Oil Crisis: From Boom To Indebtedness In Ecuador

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Oil crisis: from boom to indebtedness in Ecuador

From boom to indebtedness

The oil considered as the two sides of a currency, can be a fortune for the people and a misfortune for the State. It all depends on the organization in which the government manages to administer this non -renewable resource. While oil is true, it is an energy resource that has become the engine of the economy around the world because of the various uses it has in people’s daily lives and even the amount of products that are obtained with the transformationof this;But would the government be willing to invest millions of money in oil exploitation until an external debt?

The story begins in the first oil well (Ancón Province of Santa Elena) in which its obtaining at the commercial level is manifested, for the year of 1928 the export was given in marginal amounts, at the end of the 50s the coastal oil vines beganTo decline until the fields of Santa Elena were declared in 1967, the decline of the first wells was such that the country stopped invoicing oil, the government of that time grants licenses in the Ecuadorian northeastern in search of more oil sources of oil, Guevara points out that ” The discovery of hydrocarbons in the Amazon region means that in 1968 the interest of foreign companies is reactivated, granting the Ecuadorian State more than 4 million hectares to seven companies for the exploration and exploitation of oil in the area.”(Guevara, 2001)

The oil boom began an alleged solution of the Ecuadorian economy that was then affected by different factors one of them was to convert private debt into public, when the importation and export of crude oil was carried out that initially favored the country; Thus, Ecuador begins with the eagerness to get more oil to export, however, shortly afterwards it was aggressively and this oil boom began to have flaws because the highest income immediately became greater expenses, especially investment; Dollarization was born that was partially beneficial, although he harmed the population by converting sucres into dollars leaving the money from the frozen people in the banks, the capital of citizens decreased creating excessive losses and a forced migration occurred by not finding economic sources To be able to solve your expenses, thus increasing the entry of money from abroad to Ecuador.

Capital expenditure grew mostly as a result of the increase in the field of salaries and salaries, making the investment expenditure prior to boom increase together with public debt and private debt;leading to the maximum access to international loans as a result of the boom and together with other factors such as the crisis of 1980. According to ‘‘ Ecuador Ecuador ’’ data, it highlights that ‘‘ The first oil boom was almost exclusively used by the State, since private participation in production in 1978 was only 1.1% of the total.’’ (Baquero & Mieles, 1990)

In conclusion, governments in Ecuador invested too much money in oil since they thought that they did obtain a very good reception in the oil boom could continue to exploit this non -renewable resource indiscriminately by the ambition to export oil to other countries and get large sumsof money for the country without having proper knowledge and advice on the limits of extraction. As a consequence instead of generating profits for the country, the level of expenses in terms of oil extraction increased. Each government has the right and the obligation to know the proper use of the resources of a country and even have the necessary advice to be able to be up to the limits to invest in a project and not generate a debt that may suffer the consequencesthe village.

Bibliography

  1. Baquero, d., & Mieles, J. (April 8, 1990). Ecuadorian boom. ECUADOR ECONOMY FORUM, PAGE. two.
  2. Calva, d. (September 6, 2011). monographs.com. Obtained from https: // www.monographs.com/works88/concept -petroleum/concept -petroleum.SHTML
  3. the Telegraph . (March 16, 2015). Obtained from https: // www.the Telegraph.com.EC/News/Economy/8/Con-El-Boom-Petrolero-1972-1982-Inicio-EL-EDEBTATION-EXTERNAL-INFOGRAPHY
  4. Guevara, v. (2001). The hiring system in the activities of the oil sector . Quito: Iaen.
  5. Hellenro. (June 16, 2004). monographs.com. Obtained from https: // www.monographs.com/jobs15/oil-Ecuador/Oil-Ecuador.SHTML
  6. Raw judgment. (s.F.). Obtained from https: // www.JUICIOCRUDO.com/Video/la-Industria-Petrolera-in-the-Ecuador/17

 

Free Oil Crisis: From Boom To Indebtedness In Ecuador Essay Sample

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