Explanatory factors of the variation of the Gross Domestic Product in Ecuador between 1996 and 2019

Abstract

To evaluate the economic performance of a country over time, it is important to follow the evolution of the behavior of the Gross Domestic Product. The present research aimed to describe the contribution of factors such as the size of the population, the labor market, employment and labor productivity in the variation of the real Gross Domestic Product of Ecuador from 1996 to 2019. The interaction of the different variables was analyzed according to a decomposition model of the variation of the real Gross Domestic Product, whose most important contribution is the identification of the main sources associated with the evolution of the Gross Domestic Product in the short term. The fundamental results showed that the growth rate of the real Gross Domestic Product shows a fluctuating performance in the period, with two years of fall or negative variations in the Gross Domestic Product (1999 and 2016). Most of the accumulated absolute variation in the Gross Domestic Product between 1996 and 2019 had a counterpart in the effect generated by the variation in the working-age population. However, the highest correlation was found between the growth rate of the Gross Domestic Product and the interannual growth rates of the employed population and productivity, which suggests that the growth of the Gross Domestic Product is low mainly due to the low expansion in the employment and productivity.