serial Number

Country

Year

HS 2 Digit Industrial

Code(2002)

RCA

Country

Year

HS 2 Digit Industrial

Code(2002)

RCA

Serial Number

1

India

2009

78

1.0026

India

2010

12

1.0708

1

2

India

2009

74

1.0343

India

2010

07

1.1670

2

3

India

2009

08

1.0827

India

2010

72

1.2150

3

4

India

2009

27

1.0898

India

2010

64

1.2222

4

5

India

2009

72

1.1029

India

2010

02

1.2277

5

6

India

2009

07

1.1615

India

2010

78

1.2621

6

7

India

2009

64

1.2663

India

2010

27

1.3219

7

8

India

2009

58

1.2734

India

2010

36

1.3759

8

9

India

2009

73

1.3178

India

2010

58

1.3861

9

10

India

2009

36

1.4148

India

2010

28

1.4906

10

11

India

2009

32

1.4203

India

2010

32

1.5344

11

12

India

2009

03

1.4665

India

2010

29

1.5960

12

13

India

2009

29

1.6272

India

2010

17

1.6227

13

14

India

2009

68

1.7851

India

2010

89

1.6481

14

15

India

2009

89

1.8117

India

2010

24

1.7216

15

16

India

2009

24

1.8144

India

2010

73

1.7482

16

17

India

2009

41

1.9024

India

2010

68

1.7693

17

18

India

2009

42

2.2586

India

2010

41

1.7829

18

19

India

2009

23

2.3032

India

2010

61

1.8412

19

20

India

2009

25

2.3677

India

2010

42

1.8722

20

21

India

2009

61

2.3716

India

2010

03

1.9796

21

22

India

2009

79

2.5915

India

2010

25

2.0783

22

23

India

2009

10

2.6178

India

2010

74

2.3475

23

24

India

2009

62

2.8483

India

2010

10

2.4140

24

25

India

2009

55

3.3991

India

2010

23

2.4639

25

26

India

2009

67

3.5983

India

2010

26

2.5908

26

27

India

2009

09

3.6304

India

2010

62

2.6105

27

28

India

2009

54

3.6755

India

2010

67

2.9956

28

29

India

2009

26

3.8056

India

2010

79

3.3566

29

30

India

2009

63

3.8076

India

2010

55

3.5829

30

31

India

2009

14

3.9922

India

2010

54

3.6503

31

32

India

2009

53

5.1175

India

2010

63

4.1009

32

33

India

2009

52

5.4369

India

2010

09

4.1532

33

34

India

2009

13

5.5958

India

2010

71

5.1608

34

35

India

2009

57

5.8824

India

2010

14

5.6180

35

36

India

2009

50

6.6331

India

2010

57

6.3270

36

37

India

2009

71

7.0158

India

2010

50

6.8136

37

India

2010

53

7.7707

38

India

2010

52

8.3618

39

India

2010

13

8.5674

40

Source; Author's work in WITS

India's Advantage lies in 37 Products from industries in Agriculture, Industry and Petroleum in 2009. Such Products include Natural/Cultured Pearls, Precious Stones and Metals, Silk, Carpets and other Textile Floor Covering, Articles of Apparel and Clothing, Mineral Fuels, Oils and Products of Distillery, Iron and Steel, Organic Chemicals, Ships, boats and Floating Structures, Zinc and articles there of, Ores, Slag and ash, Cotton, Coffee, Tea and Spices, Articles of Leather; saddlery, Raw hides and Skins, Tobacco and manufactured tobacco products, Fish and Crustacean,, Edible Fruits, vegetables, among others. These are potential sectors for inviting FDI into India.

Common Industries where in Ecuador and India have RCA>1 in 2009 and have potential for trade (may be intra industry trade). These include Lead and articles there of(78),Edible fruit and nuts;peel of citrus fruit or me(08),Mineral fuels; oils and products of distillery(27),Edible vegetables and certain roots and tubers(07),Special woven fabrics; tufted textile fabrics; lace; tapestries(58), Fish and Crustacean; mollusk and other aquatic invertebrates(03), Tobacco and Manufactured tobacco substitute(24), Residues and waste from the food industry(23), Coffee; Tea and Spices(09) and Vegetable plaiting materials; vegetable products(14)8.

Table XVI works out export specialization index for Ecuador on the basis of 20 specialized products of Ecuador in 2002, 2005 and 2010. The index helps us to identify markets for the 20 specialized products of Ecuador.

