The Miraculous Turnaround in Ecuadorian Migration Under President Correa
The Miraculous Turnaround in Ecuadorian Migration Under President Correa
Posted: 12/19/2012 9:11 am
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From the start of his presidency, Correa made reducing unemployment and emigration major priorities. Correa's task was made much more difficult by the fact that Ecuador does not have a sovereign currency (it uses the U.S. dollar as its currency). This meant that it was exposed to the bond vigilantes and had vastly less ability to adopt the stimulus programs that could have reduced unemployment much more quickly. As an economist, Correa was aware of these facts and warned that the use of the U.S. dollar as Ecuador's currency sharply constrained the nation's policy options. Correa warned the nation about the risk but he is a pragmatist rather than a dogmatist and he recognized that readopting a sovereign currency was not politically feasible. He was a great proponent of the creation of a Bank of the South that could finesse some of the problems caused by Ecuador's use of the U.S. dollar, but he realized that this was a long-term project. Correa realized that he would need to create immediately the ability to expand education and jobs programs. He also recognized that Ecuador's sovereign debt added a crippling constraint to Ecuador's ability to grow and reduce unemployment and migration through such programs.
Correa took the three essential steps to minimize this sovereign debt constraint. He repudiated the debt, repurchased the great bulk of the debt at a large discount, and he secured a large loan from China. The loan ensured that Ecuador would continue to have access to credit to fund investments that would increase jobs, increase social mobility and stability, and reduce emigration. This creative and just solution demonstrated the advantages of having a real economist not in thrall of failed dogmas as a national leader.
One of the programs Correa promptly adopted was the "Welcome Home Plan" to encourage emigrants to return to Ecuador. The program proved well-timed because of the Spanish and U.S. crises. The innovative program aids returnees start productive businesses in Ecuador, further reducing unemployment. The symbolism of making such a program a national priority was also highly useful. Ecuador has also adopted reforms under Correa that make it far easier to emigrate to Ecuador.
Correa's task in reducing unemployment and emigration was difficult enough given all these difficulties, but fate conspired to make the task far tougher. Continuing violence in Colombia has led to large-scale emigration to Ecuador. The official numbers are large, but most unofficial estimates by experts place the number of refugees or émigrés at 200,000 - 300,000. That is a staggering burden for a nation like Ecuador and the northern portion of Ecuador, where the Colombians settle, already was less economically developed. This makes Ecuador's success in avoiding recession and reducing unemployment, youth unemployment, and emigration all the more impressive.
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http://www.huffingtonpost.com/william-k-black/the-miraculous-turnaround_b_2329708.html?utm_hp_ref=business&ir=Business