Ecuador Stage III Take Off


Ecuador in  Stage III

Yesterday’s message looked at how changes at the Fed, in Europe and the Middle East rebalanced  values quickly. Read about that at Value Prevails in Three Ways.

Other times values shift slowly such as they have with Ecuador real estate.

More than a decade an a half ago when  Merri and I arrived, Ecuador was in stage II  of economic development.  Real estate values were unbelievably good.

A great report at the North Virginia Education website outlines  how an American Economic Historian, Walt Whitman Rostow outlined five stages of economic development.

Stage I — Traditional Society. The economy is dominated by subsistence activity where output is consumed by producers rather than traded. Agriculture is the most important industry.  Production is labor intensive. There is minimal capital.

Stage II — Transitional Stage (the preconditions for takeoff).  There is an emergence of a transport infrastructure to support trade. Growing incomes, savings and investment develop entrepreneurs.

Stage III — Take Off.  Industrialization increases, with workers switching from the agricultural sector to the manufacturing sector.  The economic transitions are accompanied by the evolution of new political and social institutions that support the industrialization.

Stage IV — Drive to Maturity.  The economy is diversifying into new areas. Technological innovation brings increased investment opportunities. The economy produces a wider range of goods and services.   Reliance on imports slows.

Stage V — High Mass Consumption. The economy is geared towards mass consumption. The consumer durable industries flourish. The service sector becomes increasingly dominant.

Now Ecuador is shifting into stage III.

The changes bring some uppers and downers but overall is good news.

The Uppers

Ecuador is a very different place than when Merri and I arrived 18+ years ago.

A good example of the change can be seen in the recent handbook updates outlining new shopping centers in Ibarra and Bahia.

The beaches are empty and wonderful with sun year round.

Bahia photos

Normally when people think of Ecuador’s coast, they envision a beach like this one just north of Bahia,  that is about to begin. However shopping also on Ecuador’s coast is good and getting better.

These shopping centers in Quito, Guayaquil, Cuenca and Manta are coming to

Bahia photos

Bahia on the coast and also Ibarra in the north of Ecuador.

A parcel of land close to the Chone bridge in Bahia will be the site of Mi Comisariato.   Super Maxi is also in Ibarra and coming to Bahia.

Bahia photos

These are top of the line shopping centers with cinemas and all.

Bahia photos

 Super-Maxi

Bahia photos

El Paseo Mall 

Bahia photos

You can find the big ticket items like kitchen equipment, light fixtures for example, as well as most of the house cleaning products and food.

Bahia photos

This progress will make it a more attractive place for a larger number of people.

These centers make Ecuador more attractive to the growing middle class and to a new type of expat… the ones who want a Western lifestyle… places of commerce…. malls, cinemas, fast foods, golf courses… paved roads… the many features that the masses gravitate toward and Westerners take for granted.

This will increase the value of real estate… for those already there.

The Downers

The change makes a country less attractive to Merri and me… but we are a bit weird always out on the leading edge… looking for something new.  We know shopping malls.  They no longer offer us any sense of adventure.

Ecuador is becoming a place where you can live an enjoy all the Western creature comforts.

The cost of living is rising because of this.  Years ago one could live well on $750 a month. Now most of our Ateam Ecuador (in Cuenca, Quito, Cotacachi and on the coast) are suggesting that $1,500 a month is more realistic.

Stage III includes the evolution of new political and social institutions that support the industrialization.  I can spell this out in two words… increased taxes.

In the earlier stages of Ecuador, the expats were almost invisible as far as government was concerned.  No more!  Added government regulations aimed at expats are rising in many parts of life. Dan Delgado at dandelgado86@gmail.com sent a note about expats hiring domestic help (bolds are mine):

Domestica Digna Programs – Paying Benefits to Your Hired Helpers

Authorities are now enforcing laws that were instituted last year to convince everyone to affiliate their housekeepers and caretakers according to guidelines of the labor department (MRL) and Social Security (IESS). Whether seen as Progressive or Socialist, the laws are changing rapidly in Ecuador and codes and norms are being rewritten to conform to the new Constitution of 2008.

The recent amendments to the Constitution that address Social Security in employment law are meant to protect more people from ending up with no job security, medical insurance or retirement benefits. The new rules can seem complicated at first, and some of the disincentives for noncompliance by employers include fines of hundreds of dollars for not having a clear contract, if there is a disagreement brought to a labor court judge, and also the penalty is now potentially prison for not affiliating a worker with the IESS (social security) system.
 
New residents relying on information from local friends who are used to the old way of hiring help may find themselves in uncomfortable situations that could have been avoided by knowing the new rules and considering the risks and benefits from an informed point of view. For example, a worker can be signed on and off the system (on-line from your home) for a day or more at a time easily, once the employer is properly signed up. Otherwise now, if there is a “workplace” accident in your home, or some serious labor dispute, and the worker is found not to have been properly contracted and covered, the penalty for the “employer” may include prison.