Table XVI: Export Specialization Index: Identification of Markets for 20 Specialized Products in 2002, 2005 and 2010.

Year

ES

Country

Ind.

Year

ES

Country

Ind.

Year

ES

Country

Ind.

2002

1.0886

Colombia

18

2005

1.0119

Japan

53

2010

1.0102

Japan

53

2002

1.1415

Germany

18

2005

1.0767

Canada

06

2010

1.0206

Chile

03

2002

1.2038

Japan

18

2005

1.1295

Chile

06

2010

1.0864

United States

20

2002

1.2067

Venezuela

16

2005

1.1824

Brazil

16

2010

1.1345

Argentina

08

2002

1.3463

Netherlands

06

2005

1.2247

Chile

16

2010

1.1418

Italy

16

2002

1.4742

Mexico

17

2005

1.2937

Netherlands

06

2010

1.1808

United States

16

2002

1.5152

Colombia

16

2005

1.2956

Colombia

16

2010

1.1946

Canada

06

2002

1.5397

United States

20

2005

1.3906

Italy

16

2010

1.2617

Chile

06

2002

1.5545

Brazil

17

2005

1.4123

United States

20

2010

1.2782

Germany

08

2002

1.6195

Canada

06

2005

1.4631

Germany

08

2010

1.2917

Brazil

17

2002

1.6952

Chile

16

2005

1.7296

Netherlands

16

2010

1.3809

Venezuela

16

2002

1.7209

Belgium

08

2005

1.7347

Chile

08

2010

1.4493

Colombia

16

2002

1.8491

Japan

08

2005

2.1660

United Kingdom

53

2010

1.4777

Belgium

08

2002

2.3358

Chile

08

2005

3.0202

United States

27

2010

1.5364

Mexico

18

2002

2.5269

United States

27

2005

3.3201

United States

18

2010

1.6469

Chile

08

2002

2.5850

Germany

08

2005

3.3608

Spain

16

2010

1.8541

United States

27

2002

2.6357

Italy

16

2005

3.6682

United States

16

2010

1.8943

Italy

14

2002

2.8243

Spain

16

2005

3.8911

Italy

08

2010

2.1967

Spain

16

2002

3.3827

United Kingdom

53

2005

5.5150

United States

03

2010

2.2576

United States

18

2002

5.7679

United States

18

2005

7.8791

United States

08

2010

2.2747

Brazil

16

2002

7.6142

Italy

08

2005

17.8697

United States

06

2010

2.8907

United Kingdom

53

2002

8.8523

United States

03

2010

3.5259

Italy

08

2002

12.3736

United States

16

2010

5.3344

United States

03

2002

21.0895

United States

08

2010

6.5370

United States

08

2002

26.7303

United States

06

2010

12.3230

United States

06

Source: Author's work on WITS. 20 specialized products can be identified from the Appendix List II below or Table XII above.

The table indicates that Ecuador is targeting the US markets in 2010 for exports of Fish, Cut Flowers and Live Trees, Edible Fruits, Preparation of Meat and Fish, Cocoa and Cocoa Preparations and Mineral fuels and products from distilleries, Japan and the United Kingdom for Other Vegetable Textile Fibres, Chile for Fish, Fruits and Live trees and Cut flowers, Germany and Italy for Edible Fruits and Nuts, Spain for Preparation of Meat and Fish, Brazil for Preparation of Meat and Fish and Sugar and Sugar Confectionaries, Italy for Vegetable Plaiting Material and for Preparation of Meat and Fish, Columbia and Venezuela for Preparation of Meat and Fish, Canada for Live trees, Bulb root and Cut flowers, Mexico for Cocoa and Cocoa Preparations, among others. Since 2002, Ecuador has probably lost its competitiveness since 2002 in providing Cocoa and Cocoa Preparations and Preparation of Vegetables and Fruits in the US Markets.

