High hopes for next president of Ecuador

Income distribution main concern during Correa's studies at UI

By Renata Johnson

Ecuador is set for a fresh start on Jan. 15, 2007, when newly elected President Rafael Correa will begin his mandate. Hoping to redistribute the country’s oil wealth, Correa is an economist who solidified his ideas during his Ph.D. studies at the University of Illinois, Champaign-Urbana.

Between 1997 and 2001, Correa was a doctoral student in the department of economics, where he focused on international economics and economic development.

“He did first-rate graduate work as a student, getting a solid grip on modern economic theory and quantitative methods,” said UI professor of economics Werner Baer, who was also Correa’s dissertation adviser. “Even in his student days he was concerned about income distribution.

One of Correa’s dissertation essays dealt with the impact of neoliberalism on Latin American growth and income distribution. Although Ecuador is the second largest oil exporter in Latin America, nearly 70 percent of its 13 million inhabitants live in poverty, according to UNICEF. Correa has been critical of Ecuador’s dollarization and the “Washington Consensus,” a doctrine that calls for trade liberalization, deregulation, privatization and fiscal discipline as a way to promote economic growth.

For Pilar Eguez, a UI doctoral` student in anthropology, Correa's election represents "a backlash of the Ecuadorians and the Latin Americans to the consequences that nearly 25 years of so-called structural adjustment policies have left in our countries." Eguez referred to the growing inequality, poverty, and the economic vulnerability that have plagued the country, despite its oil reserves.

Eguez, who is also from Ecuador and has a BA in economics, was an active supporter of Correa's campaign via the Internet. "Correa was one of the few economists at that time who questioned this economic policy [dollarization] and its sustainability in light of other experiences in Latin America, such as the Argentinean convertibility," she said. Eguez worked at Ecuador's Ministry of Economy, in a consultancy for the United Nations Development for Women, right after Correa carried on several reforms during his short stint as minister of economy.

"I was working precisely in one of these reforms (.) through which a segment of the fiscal budget fed by oil revenues was redistributed towards education, culture, health care, housing, research, and away from servicing external debt," Eguez said.

Correa resigned the position as economy minister in less than four months, claiming lack of support from then president Alfredo Palacio. Although it is difficult to foresee what any presidency will be like, one thing seems to be certain: Correa has been coherent with his ideals.

“He [Correa] has always been concerned by the uneven distribution of income and his efforts will be to ameliorate the situation of the poor,” Baer said.  However, “I would be surprised if he followed the lead of Chavez and Morales.” According to Baer, Correa believes in the market economy and property rights and shouldn’t be portrayed as a dangerous leftist. “I assume that he will be more like President Lula – market-friendly policies with a concern for more social equity.”

Like many hopeful Ecuadorians who voted for Correa, Eguez said she thinks the prospects for change will be strong.  However, as  Ecuador expert and UI anthropology emeritus professor Norman Whitten said, citing former president José María Velasco Ibarra, “Ecuador is a very difficult country to govern.” The problem lies in the power structure in which few people stay at the top and the vast poor population are trapped underneath it.

“Whether Correa can maneuver in this environment of ‘nongovernability,’ and indeed govern, remains to be seen,” Whitten said. “If he can, Ecuador may become a model of transformation hemisphere wide.”

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Papers written by Rafael Correa at the University of Illinois:

  • “One Market, One Currency: The Economic Desirability of a Monetary Union for the CAN”. University of Illinois. May 2001.
  • “Destabilizing Speculation in the Exchange Market: The Ecuadorian Case”. University of Illinois. January  2000.
  • “Is Institutional Change Endogenous? A Critical View of the Political Economy of the Reforms: The Ecuadorian Case”. University of Illinois. August 1999.
  • “The Ecuadorian ISI Revisited”. University of Illinois. May 1999.