Boom and Bust: Ecuadors Financial Rollercoaster by Pablo R. Izurieta Andrade

Author:Pablo R. Izurieta Andrade [Andrade, Pablo R. Izurieta]
Language: eng
Format: epub
Publisher: Vernon Press
Published: 2015-10-11T21:00:00+00:00

Table 31: GDP levels 1948-1972154

Reverses Within Prosperity and Stability

José María Velasco Ibarra was triumphant in a free general election organized in 1952. He was elected to succeed Galo Plaza with 153,934 votes, the highest ever count for a candidate. He had famously proclaimed, “Dadme un balcón en cada pueblo y triunfaré” (Give me a balcony in every town and I will win), and that is exactly what he did in order to assume his third presidency. The salubrious state of the Ecuadorian economy assured healthy government coffers and a stable presidency at the start of his third presidential term. Velasco was able to continue with the public works projects, which had been made possible due to the increase in government revenue of 11.3% a year from 1945 to 1955.155

However, his populist campaigns aimed at punishing the oligarchy and fighting for the disadvantaged resonated little once he assumed office. In fact, his government became notorious for repressing demonstrations with often-brutal force. During his mandate, as had been customary during his previous administrations, Velasco started many public works projects and increased bureaucracy. Most of these projects, however, never prospered and were left abandoned shortly after their first-stone ceremonies. Many funds were also spent on military buildup, such as with the purchases of several Douglas C-47 Skytrains and two modern destroyers, the Presidente Alfaro, and the Presidente Velasco Ibarra. The banana economy was healthy, but Velasco’s spending habits were dwindling the hopes for economic consolidation. During Velasco’s presidency, government expenditure increased at an average annual rate of 14.7%, conflicting with the 11.3% annual increase of government income. In contrast, the increase in government expenditure during the final year of the Plaza administration, from 1951 to 1952, was 6.7% (see table 32). Even though GDP continued to increase during Velasco’s administration, the rapid escalation in expenditure seems to not have been necessary, and rather should have been avoided.

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