Table XVII given below gives the Trade Complementarity Index for Ecuador based on trade data available at 6 digit disaggregated levels for years 2002, 2005, 2009 and 2010. The index shows how well the structures of a country's imports and exports match. The index is zero when no goods are exported by one country or imported by the other and 100 when the export and import shares exactly match. It is observed that Lao PDR has the highest value of the index for years 2002(61.01), 2009(56.45) and 2010(54.01). Bolivia has the highest value in 2005(56.45). Hence, it seems that both these countries, among all, have the matching of their products with Ecuador. In 2009, Columbia stood second(47.28) after Lao followed by East Asian Country Cambodia, followed by Bolivia, Malta, Lithuania, Netherlands, Italy, India and then Chile. In 2010, Lao tops the list followed by Cyprus, Slovenia, Estonia, Argentina, Paraguay, Cambodia, Netherlands, India, Bulgaria, Finland, Italy and Peru. Bolivia, Chile, Peru, Argentina, Brazil, Paraguay, Venezuela and Colombia figure up in top 15 countries on the list based on decreasing value of the index in at least one of the years- 2002,2005,2009 and 2010. Also, one finds that except for few countries the position of trading partners in terms of the indices is not fixed. There may be a case for aligning Ecuador with the Baltics in Europe and some it's trading partners like Netherlands, Denmark, Spain and Italy and/ Or some of the East Asian Nations like Lao and Cambodia or with the Medditarrean Countries like Malta and Cyprus. In Latin America, Ecuador may have bilateral and regional economic agreements with Bolivia, Peru, Columbia and Chile. The negotiations are generally done at 6 Digit level. One can always work out the Trade Complementarity Index at 2 digit levels which may show entirely different trading partners which have matching of products with Ecuador.

Table XVII: Trade Complementarity Index based on trade data at 6 Digit Industry Level Disaggregation in 2002, 2005, 2009 and 2010

Year

Partner Name

TC

Year

Partner Name

TC

Year

Partner Name

TC

Year

Partner Name

TC

2002

Lao PDR

61.0134

2005

Bolivia

56.4540

2010

Lao PDR

54.0195

2009

Lao PDR

50.3504

2002

Cambodia

51.4937

2005

Lao PDR

54.7768

2010

Cyprus

52.9170

2009

Colombia

47.2810

2002

Venezuela

48.1497

2005

Cambodia

51.7356

2010

Slovenia

49.9911

2009

Cambodia

44.2188

2002

Cyprus

46.2069

2005

Lithuania

42.6484

2010

Estonia

49.7902

2009

Bolivia

42.4711

2002

Bolivia

44.6476

2005

Japan

39.3796

2010

Argentina

48.0829

2009

Malta

35.5169

2002

Paraguay

44.6113

2005

Cyprus

39.2230

2010

Paraguay

47.3708

2009

Lithuania

33.3916

2002

Brazil

44.1044

2005

India

36.4010

2010

Cambodia

47.3468

2009

Nether lands

33.1510

2002

Lithuania

41.7279

2005

Italy

35.5024

2010

Netherlands

34.3455

2009

Italy

31.5086

2002

Chile

39.5744

2005

Peru

34.5452

2010

India

33.3082

2009

India

31.0422

2002

Malta

37.7396

2005

Netherlands

34.5101

2010

Bulgaria

32.8666

2009

Chile

31.0134

2002

Estonia

37.6796

2005

Chile

33.4700

2010

Finland

31.4221

2009

Bulgaria

30.9006

2002

Italy

37.4275

2005

Bulgaria

32.7020

2010

Italy

30.9372

2009

Peru

29.6508

2002

Netherlands

37.1014

2005

Korea, Rep.

32.4110

2010

Peru

30.1552

2009

Cyprus

29.1569

2002

Peru

37.0375

2005

Romania

30.9658

2010

Malta

30.0624

2009

Finland

28.9188

2002

India

36.0716

2005

Slovak Republic

30.8191

2010

Lithuania

29.8489

2009

Greece

28.3108

2002

Portugal

35.3516

2005

France

30.5101

2010

Chile

29.8122

2009

Poland

28.0446

2002

Slovak Republic

35.3347

2005

Poland

30.1079

2010

Venezuela

29.4319

2009

France

27.5868

2002

Romania

35.2127

2005

Belgium

29.8745

2010

Greece

29.2401

2009

Korea, Rep.

27.1422

2002

Luxembourg

35.2058

2005

Spain

29.7165

2010

Poland

29.0683

2009

United Kingdom

27.1411

2002

France

35.0698

2005

Greece

29.6118

2010

United Kingdom

28.7446

2009

Belgium

27.0256

2002

Vietnam

35.0163

2005

Thailand

29.4536

2010

Belgium

27.8698

2009

Sweden

26.6918

2002

Finland

34.9237

2005

Portugal

29.3838

2010

Sweden

27.5862

2009

Vietnam

26.5145

2002

Japan

34.8780

2005

Malta

28.8375

2010

United States

26.6851

2009

Luxembourg

25.8696

2002

Korea, Rep.

