Programming Development: Software as an Alternative for Effective Structural Change in Ecuador

Abstract

Ecuador’s economic dependency on primary resource poses a threat to the nation’s wellbeing and future economic growth. Maintaining a commodity-based economic strategy would continue to degrade the natural environment and impair the Ecuadorian economy: a degrading environment would harm the economy since the economy is dependent on the environment. Regardless of environmental conditions, though, Ecuador’s economy would continue to degrade if it depended on commodities to fuel growth: the conditions that made commodity-driven economic growth possible are faltering and producing primary commodities inhibits the structural change necessary to fuel additional economic growth. A solution posed by scholars to rid Ecuador’s dependency on commodities has been to promote structural change by producing new products that are high in complexity—the sophistication of the productive know-how required to produce a product—since commodities are low in complexity (Hausmann, Hwang, & Rodrik, 2006; Hausmann & Klinger, 2010). This thesis replicates this analysis with updated Goods data for 2016 and includes Services data for 2009, which was previously unavailable. The results show that Ecuador’s Goods export basket, and its respective capabilities, have been stagnant since 2000. Services data reveals additional capabilities in Ecuador’s export basket and shows that some service opportunities are more similar to Ecuador’s export basket and are higher in complexity compared to Goods. Using these results, the second half of the thesis argues that Ecuador should abandon Goods and pursue ICT Services, specifically software, by analyzing the feasibility of this proposal and presenting a case study on a successful ICT firm in Ecuador.