Although if you look further into the following article you’ll see that it mentions legal assistance, there actually should be no need for a lawyer for contracting workers, unless you want to add some unique clause to the contract, which may then require special approval by a MRL (labor department) Judge. Several printable contract formats are available free on-line from this Ministry of Relaciones Laborales. It’s part of government, so information is free at http://www.mrl.gob.ec/ and they have an office a few blocks from Supermaxi in Ibarra.

Here is an excerpt from a story by a resident in Cuenca- from theGaithers blogspot on June 6, 2012.

“…learned the hard way. The very friendly maid went to a labor attorney after they declined to play the game of “another gringo will pay me twice what you are.”  That was a shock after months of gringo gifts and generosity.  A simple severance agreement was quickly drawn up and half a month’s pay was given as severance.
The rule of vesting is that on the 15th visit to work in your home, the maid is considered your employee. This applies even if she only works 3 or 4 hours a visit.

Even visits for family events or holidays (when no work is done) may be considered a labor visit…”

Reprinted from http://thegaithers.blogspot.com/2012/06/domestic-help.html
 
I hope to soon meet with a director of this MRL Labor Ministry, who is now leading teams from town to town, focused on informing domestic workers of their rights and ask her to make it easier for us all to know what the new rules and procedures are. Lately, there have been radio and TV “public service announcements” in Kichwa and in Spanish, inviting domestic workers and others to come and get information from MRL facilities, including MRL “mobile units”. The MRL-connected agents are also attracting Domestico/a’s with offers of free training in first aid and cooking and housework organization. Workers are encouraged to call 1-800-CONTACTO for lots of free information.

Formalization of these work regulations will be good for the workers.  Merri and I have worked hard to help domestic employment in Ecuador.  We paid special Social Security payments, that the previous owners had not kept up for our employees when we purchased Inn Land of the Sun.   The staff at the hotel earn much more than is normal (and we believe work much harder because of it).

These new regulations may help workers.  We are happy about that but  more regulations also mean more enforcement and… more tax plus higher costs of living. This is all part of Stage III economics.

We are concerned though about the number of new regulations that could produce a jail sentence.  These regulations are weighted against the expat.

Dan also wrote:  Sr. Ruminahui Andrango (aka Rumi), son of Cotacachi mayor and also head of the UNORCAC indigenous organization, says he will work on scheduling a public forum with people in the English-speaking community to explain local perspectives on issues of Indigenous Jurisdiction and Community Rules to us newcomers. He does not have a file or archive of each of the community’s rules for the many communities that he works with, although he does have a general Template of what these include, and can use this to begin explaining. The Ministry of Agriculture (MAGAP) is the entity that approves and files Community rules in the rural territories that the Indigenous have jurisdiction over. 

I asked Rumi whether people should be more cautious entering indigenous areas since a confrontation a month ago in the Indigenous community, La Rinconada, near Otavalo, where non-Indigenous people, who were there to purchase property, and their police escorts, were held overnight by the Indigenous community.

He answered that all outsiders should show more respect for these basically unpublished rules and loosely delineated community territories.  He said that because the Otavalo Municipal authorities had just recently received warnings from the community, this was a unique situation. The police, in this case, had their guns and uniforms removed and they were given a ritual bath treatment before being allowed to leave.

What a great way for the community to give these people who were trying to ignore hundreds or thousands of years of history a send off… with a purifying bath!

The fact that this issue is finally being addressed is important.  We urge readers who visit Ecuador to learn and respect these ancient cultures rather than try to ignore them and impose Western attitudes.  These resolutions are a vital part in stage three development… but will require increased government control (and cost).

Ecuador is a democracy so the ability to vote counts.  The indigenous population has a huge a voter clout!  Expats have almost non at all.

Traffic laws are getting tighter as well and could also lead to jail.

ecuador police

Traffic cameras are now being used in Ecuador and are moved around the country.  A photo of the speeding car can lead to up to three days in jail.

New traffic regulations create a fine of appx. $15 for jaywalking and if a pedestrian is accused of causing a traffic accident the pedestrian can be held in jail during investigations.

How harshly these regulations will be enforced is unknown.

Speed limits are:   Urban areas – appx. 30 mph. At appx 10 miles over the limit can cause three days in jail.

Perimeter roads – appx. 55 mph.  Above 75 mph can cause three days in jail.

Straight highways –  appx. 60 mph.  Above 84 mph can cause three days in jail.

Curvy roads –  appx. 37 mph.  Above 45 mph can cause three days in jail.

I asked our attorney, Dr. Andres Cordova, to clarify. He replied:  Dear Gary:   Due to a high rate of traffic accidents in Ecuador authorities have decided on a crackdown on speeding, drunk and reckless driving.  As is sometimes the case here, I believe the authorities have gone beyond the limit. While this should certainly put some drivers in line, jail time for speeding seems too harsh. It’s one thing to go 10 over the limit and another to do 100mph in the middle of the city. I am not sure if the measure will stand but many people  have actually slowed down because of it.

There is a 10kph (6 mph) tolerance and above such you risk being ticketed and eventually, taken to jail for 3 days.   Radar detectors are illegal in Ecuador.