34.8741

2005

United Kingdom

28.6780

2010

Vietnam

26.6692

2009

Denmark

25.7351

2002

Belgium

34.8726

2005

Sweden

27.8344

2010

Portugal

26.6562

2009

Spain

25.6851

2002

Uruguay

34.2956

2005

Singapore

27.7067

2010

Korea, Rep.

26.5278

2009

Japan

25.3574

2002

Spain

34.2752

2005

Slovenia

27.6523

2010

France

26.3763

2009

Portugal

25.3443

2002

Poland

34.2405

2005

Indonesia

27.6208

2010

Luxembourg

26.3489

2009

United States

25.3161

2002

Indonesia

34.1628

2005

Finland

27.4686

2010

Spain

26.1393

2009

Brazil

25.3120

2002

Bulgaria

33.9150

2005

Venezuela

27.3782

2010

Denmark

26.0023

2009

Austria

25.1122

2002

Malaysia

33.8085

2005

Germany

26.9713

2010

Slovak Republic

25.9055

2009

Estonia

24.9582

2002

Slovenia

33.6927

2005

Brazil

26.9361

2010

Japan

25.3885

2009

Thailand

24.3163

2002

Singapore

33.5490

2005

United States

26.8516

2010

Brazil

25.3841

2009

Indonesia

24.1075

2002

Latvia

33.2424

2005

Luxembourg

26.8319

2010

Austria

25.2813

2009

Singapore

24.0107

2002

Hungary

33.0848

2005

Uruguay

26.6955

2010

Ireland

24.7865

2009

Ireland

23.9115

2002

Sweden

33.0805

2005

Denmark

26.6372

2010

China

24.6776

2009

Germany

23.8560

2002

Ireland

32.8737

2005

Ireland

26.5930

2010

Germany

24.6096

2009

China

23.8382

2002

United Kingdom

32.8695

2005

Vietnam

26.4480

2010

Bolivia

24.4082

2009

Romania

23.4351

2002

Argentina

32.8128

2005

Austria

26.4369

2010

Romania

24.1219

2009

Slovenia

23.3504

2002

Denmark

32.6524

2005

Czech Republic

26.0536

2010

Indonesia

23.6602

2009

Uruguay

23.2420

2002

Germany

32.6136

2005

China

26.0044

2010

Colombia

23.1250

2009

Slovak Republic

23.1089

2002

Hong Kong, China

32.2943

2005

Latvia

25.8309

2010

Canada

23.0250

2009

Latvia

22.9167

2002

Greece

32.2745

2005

Argentina

24.5830

2010

Hungary

22.3593

2009

Canada

22.3990

2002

Austria

31.9258

2005

Hungary

24.3755

2010

Malaysia

22.3378

2009

Venezuela

21.5366

2002

Czech Republic

31.8645

2005

Estonia

24.2703

2010

Czech Republic

22.2361

2009

Czech Republic

21.2724

2002

China

31.8588

2005

Canada

23.5301

2010

Thailand

22.2055

2009

Argentina

21.0050

2002

Colombia

31.5386

2005

Colombia

23.2440

2010

Singapore

22.0753

2009

Hungary

20.9640

2002

Thailand

31.0234

2005

Paraguay

22.5280

2010

Latvia

20.7431

2009

Malaysia

20.0406

2002

United States

30.3166

2005

Hong Kong, China

21.3572

2010

Uruguay

20.5201

2009

Paraguay

19.6461

2002

Canada

28.3059

2005

Mexico

19.8466

2010

Hong Kong, China

19.0107

2009

Hong Kong, China

17.1633

2002 Mexico 27.9528

2005

Malaysia 19.6995

2010

Mexico 18.4531

2009

Mexico 17.0487

Source: Author's work in WITS

Table XVIII gives the Trade Intensity Index for Ecuador in 2002, 2005 and 2010.An index of more (less) than one indicates a bilateral trade flow that is larger (smaller) than expected, given the partner country's importance in world trade. We find that in year 2010, Peru, Venezuela, United States, Uruguay, Bolivia, Columbia, Chile, Argentina, Italy and Spain, all had intense trade relations with Ecuador. All other countries listed in 2010 have potential to increase trade relations with Ecuador (have values of index less than one). To name few are Japan, Malaysia, Belgium, Netherlands, France, Mexico, Germany, among others. The list of 2010 is common with other years except one finds that Ecuador does not have intense trade relations with Brazil in 2010. Ecuador may need to rethink their trade policies with the fast growing Brazil and South Korea.

