Ecuador

Abstract

The social and economic development of Ecuador has been uneven in recent decades. Progress has been made on some dimensions of human development, but stagnation or deterioration has occurred in other areas. This chapter seeks to assess the feasibility of achieving the United Nations’ Millennium Development Goals (MDGs) by 2015, using a dynamic general equilibrium framework. The general equilibrium focus is especially relevant considering that the achievement of these goals has dynamic effects on the economy as a whole. It creates changes in the skill composition of the labour force, for example, and produces endogenous growth effects, which may make it easier to achieve these goals. At the same time, however, the upfront public spending efforts needed to meet the goals could generate macroeconomic trade offs and hence obstacles to sustained growth and poverty reduction. The objective of the analysis is to generate results regarding the level of public spending that would be required to achieve the goals, to assess the viability of alternative forms of financing the required increase in public spending, and to identify possible tradeoffs.