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Correa's Win in Ecuador Due to Financial Reform Policies

The successful re-election effort of Ecuadorean President Rafael Correa on February 17 came as a result of the success of his economic policies.

The successful re-election effort of Ecuadorean President Rafael Correa on February 17, where he received close to 58 percent of the vote in that majority indigenous country, came as a result of the popularity and success of his economic policies according to a team of United States economists.

“There’s no surprise here but there seems to be debate over the meaning of these elections,” said Mark Weisbrot, an economist and Co-Director of the Center for Economic and Policy Research in Washington, D.C.

“During Correa’s presidency there has been solid economic growth and unemployment hit a record low of 4.1 percent last year; poverty has been reduced by 27 percent, real education spending has doubled, and access to health care increased. These accomplishments are more than enough to explain the electoral results,” Wesibrot asserted.

In the report co-authored by Weisbrot and released in the week prior to the election, Ecuador’s New Deal: Reforming and Regulating the Financial Sector, the economists point to a number of policies that were helpful to the Ecuadorean economy and to Correa’s popularity.

In the report they assert that by, among other things, imposing taxes on banks, adding regulations, passing anti-monopoly laws, funding the Popular Finance Program which in turn lent more money to small businesses, and taxing capital that left the country, Ecuador was able to reduce poverty and improve education and health care for all citizens.

“Ecuador’s success shows that a government committed to reform of the financial system, can – with popular support – confront an alliance of powerful, entrenched financial, political, and media interests and win. The government also took on powerful international interests as well, in its foreign debt default, its renegotiation of oil contracts, and its refusal to renew the concession for one of the United States’ few remaining military bases in South America,” Weisbrot stated in the report.

“Its accomplishments have implications not only for much of the standard policy prescriptions that are offered to developing countries but also for the prospects of any democratic government that is elected on a reform program and wants to chart a new path to growth and development.”

These factors, according to Weisbrot and his team, made the difference in the presidential election. Correa’s closest competition was from conservative former banker Guillermo Lasso who received 24 percent of the vote, while the only candidate with close ties to the larger indigenous organizations, Alberto Acosta of the leftist MPD-Pachakutik Party, received only 3.2 percent.