Table XVIII: Trade Intensity Index (T) for Ecuador in 2002, 2005 and 2010

Year

Partner Name

T

Year

Partner Name

T

Year

Partner Name

T

2002

Peru

72.0119

2005

Bolivia

3.9427

2010

Peru

39.8306

2002

Chile

6.1849

2005

United States

3.3016

2010

Venezuela

21.9345

2002

Venezuela

5.9556

2005

Colombia

27.0774

2010

United States

2.9376

2002

Colombia

43.3249

2005

Chile

11.1877

2010

Uruguay

2.7358

2002

Bolivia

3.9945

2005

Argentina

1.6583

2010

Bolivia

2.2920

2002

Korea, Rep.

3.0628

2005

Brazil

1.2607

2010

Colombia

16.6058

2002

Argentina

2.3994

2005

Italy

1.0587

2010

Chile

13.6759

2002

United States

2.3490

2005

Spain

0.7659

2010

Argentina

1.8007

2002

Paraguay

2.3118

2005

Uruguay

0.7494

2010

Italy

1.0699

2002

Italy

1.5450

2005

Netherlands

0.5363

2010

Spain

1.0041

2002

Uruguay

0.6832

2005

India

0.3456

2010

Japan

0.6947

2002

Spain

0.4948

2005

Mexico

0.3268

2010

Malaysia

0.6529

2002

Belgium

0.4879

2005

Latvia

0.2976

2010

Belgium

0.5871

2002

Netherlands

0.4711

2005

Belgium

0.2820

2010

Netherlands

0.5164

2002

Japan

0.4702

2005

Germany

0.2730

2010

France

0.2824

2002

Germany

0.4320

2005

Canada

0.2015

2010

Mexico

0.2818

2002

Brazil

0.3893

2005

France

0.1834

2010

Germany

0.2709

2002

Poland

0.2778

2005

Slovenia

0.1729

2010

Poland

0.2664

2002

Mexico

0.2241

2005

Japan

0.1640

2010

China

0.2440

2002

United Kingdom

0.1841

2005

Poland

0.1597

2010

Brazil

0.2378

2002

Portugal

0.1694

2005

Paraguay

0.1522

2010

Singapore

0.2113

2002

France

0.1687

2005

United Kingdom

0.1473

2010

Portugal

0.1968

2002

Canada

0.1368

2005

Portugal

0.0850

2010

Bulgaria

0.1867

2002

Romania

0.1244

2005

Denmark

0.0714

2010

Paraguay

0.1861

2002

China

0.0710

2005

Sweden

0.0296

2010

Romania

0.1522

2002

Indonesia

0.0594

2005

Indonesia

0.0281

2010

Lithuania

0.1383

2002

Greece

0.0410

2005

Czech Republic

0.0236

2010

Greece

0.1353

2002

Sweden

0.0372

2005

Estonia

0.0182

2010

Denmark

0.1351

2002

Finland

0.0281

2005

Hong Kong, China

0.0182

2010

Slovenia

0.1287

2002

Luxembourg

0.0272

2005

Korea, Rep.

0.0162

2010

Canada

0.1248

2002

India

0.0216

2005

Finland

0.0154

2010

United Kingdom

0.1241

2002

Hong Kong, China

0.0212

2005

Greece

0.0146

2010

Sweden

0.0468

2002

Denmark

0.0177

2005

Slovak Republic

0.0139

2010

Finland

0.0385

2002

Bulgaria

0.0135

2005

Vietnam

0.0134

2010

India

0.0346

2002

Vietnam

0.0123

2005

China

0.0132

2010

Vietnam

0.0321

2002

Czech Republic

0.0089

2005

Lithuania

0.0125

2010

Austria

0.0316

2002

Slovak Republic

0.0086

2005

Ireland

0.0105

2010

Slovak Republic

0.0297

2002

Austria

0.0073

2005

Malta

0.0080

2010

Ireland

0.0258

2002

Slovenia

0.0066

2005

Bulgaria

0.0079

2010

Korea, Rep.

