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Friday, 15 February 2013

Good news from Equador

Here's proof if one needs it that governnment can intervene in the economy for the benefit of society as a whole. A new report by the Center for Economic Policy Research  has just been published on the policies of the Ecuadorean government of Rafael Correa (pictured) in regulating the financial sector and how they have been remarkably successful. Ecuador is a key ally of Cuba in the ALBA project:

"Overall, it appears that the Correa government’s sweeping financial reforms have been successful, not only in achieving their intended goals but in aiding macroeconomic stability, growth, employment, and very significant improvements on a range of economic and social indicators. What is most remarkable is that many of these reforms were unorthodox or against the prevailing wisdom of what governments are supposed to do in order to promote economic progress. Taking executive control over the Central Bank, defaulting on one-third of the foreign debt, increasing regulation and taxation of the financial sector, increasing restrictions on international capital flows, greatly expanding the size and role of government – these are measures that are supposed to lead to economic ruin. The conventional wisdom is also that it is most important to please investors, including foreign creditors, which this government clearly did not do. While not all of Ecuador’s reforms went against orthodox policy advice – its measures to resolve insolvent banks, anti-trust legislation and the creation of an enforcement body, and deposit insurance reforms, for example, are widely accepted – the bulk of them clearly did, and yet they succeeded."

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