Graduate School of International Studies Ajou University
Ecuador is one of the countries in Latin America that did not achieve industrialization with the ISI model in the 1950s, nor did it after the Oil Boom in the 1970s. On the contrary, it became dependent on exports of this resource, which makes it vulnerable to the volatility of its international price per barrel. Another external factor that affects the Ecuadorian economy is the appreciation of the dollar, being that, USD was adopted as a local currency since the year 2000. The international financial crisis of 2008 brought with it the combination of these two factors in a negative way for Ecuador, that is, fall in oil price and appreciation of the dollar. This event, which was happening for the first time, caused the deficit in the Trade Balance to be unsustainable. Therefore, the Ecuadorian government decided to apply safeguards as an emergency measure in early 2009. These were mostly quantitative restrictions, using the Infant Industry protection argument as justification. Based on this first experience, the Ecuadorian government applied safeguards for the second time in 2015, with the difference that this time, they were applied as Ad-Valorem tariffs only and a wider range of import products. The main objective of this research work is to analyze the impact of these measures on the Ecuadorian economy, since their results were unexpected and differ with those announced by the government of that time. The main conclusion reached in this research work is that, while safeguard measures used to be considered the best option to reduce imports and correct trade balance, it is proved these outcomes as temporary results. Thus, once the measure is eliminated, it can cause an even greater deficit than the previous one, which can become a malicious cycle where the only way out would be the application of new safeguards.