0.0248

2002

Ireland

0.0047

2005

Thailand

0.0073

2010

Estonia

0.0197

2002

Thailand

0.0046

2005

Singapore

0.0064

2010

Hong Kong, China

0.0167

2002

Singapore

0.0034

2005

Luxembourg

0.0060

2010

Latvia

0.0132

2002

Hungary

0.0028

2005

Austria

0.0058

2010

Malta

0.0107

2002

Lithuania

0.0025

2005

Romania

0.0054

2010

Indonesia

0.0090

2002

Latvia

0.0013

2005

Malaysia

0.0022

2010

Thailand

0.0076

2002

Estonia

0.0008

2005

Hungary

0.0002

2010

Cyprus

0.0061

2002

Malaysia

0.0002

2005

Cyprus

0.0000

2010

Czech Republic

0.0038

2010

Luxembourg

0.0035

2010

Hungary

0.0015

Source: Author's work in WITS

The export diversification (DX) index for a country is defined as: DX = (sum |h - xi|) / 2 Where h. is the share of commodity i in the total exports of country j and xi is the share of the commodity in world exports. The lower the index, the less concentrated are a country's exports. Table XVIX gives the Export Diversification index for Ecuador based on trade data disaggregated at 2 Digit and 6 Digit levels. The figures are on the higher side indicating the concentrated trade of Ecuador. Product concentration index below will confirm that more than half of Ecuador's exports are of Industry 27(Mineral Fuel and Products from the Distillery). Ecuador needs to rethink its trade policy by diversifying its trade into manufactured products and more diversified production structure. Information Technology services, Tourism, Manufacturing of Automobiles, Industrial and Textile Goods and Chemicals are some areas where Ecuador can think of developing niche and cater to European markets. Production and Trade in Climate Smart Goods is another area of focus.

Table XVIX: Export Diversification Index for Ecuador in 2002, 2005 and 2010 based on trade data at 2 and 6 Digit Level Disaggregation

Reporter ISO3

Year

DX

Reporter ISO3

Year

DX

ECU

2002

0.6549

ECU

2002

0.7609

ECU

2005

0.6983

ECU

2005

0.7453

ECU

2010

0.7020

ECU

2010

0.7012

6digit

2digit

Source: Author's work in WITS

Table XVIX and Table XX shows some conflicting trends for Ecuador from 2002 till 2010. While at 2 digit level the Export Diversification index shows that exports are becoming more diversified, but at the 6 digit disaggregation the index indicates that Ecuador trade is becoming more concentrated. Whatever it may be the tariff liberalization at the international level are done at 6 digit levels. Ecuador needs to keep focusing on diversifying its production and trade structure.

Table XX: Export Diversification Index based on trade data at 6 Digit Level of Some Selected Countries in 2002, 2005 and 2010

Country

2002

2005

2010

Argentina

0.6691

0.6292

0.6492

Austria

0.4319

0.4378

0.4506

Belgium

0.4466

0.4569

0.4516

Bulgaria

0.6306

0.6309

0.5689

Bolivia

0.6936

0.6798

0.5607

Brazil

0.5988

0.5824

0.6127

Canada

0.4835

0.4772

0.4829

Chile

0.7685

0.7752

0.7672

China

0.5395

0.5201

0.4890

Colombia

0.6819

0.6554

0.6777

Cyprus

0.6045

0.5729

0.5787

Czech Republic

0.5260

0.5242

0.4954

Germany

0.3154

0.3379

0.3610

Denmark

0.5076

0.4977

0.4787

Ecuador

0.6549

0.6983

0.7020

Spain

0.4460

0.4530

0.4563

Estonia

0.6392

0.5446

0.5268

European Union

0.2859

0.3028

0.3195

Finland

0.6368

0.6058

0.5726

France

0.3596

0.3944

0.4242

United Kingdom

0.3213

0.3315

0.3532

Greece

0.6542

0.6103

0.5830

Hong Kong, China

0.5383

0.5579

0.5677

Hungary

0.4685

0.5135

0.4913

India

0.6552

0.6255

Ireland

0.6736

0.7002

0.6920

Italy

0.4427

0.4408

0.4418

Japan

0.4420

0.4806

0.4777

Cambodia

0.6383

0.6298

Korea, Rep.

