April 20, 2010
Ecuador is not one of those places on everyone’s radar. In fact, when I recently announced that I would be returning to Ecuador, I received a handful of subscriber emails like this one:
“Why are you wasting your time in that communist money pit? [SB: strange choice of words…]”
Clearly, Ecuador suffers from a similar reputational stigma as Colombia, and this keeps that majority of gringos away. The country’s president Rafael Correa is aligned with Venezuela’s widely disparaged Hugo Chavez, both of whom focus their policies on a pro-social agenda.
Just recently, in fact, Correa announced that he would be taking steps to nationalize foreign oil companies who don’t agree to limit their profits based on a government mandated ceiling.
These sorts of things tend to make foreigners run away like a scalded dog.
Politically, Ecuador is a disaster. The country saw seven presidents from 1996-2007, which makes it about as stable as Thailand. But while I wouldn’t take the political risk in Ecuador as an institutional or resource investor, I have no problems being an expat there.
Why? Just because the government is going after oil profits doesn’t mean that they want the title to your house in Cuenca. Dispossessing foreigners of their property would do absolutely nothing for the government, or for ‘the people’ that Correa so desperately wants to please.
Would I buy a nice house with a small farm in Ecuador? Sure. Would I buy 10,000 acres of land adjacent to an impoverished village? Doubtful. You see the difference.
Today, my goal is to provide you with a short, balanced overview of Ecuador, with the intention of providing more details later this week.
The bottom line is that Ecuador is definitely worthy of consideration. Specifically, based on how I define the “7 expat categories”, Ecuador is great for retirees, hermits, nomads, and internationalists. It’s terrible for hedonists.
Here are six reasons why:
First, as you’ve probably heard, cost of living is dirt cheap in Ecuador… and by cheap, I mean that you actually feel guilty that it’s so cheap.
Quality housing, for example, can easily be had for less than $1,000 per square meter (which is my line in the sand for ‘CHEAP’), and $350 to $500 per month for a nice rental is quite common.
Labor costs nothing, so you can have a whole staff at your hacienda for the equivalent of a Mercedes payment; and food prices are generally 20% to 60% less than in North America or Europe.
It’s also worth mentioning that the US dollar is the official currency, which has several advantages and disadvantages that I’ll get into in a future letter.
Second, life is slower and much more traditional in Ecuador. The common analogy is that it’s like the United States in the 1950s (which is a similar analogy used in Uruguay and Paraguay).
Well, I wasn’t around in the 50s, but I certainly agree that life is very simple in Ecuador.
For example, the government typically does not pass invasive laws designed to save people from themselves; the concept of ‘family’ is still of tremendous importance; and people spend more time hiking and picnicking than sitting in front of a computer.
Third, medical care is of reasonable quality; I have never had any issues with minor medical care here (both western and aboriginal), and there are a variety of high quality anti-aging clinics in the country. For major medical issues, though, I would probably seek aid elsewhere.
Fourth, English language penetration is satisfactory in the larger cities like Quito and Guayaquil (pronounced ‘why-uh-KEEL’), but once you get into the smaller towns, you’d best be able to speak some basic Spanish.
Fifth, food quality is typically excellent; many of the southern valleys have impeccably grown organic food, and the soil quality often yields enormous proportions… I’m talking about fruits and vegetables the size of your head.
As a warning, however, there is some credible evidence of substantial pesticide usage in many parts of the country, as well water pollution from oil spills over the last several decades in the Amazon basin.
In fact, there is a $27 billion lawsuit pending in an Ecuadoran court at the moment against Chevron for substantial environmental damage without proper attention to clean-up.
Sixth, despite the negative attention that the oil sector receives, the country is quite open and friendly to foreigners, and the government makes it easy for them to come to Ecuador with a variety of retirement and investment schemes.
Overall, if you’re looking for deep discount living, a slower lifestyle, and only minor sacrifices to modern convenience, I would strongly recommend that you check out Ecuador.
I will be here for the rest of the week, so if you have any specific questions that you want me to find out about, drop me a comment here.