Income Distribution Essay Example for Free

Income Distribution Essay The total wage of a private sector worker is of US$137, 9 dollars per month; as it is considered that in each family has other income, and the minimum income per family will be of 224 dollars per month. This wage allows family to buy 67% of the basic basket, it is to say a little more than half of all necessary articles, and a restriction of 33% in the consumption of basic articles exists. The dolarization did not mean a revaluation of the wage as the government raised, it rather constituted a cut of the income, since the prices of goods and services were internationalized, while the wages stay depressed, in relation to the life cost. The concentration of wealth and work in Ecuador is acute; 1. The 2 % belonging to the poorest receive 0,015% of the national entrance, and they gain 1270 times less than the wealthier 2% of the population. 2. The 20% belonging to the wealthier receive 58,7% of the national entrance. Poverty: The accumulation of wealth in the hands of the monopolistic groups has like counterpart the poverty and the extreme poverty for the majority of Ecuadorians. In Ecuador the poverty borders 80% of the population and from these, 20% are in extreme poverty. Poverty in Ecuador has a structural character and a massive incidence. It is structural because historically the economic conditions have been created, socially and politically to consign to a great number of the population of its participation in the production and wealth of the country. That is to say, in Ecuador the poverty is not a consequence of the lack of resources or natural wealth but to the form in which the Earth property and other resources have been, and in the relations of dependency with the central capitalist countries. From year 2002 the situation has been more difficult still, the inflation rate (91%), the percentage of the General Budget that the government destined for the payment of the external debt (51%) caused greater poverty. In 2003 the amount that the state will destine for the payment of the external debt, will be of 2. 200 million dollars. CONCLUSION The present essay has studied the historical evolution, present situation and perspective to medium term of the Ecuadorian external debt. We can make a synthesis of the most important aspects of the mentioned analysis, which will allow us to verify the validity of the question posed. The use of external resources with aims of current consumption, mainly on the part of the governmental sector, has been one of the main causes so that the productivity of the outer finance is limited. The loans produce little or no finance and it causes economic yield in the increase of current expenses, which has given rise to the countries finances consumption on the basis of the external saving, and the weight of the debt for the following years was loaded. On the other hand, the elevated rate of triggered internal inflation as of 1990, took place partly due to the funding of the originating resources of the outside by concept of external loans that, through the global budget of the state, entered circulating means. In addition, the high cost of the loans, by the majority including banking credits, in the last years has determined the rate of yield of the capital for the projects financed with external contribution, must be sufficiently high, so that it reaches a greater level than the cost of the external indebtedness. The increase of the imports, mainly as of 1990, has also been a factor affecting the trade balance; therefore it has been necessary to obtain free currencies to pay these external obligations. This growth of imports has been due to a great extent in dependency of the national manufacturing industry, of the capital assets and foreign raw materials. The country has been unable to obtain adequate levels of resource surplus, as a percentage of exports, given the prevailing conditions of export growth and was required to decrease the growth rate of its external debt over time. Even though credit from multilateral is the only source of financing available, it is clear that there is a lack of planning of investment projects. The United States eliminated government funds due to problems of political nature, principally due to the fact that the country has an income per capita of US $ 360 annual. The debt of the private sector has a determining incidence in the deterioration of the balance of payments, although it does not cause a financial load when one is originating currencies of exports, in order to cancel the service of this debt, in 1995 the service of the same one will represent approximately, 8. 5 % of exports of goods and services, whereas for 1998, that relation will raise 12%, level that we considered alarming if it is taken into account that this index, for service of the debt in the public sector, will be, of 20% in 1998. It is evident that the existing legislation in Ecuador, on the administration of the indebtedness, has been a very important factor in the decisions that have been adopted in matter of policy of external financing, although the cases have not been few in which the government has made decisions from economic order moving away of the effective legal procedures, reason why the control problem of the Ecuadorian outer debt is deduced, as a lack of exact fulfillment of the law. The policy of the external indebtedness, from the economic and legal point of view, has had faults as much in its application as in its fulfillment, cause of which the external resources entered the country to finance their way, they do not have an optimal use, specific and productive, and on the contrary they have meant at certain moment a serious limiting economic growth for the country. Therefore we can firmly say: that the external debt has had an impact In Ecuadors Economic development.