There are limits for urban areas and limits for highways. The limits change depending on the vehicle driven. Public transportation and trucks need to go slower.

All of these points are signs that Ecuador is in Stage III, the Take Off portion of the economic cycle which is more organized… richer in material wealth… but also more legislated and taxed.

Ecuador is still very inexpensive by US standards… just more costly than it was a decade or two ago.

About the staff at Inn Land of the Sun

Merri and I feel that one of our great accomplishments in Ecuador was to save the Inn Land of the Sun which formerly was called Meson de las Flores. The hotel was deeply in debt when we paid off the bank loans and turned management over to the the staff. They have run the hotel really well with a lot of help from local expats who care.

Cotacachi Expat Meetings Friday and Saturday, Sepetember 21-22, 2012
http://www.flickr.com/photos/ecuadorliving/7996329137/in/photostream

Staff welcoming expats to Inn Land of the Sun.

Each Friday and Saturday night there is a Cotacachi expat dinner. Expats meet in the fireplace room, enjoy a meal and talk about Ecuador news.

The menu for Friday September 21, 2012 will be Chicken Steak Spanish Style with Tres Leches Torte for desert.  $6.00 including service and tax.

Cotacachi  Inn Land of the Sun

Chicken Steak Spanish Style or Pizza (vegetarian, beef, chicken or pepperoni) plus desert. $5.00 including service and tax.

The menus for Saturday September 22, 2012 will be Pepper Steak and Vanilla Flan for desert. $6.00 including service and tax.

Cotacachi Inn Land of the Sun

Pepper Steak or Pizza (vegetarian, beef, chicken or pepperoni) plus desert. $5.00 including service and tax.

Beer $1.50 – Sparkling Mineral Water  $1.00 – Popcorn FREE

Telephone.  (593) 06-2916-009 – Telephone from US 336 – 792 – 4767 – Address: García Moreno 13-67 y sucre.

See more about Inn Land of the Sun here.

Super Thinking + Spanish in Cotacachi

Glenn Sterling has set a Super Spanish course in Cotacachi.

glenn

Super Thinking + Spanish teacher, Dr. Glenn Sterling.

Glenn, a retired Chiropractor completed the TEFL course as an English instructor through an institute in Leeds, England and has been in and out of Cotacachi teaching free English courses to Ecuadorians and Super Thinking + Spanish to expats and delegates.

His current schedule includes a Super Spanish program in Cotacachi.

Glenn is located at the Land of the Sun Inn and has been providing “free” Chiropractic clinics each Saturday.

He will also conduct his last Super Spanish course  in Cotacachi Oct 8-9-10 at the hotel before he moves to Kuala Lumpur where he will be director at of one of Asia’s largest clinics as he helps opens the important Asian market for learning Spanish.

One delegate wrote after Glenn’s last Cotacachi course:  Yesterday, in Cotacachi, Ecuador, I finished Super Spanish Super Learning.  I had high expectations for the course and they were exceeded. The course was taught in English by Dr. Glenn Sterling, a witty, engaging, retired chiropractor, and Alberto, his Ecuadorian side kick, who made sure we learned to pronounce everything correctly.

After three days, I can speak Spanish in complete sentences. In simple conversations, such as buying groceries or ordering a meal, I can make myself understood. I think that’s incredible!  Although I am far from the competence level of a native speaker, I feel I’ve taken a giant step forward in learning Spanish so that I can experience the people and culture of Ecuador.

The foregoing benefits would have more than justified the time and money I invested in Super Thinking Super Spanish. And learning some Spanish was not the most important benefit I got from the course.

The brutal truth: In recent years, I’ve rarely relaxed (No wonder I have high blood pressure!) and, suddenly, I’m aware of it. Why?  Prior to leaving the USA, I had felt for some time that the pace of life there was unhealthy for me (and for most people) and I did nothing about it.

One of the key elements Merri Scott designed into Super Learning is placing the student in the optimal state for learning.

During the course of the day and night, humans experience four types of brain waves: alpha, beta, delta, and theta. It turns out we learn best in alpha state. Research has shown that alpha state can be induced by meditation, listening to Baroque music (or any music that has about 60 beats per minute) and by taking a theanine (the active ingredient in green tea) supplement.  Getting into alpha involves slowing down and relaxing. So, class includes baroque music and guided journeys to support relaxation. Imagine learning while relaxing and having fun. That’s not how I remember school!

 In class, the past three days, I’ve been re-introduced to guided journeys and introduced to the calming effects of Baroque music (www.sundaybaroque.org). What a blessing! I’m inclined to make one or both a daily part of my life.  Rob Christie  Cotacachi, Ecuador

You can take advantage of our Special in Cotacachi or five other locations below: Bring a friend and save up to $899!  See more details and a 2012 – 2013 schedule below.

Learn Spanish in three days. Here is the autumn 2012, winter 2013 schedule.

October 8-9-10 Cotacachi  (Couple) (Teacher Glenn Sterling)

Report on economic development at the North Virginia Education website 



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