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Manufacturing Sector Overview

Ecuador's 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.

One 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 centers.

In 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.


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