Territorial growth in Ecuador: the role of economic sectors

Abstract

Ecuador is a developing country characterized by severe territorial disparities reflected in a heterogeneous economic and social geography that risk to undermine a future balanced development. The paper analyses for the first time the impact of main economic sectors on sub-national growth process in the context of the “Changing Productive Matrix” policy objective, which aims to achieve productive diversification based on adding value through de-concentration of production from the existing poles to the whole territory. The estimation is performed using new data provided by Central Bank of Ecuador for the period 2007-2014 through a panel econometric technique. The results prove that, despite the strategy aimed at changing the productive matrix pushed by the government, this process is far to be completed. In particular, the country is too much focused on low productive sectors which depress economic growth and the manufacture and financial services sectors are too much concentrated in few areas, preventing their possible positive effect into the whole economy.