Ecuador reuses a model from de seventies

The model of import substitution (ISI), which proposes tariff measures and seeks the promotion of the local industry, also known as the model cepalino by its diffusion through the ECLAC (Economic Commission for Latin America and the Caribbean), was applied in Ecuador and Latin America until the mid-1970s, said Roberto Illingworth, former Minister of foreign trade.

According to Illingworth, at that time the model didn’t work because it was poorly conceived and factories were becoming assemblers of products, but not real industries which replaced imports.

Pablo Collazzo, an economist affiliated to the network of microeconomics and competitiveness of Harvard, argued that to make this model work, priority of industry in the country must be identified “but “should be noted that protectionism has an expiration date. It is not just a matter of replacing foreign products by national ones; you have to take into account the investment, the modernization and training”.

Both experts agree that the public and private actors should work in the same direction to compete with the international market and also that this process of change, takes time, 15 years or more depending on the type of products.

The Coordinating Minister of production, Richard Espinosa, mentions that the Ministry seeks solutions and maintains dialogues with national companies to encourage them to take the risk of producing new goods. The problem is the trade balance: a deficit of 1.352 billion.

Bruno Leone, alternate President of the Chamber of industries of Guayaquil, ensures that that objective must encourage entrepreneurship and regulate investment in new businesses, otherwise, few national companies will retain the market of certain products and would be the only ones to receive the benefits of the Government.

According to the Ministry of production, is expected to correct the extensive “paperwork” for the creation of companies and the respective permissions, with the approval of the law for strengthening and optimization of corporate law and the stock market Sector, expected to be approved in a second debate in the Assembly.