industrial sector, historically oriented to producing for
the domestic market, is beginning to look beyond its own
borders. Throughout the 1990s, Ecuador made numerous reforms
in an effort to make its economy more competitive. These
modernization and market-oriented structural reforms continue
today and are showing promise.
such reform came in the passage of the Free Trade Zone ("FTZ")
law in 1991. Five free trade zones have since been established.
The FTZ law allows companies to import raw materials and
machinery duty-free and export semi-processed and finished
merchandise duty-free. Furthermore, all business transactions
and contracts undertaken by companies engaged in industrial
or commercial activities within an FTZ are exempt from taxes.
Manufactured exports have steadily increased since the FTZ
went into effect, and whole cities, such as Manta (one of
the FTZs) have been transformed into prosperous commercial
2000 and 2001, the Ecuadorian legislature continued to pass
laws designed to stimulate industrialization. The reforms
undertaken by the government, coupled with Ecuador's abundant
natural resources and inexpensive labor, will almost certainly
increase Ecuador's manufacturing yield and the quantity
of manufactured goods that it exports.