The Business Year

Richard Espinosa Guzmán

ECUADOR - Industry

Everyone Involved

Coordinating Minister of Production, Employment, and Competitiveness, Ecuador


The Coordinating Minister of Production, Employment, and Competitiveness, Richard Espinosa Guzmán graduated in business administration and marketing from San Francisco de Quito University. During his time in the public sector, he has served as Coordinating Minister of Social Development, Minister of Labor Relations, National Secretary of Human Resources Development and Public Sector Remuneration, National Director of Generational Change, and National Coordinator of the Ecuadorean Food Program as part of the Ministry of Social Wellbeing.

"The experience of the so-called Asian tigers in transforming their own economies can be useful for Ecuador."

What role has your Ministry played in Ecuador’s economic development in recent years?

Ecuador’s economy is doing well right now—you can see many new infrastructure projects such as roads, airports, and hydroelectric plants being built across the country. By 2016, we will have eight new electric plants operating in Ecuador thanks to the largest investment ever made in the country’s history. The situation has changed so much that we even foresee Ecuador exporting electricity to the region by 2016. Some seven years ago, many areas in the country suffered from daily blackouts. The efforts of the public and private sectors to transform the energy system in the country have made this possible. We plan to become one of the leading producers of electricity in the world by 2016, and 93% of this electricity will come from hydroelectric plants. Also, it is important to mention that we already started the tender process for the first highway in Ecuador—the Santo Domingo-Esmeraldas highway. Regarding airports, as many as 21 have been renovated. One such infrastructure project that we can highlight is the Galapagos Airport, which is the first airport in the world to be run completely on renewable energy. On top of all this, we have to praise the political stability the country has achieved in the last few years, because it has made possible the implementation of all these projects. We have also achieved the lowest unemployment rate in the history of the country, being one of the lowest in the region, too. Ecuador currently experiences growth rates above the average in the region and we have controlled inflation.

What role does the Production Code introduced by this government play in its efforts to change the production matrix in the country?

The 2008 Constitution brought in the new Production Code, a regulatory and legal framework for productive industries in the Ecuadorean economy, which has also boosted the diversification of the economy, the country’s export profile, the value-added of those products manufactured in Ecuador, and the inclusion of the private sector in the country’s overall productive chain. Investments such as the Refinery of the Pacific, as well as in productive areas such as metal and steel, energy, and shipbuilding, are ongoing efforts to change the productive matrix in the country. These have helped to bring the public and private sectors in Ecuador closer; there are over 400 companies that have stated their interest and willingness to increase production volumes and expand their export profile to contribute to such strategic efforts. There are both large- and medium-sized enterprises among these companies I mentioned. For example, three years ago Nestlé made the commitment to invest $450 million in Ecuador in the next five years. It wants to make Ecuador its operational base for exporting a wide range of local produce to other regional markets. We have seen interest from many multinational companies in establishing local production in order to reduce imports. In the next few years, we will also, for example, boost the consumption of ethanol as a fuel source for vehicles. To that end, we plan to increase sugar cane production to 36,000 hectares across the country, which will create increased job opportunities in the agricultural sector.

“The experience of the so-called Asian tigers in transforming their own economies can be useful for Ecuador.”

How have you been working with the automotive industry to boost local production?

We have been holding talks with many companies for this purpose, and we have seen interest from foreign companies planning to establish production operations in Ecuador. I believe that in the next few years we will have many more vehicles available in the market made with parts that have been produced in Ecuador. We want to increase efforts to introduce electric cars in Ecuador, and we have held talks with companies like Nissan to take advantage of our energy matrix and gradually incorporate electric vehicles into taxi fleets for example, as well as encouraging private consumption among the population. This first stage of a broader strategic plan would be followed by a second one in which we would assemble electric batteries in the country, and a third one in which we would actually assemble entire electric vehicles in Ecuador. The implementation of the second and third stages are subject to the success of the first stage. There are many more projects we foresee in this and other economic sectors over the medium term that are envisaged to contribute to the reduction of imports and the increase of exports in sectors and segments where the country has strong potential. We have to keep in mind that we are already a leading exporter of cacao, bananas, shrimp, wood for rafts, and many other products—most of them primary products.

What role will innovation and projects such as Yachay play in the future development of Ecuador?

Innovation will definitely play a major role, and the City of Yachay project is an important step toward the development of our R&D capabilities. We hope to see the project taking important steps forward during 2014, a year in which we hope to attract investment to this area of our economy by sharing risks with those willing to invest. This would be a way to show our confidence and our conviction that what we do will definitely succeed. The City of Yachay will considerably improve our R&D and scientific capacity in the near future; however, we expect the project to contribute in particular to fields such as nanotechnology and biotechnology. All in all, these initiatives are aimed at transforming the economy of Ecuador and boosting local production by generating greater value-added.

What are the challenges that still face Ecuador in its efforts to transform the productive matrix?

The challenges are many; however, we have started out on the right path. The experience of the so-called Asian tigers in transforming their own economies can be useful for Ecuador. We are convinced that we will continue to attract foreign investment into Ecuador, which should be another key driver in this process. However, as a challenge in this context, we have to make sure that these foreign investors promote the transfer of knowledge in their operations. Another challenge lies in ensuring that we properly reinvest the profits from Ecuador’s natural resource wealth into the development of technology and human resources. We welcome all foreign investors, and invite them to consider the comprehensive list of incentives and the clear legal framework we have in place for their benefit. In this context, we are in a good position to become an entry point for Asian companies looking to expand into Latin America.

What role can SMEs play in the transformation of the productive matrix?

SMEs already play a hugely important role in our economy, and I believe this will only become more relevant in the near future. We have always said that nobody will be left aside in the transformation of the production matrix. In this context, the government is trying to provide an array of tools to aid their development. We are working to strengthen the ties between SMEs and the public sector in order to do this.

© The Business Year – June 2014



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