0.5177

0.5216

0.5157

Lithuania

0.6425

0.6085

0.5516

Luxembourg

0.6749

0.6678

0.6913

Latvia

0.7193

0.6145

0.5600

Mexico

0.5011

0.5028

0.5109

Malta

0.6532

0.6550

0.6542

Malaysia

0.5913

0.5515

0.5491

Netherlands

0.3797

0.4020

0.4026

Peru

0.7578

0.7714

0.7475

Poland

0.5509

0.5603

0.5316

Portugal

0.5945

0.5184

0.5586

Paraguay

0.6701

0.6672

Romania

0.6538

0.5972

0.5531

Singapore

0.5596

0.5576

0.5422

Slovak Republic

0.6102

0.5164

0.5491

Slovenia

0.6233

0.6195

0.5493

Sweden

0.4832

0.4817

0.4657

Thailand

0.5588

0.5429

0.5359

Uruguay

0.6662

0.6765

United States

0.3348

0.3471

0.3098

Venezuela

0.7114

Vietnam

0.6737

Source: Author's work in WITS

The table XXI below shows the Herfindahl-Hirchman Index (HH) of Trade Concentration. A country with a perfectly diversified export portfolio will have an index close to zero, whereas a country which exports only one export will have a value of 1 (least diversified). The HH index of Ecuador shows that Ecuador's economy has become less diversified in 2010 from what it was in 2002. In general Latin American countries need to focus on diversifying their production and trade structure.

Table XXI: HH Index for Some Selected Countries based on trade data at 2 Digit Level

Country

2002

2005

2010

Argentina

0.0670

0.0645

0.0601

Austria

0.0712

0.0730

0.0641

Belgium

0.0577

0.0574

0.0539

Bulgaria

0.0407

0.0476

0.0486

Bolivia

0.1308

0.2583

0.2668

Brazil

0.0368

0.0444

0.0598

Canada

0.0811

0.0892

0.0881

Chile

0.1111

0.1640

0.2204

China

0.0793

0.1011

0.1093

Colombia

0.1463

0.1707

0.3316

Cyprus

0.0809

0.1097

0.0701

Czech Republic

0.0930

0.0961

0.1027

Germany

0.0896

0.0887

0.0736

Denmark

0.0514

0.0532

0.0443

Ecuador

0.2217

0.3746

0.3288

Spain

0.0725

0.0687

0.0537

Estonia

0.0666

0.0829

0.0680

Finland

0.1162

0.1104

0.0732

France

0.0605

0.0585

0.0506

United Kingdom

0.0811

0.0763

0.0649

Greece

0.0401

0.0376

0.0380

Hong Kong, China

0.1198

0.1661

0.2336

Hungary

0.1370

0.1448

0.1391

India

0.0553

0.0663

Ireland

0.1366

0.1221

0.1399

Italy

0.0630

0.0658

0.0609

Japan

0.1451

0.1354

0.1139

Cambodia

0.5181

0.3812

Korea, Rep.

