The following section presents a list of reasons why Ecuador is considered an attractive country for foreign investment, in comparison with alternatives in other developing countries. In the near future, it is probable that growth opportunities will improve even more, strengthening the long-term positioning of the country.
Methods of Payment
In Ecuador , dollarization has eliminated the problem of having a local currency as a method of payment. It also eliminates the risks caused by fluctuating exchange rates when planning long-term projects. This is not a minor point in lieu of the financial problems that arise in developing countries when devaluations occur.
This monetary system permits all payments and transactions to be made with a stable currency which is not susceptible to inflation and, consequently, reduces the risk for prospective investment opportunities. Dollarization has been considered as the ideal mechanism for establishing credibility in the Ecuadorian monetary system.
Freedom of Capital
Ecuador has an economy based on the complete freedom for the entrance and exit of capital, which, in turn, facilitates commerce and foreign investment; paired with dollarization, this freedom of capital movement is a strong catalyst in the investment process, taking into consideration that problems relating to devaluations have been eliminated. Ecuador 's monetary policy is not characteristic of the Andean region, but probably will be in the future, given the inclination of governments to recur to the control of capital resources after the financial and devaluation crises in developing countries.
Commerce of Goods
Ecuador is a relatively open country in terms of the commerce of goods and services. Since the beginning of the 90's, it has had an average customs tariff of 10%. Since 1995, Ecuador belongs to the Andean Customs Union, which establishes a common tariff for the export of goods and free commerce between member nations. This positions Ecuador as a strategic destination for the importation of merchandise for a market of approximately 110 million people.
Ecuador guarantees non-discriminatory treatment for foreign investors. Even more, Ecuador considers offering nationality to foreigners who render valuable services to the country.
Concerning investment in particular, the State guarantees foreign and domestic capital that is invested in production, especially production designated for internal consumption and exportation, giving a favorable status to foreign investors.
Ecuador recognizes the possibility of granting tributary incentives for investment in the underdeveloped sectors of the economy. This incentive is accessed through Free Zones, areas that are beginning to be used as active tools of the political economy to attract domestic and foreign investors.
Special legislation exists to protect foreign investors. The Law of Investment Promotion and Guarantee explicitly permits foreign investors to open foreign investment contracts with the State with the purpose of not interfering with judicial norms applicable to the national company that receives the investment.
All foreign investors who register an investment of more than US$500,000 receive the option of tributary stability. This option offers the investor the right to choose a fixed tax rate applicable to the existing rate at the moment when the contract becomes effective.
Natural Resources and Geography
It is important to mention the biological diversity of Ecuador 's natural resources, due to its geographical location and varied climatic regions in comparison with other countries. This comparative advantage gives Ecuadorian products, especially agricultural products, a very unique quality. Examples of Ecuador 's unique agricultural products are fruits, vegetables and flowers, which receive worldwide recognition for their excellent and incomparable quality.
Ecuador 's geographical location is strategic and unique, being midway between the markets of the United States and Canada , and the markets of Chile and Argentina , which can be reached through the port of Valparaiso . Furthermore, Ecuador is relatively closer to the markets of Asia than other countries in the region.
Historically, Ecuador has been considered an oasis in the region for its notable capacity to impede the break out of armed movements. This security, added to the country's geographical treasures and its newborn tourist industry, offers a wonderful combination of natural beauty, history, tradition, folklore and modernity all in the same country.