Come for the Spanish, Stay for the Economics: My Six Weeks in Ecuador

Overlooking El Panecillo in Quito, Ecuador.

This summer, I had the chance to immerse myself in Latin America through the Georgetown in Quito program. Aside from improving my Spanish (and passing my proficiency exam) and making incredible new friends, the most fascinating part of the program was being able to witness firsthand what life is like in an emerging economy.

My host family, the Espinosas, provided me a unique perspective on understanding Ecuador’s economy and relationship to the U.S. The three eldest sons of the family all had an American connection, spoke English, and wanted to provide the same for their own children. The oldest, Giovanni, attended Johns Hopkins SAIS to get his master’s degree in applied economics and worked for the World Bank and the Ecuadorian Banking Superintendent. His international experience and knowledge of English clearly helped him in his career; many members of the Ecuadorian business community must know English to work with U.S. or European companies, the two largest sources of foreign direct investment (FDI) in Latin America. Giovanni wanted his ten-year-old son to go to college in the United States, although he himself went to the highest-ranked college in Ecuador. Giovanni also enrolled his son in a  preparatory school with a British curriculum, so he could learn English. I never realized how powerful a degree from an university in the U.S. is internationally, even if it is from a smaller, lesser-known American university. Given the cost of U.S. universities and their lack of financial assistance to most international students, this pathway to upward mobility is only accessible to a small set of Ecuadorians.

Ecuadorians do not only want to go to the United States for higher education. My host family’s nephew, Ignacio, learned French in private school and wants to attend university in France because he believes it will provide him with more opportunity than attending university in Ecuador. If Ecuador had a stronger higher education system, more Ecuadorians would stay in the country for school, providing more access to opportunities for all Ecuadorians, not just for the upper social class that can afford education abroad. Additionally, the improvement would likely prevent the brain drain, in which many educated Ecuadorians immigrate to Spain or the United States and send remittances home to their families.

However, there is a cultural factor that keeps many educated and successful Ecuadorians in the country: connection with their family. My host father, Patricio, ran a successful business selling appliances in Ecuador and Colombia; I once asked him if he ever considered leaving Ecuador for Spain or the United States. He said, “No, my life and my family are here in Ecuador.” He explained how Ecuadorians value connections with their family over everything else, while he felt that Americans value work first and family second. I think Patricio’s strong desire to remain in Ecuador stems from traditions of an older generation. In contrast, his sons, who began their careers in the age of rapid globalization and advances in communications technology, often work very long hours and rely on their parents to care for and feed their children while they work.

Ecuador’s business culture and work ethic seem to be changing to match the country’s economic growth and increasing competitiveness against regional rivals, such as Peru and Colombia, who each have their own currencies (Ecuador uses the U.S. dollar and has experienced deflation). The country has embraced free trade and passed trade deals with the U.S. market. Ecuador had a draft trade agreement with the United States in 2007, but it was scrapped during the administration of President Rafael Correa. Currently, the Ecuadorian business community wants the country to remove its tariffs and make more trade agreements. My host brother Juan, who works for AB InBev (Budweiser’s parent company and the world’s largest beer producer), was very enthusiastic about the opportunities a U.S.-Ecuador trade deal would bring but remained skeptical that one would materialize. Ecuador imposes very high tariffs on food, which I noticed when I was  looking to buy snacks and they were all corn- or potato-based Lays products. I was looking for Rold Gold pretzels, one of my favorite snacks, but could not find them anywhere. I was surprised because Lays, owned by the same parent company as Rold Gold, already had a nationwide distribution network in Ecuador. I then looked at the bag and found that all of these snacks were products of Ecuador. The pretzels, product of the U.S., were priced exorbitantly due to tariffs. Members of my host family said they would go on trips to Miami to buy iPhones and Abercrombie clothing because the tariffs make these luxuries unaffordable at home.

In Ecuador, I also witnessed how acquiring capital for manufacturing can help people scale their business. For one leg of the trip, I visited the commune of Salinas, a location where all types of the businesses are community-run and the workers share in the profits. We visited a small soccer ball factory located on the top floor of a house where it was cramped, hot, and greasy. The workers could not produce that many soccer balls per day and only sold them domestically. Surprisingly, the commune also had a mushroom-processing facility with new equipment and sanitary systems so that these mushrooms could be sold in Ecuador or exported to North America and Europe. The largest factory in the commune was for wool, which they sell and distribute throughout Ecuador and the world. This factory had large machines, but they were from 1982; I began to wonder how much more they could sell if they had newer equipment. I also wondered how much electricity cost in this rural village to operate a factory and if there could be savings on electricity by installing solar panels, wind turbines, and using energy storage.

Ultimately, I came away from Ecuador with a greater understanding of how a globalized economy works and the importance of trade and a market-based economy to create lasting change and lift people out of poverty.