Although its overall impact has fallen in recent years, money sent home from Ecuadorians living abroad — or remittances, as the payments are commonly known — remains a vitally important part the country’s economy.
In 2016, remittances totaled $2.6 billion, mostly from the U.S. and Spain, accounting for 2.7% of Ecuador’s Gross Domestic Product (GDP). By contrast, remittances in 2001 totaled $3.1 billion, but represented almost 9% of the GDP of a much smaller national economy.
“These payments are still very important to the country but they are a much smaller component of the overall economy than they were in the past,” says Rodrigo Mendieta, an economics professor at the University of Cuenca. “Two decades ago, the country would have had a difficult time surviving without them.”
Although there are no local statistics provided by the Ministry of Finance, Mendieta says the importance of remittances is much greater in southern Ecuador than in the rest of the country. “On a per capital basis, Azuay, Canar, and Loja provinces sent the largest number of residents abroad in the 1990s and early 2000s than other regions,” he says. “In some communities, such as Giron and Gualaceo, remittances are 10%, 15% or more of the economy.”
According to a 2012 study by Ecuador’s census office, as much as 20% of the population of some rural communities left the country in the in the 1990s to find work in North America and Europe.
Mendieta says the payments have had an important “palliative” affect for the country. “Over the years, the economies of the U.S., Canada and Europe have remained strong while Ecuador’s economy has suffered,” he says. “The money from abroad was a life saver in hard times.”
Through the first six months of 2017, Ecuador has received $1.325 billion in remittances, which represents a 2.7% increase over 2016. The finance ministry estimates the 2017 total to reach $2.75 billion.