0.1255

0.1312

0.1095

Lithuania

0.0679

0.0954

0.0777

Luxembourg

0.0851

0.0759

0.0676

Latvia

0.1302

0.0867

0.0620

Mexico

0.1339

0.1265

0.1296

Malta

0.2948

0.2748

0.3192

Malaysia

0.2045

0.1766

0.1381

Netherlands

0.0398

0.0570

0.0484

Peru

0.1063

0.1256

0.1593

Poland

0.0540

0.0595

0.0649

Portugal

0.0585

0.0500

0.0429

Paraguay

0.1789

0.2024

Romania

0.0728

0.0646

0.0725

Singapore

0.2159

0.2011

0.1681

Slovak Republic

0.0770

0.0846

0.1213

Slovenia

0.0637

0.0692

0.0690

Sweden

0.0776

0.0824

0.0663

Thailand

0.0861

0.0848

0.0788

Uruguay

0.0680

0.0844

United States

0.0817

0.0765

0.0558

Venezuela

0.8729

Vietnam

0.1021

Source: Author's work in WITS

The Table XXII confirms the results of the earlier mentioned two tables. In 2010, more than 55% of Ecuador's total exports are of Industrial Code 27(Mineral fuels, oils & product of their distilleries), followed by industrial code, 08(Edible fruit and nuts) covering more than 12% of Ecuadorian exports, followed by 03(Fish & crustacean, mollusc & other aquatic invertebrates (covering more than 6% of Ecuador's exports), followed by Industrial code 06 (Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage) covering 3.49%, Preparations of meat, of fish or of crustaceans, mollusks or other aquatic invertebrates (chapter 16) covering 3.42 %, Cocoa and cocoa preparations (chapter 18) covering 2.41 %, Preparations of vegetables, fruit, nuts or other parts of plants (chapter 20) covering 1.38% in 2010,among others. The trade concentration of Industrial code 27 has increased from more than 40% in 2002 to more than 55% in 2010. The share of industrial code 03 has come down marginally in 2010 from what it were in 2002. The share of industrial code 08(Edible fruits and nuts) has come down from more than 20% in 2002 to more than 12 % in 2010. The share of industrial code 06 has come down from more than 5 % in 2002 to less than 3.50% in 2010. These trend may also indicate the importance of petroleum oil and other services industry (Travel and Tourism, Information Technology, Infrastructure services, among others) in production and trade structure of Ecuador.

Table XXII: Product Concentration of 20 Products in Ecuador's Total Exports in 2002, 2005 and 2010

Year

Ind.

PC

Year

Ind.

PC

Year

Ind.

PC

2002

03

6.9212

2005

03

5.4216

2010

03

6.2553

2002

06

5.8049

2005

06

3.7716

2010

06

3.4949

2002

07

0.7651

2005

07

0.6279

2010

07

0.5066

2002

08

20.0022

2005

08

11.6099

2010

08

12.1166

2002

09

0.2866

2005

09

0.2777

2010

09

0.3932

2002

14

0.0052

2005

14

0.0043

2010

14

0.0110

2002

15

0.5994

2005

15

0.7872

2010

15

1.1744

2002

16

6.8185

2005

16

4.4721

2010

16

3.4523

2002

17

0.6801

2005

17

0.5429

2010

17

0.3159

2002

18

2.5506

2005

18

1.7180

2010

18

2.4197

2002

20

1.5256

2005

20

1.2766

2010

20

1.3855

2002

21

0.7487

2005

21

0.7016

2010

21

0.6458

2002

23

0.3411

2005

23

0.2660

2010

23

0.7253

2002

24

0.2965

2005

24

0.2531

2010

24

0.2277

2002

27

40.8806

2005

27

59.4707

2010

27

55.3032

2002

44

1.2919

2005

44

0.9758

2010

44

1.1758

2002

53

0.1589

2005

53

0.0788

2010

53

0.0752

2002

58

0.0030

2005

58

0.0043

2010

58

0.0599

2002

65

0.0633

2005

65

0.0421

2010

65

0.0584

2002

78

0.0053

2005

78

0.0330

2010

78

0.0500

Source: author's work in WITS

Conclusions from Trade Indices Work

Ecuador need to rethink its trade policy by diversifying its trade into manufactured products and more diversified production structure. Information Technology services, Tourism, Manufacturing of Automobiles, Education and Training Services, Bio combustibles, Housing materials, Pharmaceutical industries, Health Products and Hospital services, Hardware production, Industrial and Textile Goods, Industrial and Textile Goods and Chemicals are some areas where Ecuador can think of developing niche and cater to European markets. Production and Trade in Climate Smart Goods is another area of focus. In particular, study identifies the following industries for further diversifying industrial structure of Ecuador for its gain in future. These are Industrial Codes- 61(Articles of apparel and clothing accessories, knitted or crocheted), 62(Articles of apparel and clothing accessories, not knitted or crocheted),42( Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal), 90(Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof), 84(Electronic appliances), 85(Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles),87 (Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof), 83 (Miscellaneous articles of base metal), 73 (Articles of iron or Steel), 69 (Ceramic products), 30 (Pharmaceutical products),29(Organic chemicals), Climate Smart Goods- 840510(Clean Coal Technologies), 850720,853710 and 854140(Solar Photovoltaic systems), 848340 and 848360( Wind Power Technologies), 853931(Energy Efficient Lighting), among others. In services sector, Tourism, IT and ITES, Hospital services, Education and Training Services( training of English), Cultural Services, Knowledge Processing Outsourcing and Financial Analytics, Infrastructure services, have lot of potential of bring the necessary foreign exchange and stability into the system .Ecuador need to diversify into the following industries and services for higher and more stable export earnings, job creation and learning effects, and the development of new skills and infrastructure that would facilitate the development of even newer export products.

 
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