The IMF, the World Bank, and U.S. Foreign Policy in Ecuador, 1956-1966

Resumen

Ecuador is rich in natural resources, but since its independence it has remained one of the poorest countries in the Western Hemisphere. Historically dominated by a few wealthy landowning families, Ecuador's Indian peasants and mestizo workers were excluded from mainstream political, military, economic, and social institutions. Class divisions were paralleled by the regional schism between the agriculturally dependent indigenous people of the temperate highlands and the coastal population, whose livelihood emanated from plantation crops, light manufacturing, commerce, finance, and service industries (Hurtado, 1977:191; Schodt, 1987: 1-15; Blanksten, 1964: 28-31; Public Record Office, Foreign Office Archives [hereafter F.O.] 371148002, AS 2182/1, 18 February 1960). With almost 80 percent ownership of land, the oligarchy, which had investments in light industry, finance, and commerce and made up a tiny percentage of the 4.2 million people in 1960, dominated politics and determined the country's economic destiny. Because the state pursued policies that perpetuated the upper classes' privileged economic status, which is reflected in the grossly unequal income distribution of the second half of the twentieth century, workers have not experienced upward socioeconomic mobility comparable to that in Europe, Canada, or the United States. Foreign development and stabilization loans that the United States and the multilateral banks granted to Ecuador during the cold war perpetuated the uneven income distribution and dependency on foreign capital (Cardoso and Helwege, 1992; Pyne, 1973: 17). During the export-oriented growth period of 1948-1960 while the banana boom lasted, Ecuador enjoyed relative political and monetary stability. In the mid1950s, however, the prices of raw-material exports declined relative to prices of manufactured imports, forcing Ecuador to rely on foreign loans to