Ecuador leapt into the global economy seeking economic development but found only dependency. María Gabriela Palacio Ludeña writes.
At Guayaquil airport, Ecuadorians disembark from deportation flights, some wearing ankle monitors while others are still in transit clothes following the reinstatement of aggressive enforcement policies under Trump’s second administration. As of April 1, 2025, 2,190 Ecuadorians had already been deported from the U.S. that year alone, according to Ecuador’s Dirección de Protección de Ecuatorianos en el Exterior (El Comercio). These deportees typically arrive with their personal belongings in clear plastic bags, a standard procedure by U.S. immigration authorities that underscores the disposability and bureaucratised nature of the process.
Ecuador played by the rules of global capitalism: it dollarised, liberalised, and opened its borders to trade and finance. Yet, in today’s trade wars, it finds itself with no protection, only exposure.
Ecuador’s participation in globalisation, rather than fostering development, has entrenched its subordination.
Ecuador embodies a structural paradox: the countries that implemented the neoliberal playbook most rigorously, such as liberalising trade, privatising services, and dollarising currencies, are now the ones most exposed to the fallout of global economic instability. Ecuador epitomises the systemic imbalance at the heart of the current global order: a system where rule-takers are disciplined, and rule-makers are shielded. In Ecuador’s case, the simultaneous loss of monetary sovereignty, dependence on volatile commodity exports, and rising external debt have rendered it acutely vulnerable to exogenous shocks.
Viewed through the lens of dependency theory (see box, Dependency Theory), Ecuador’s experience illustrates how integration into global markets on unequal terms reinforces its peripheral status. The country is structurally excluded from shaping the very rules that govern trade and finance, and its participation in globalisation, rather than fostering development, has entrenched its subordination.
As Cristóbal Kay argued, dependency theory seeks to uncover both the internal and external mechanisms of domination and exploitation that hinder autonomous development. These dynamics remain relevant today as global economic restructuring and financialisation continue to entrench dependency through new forms of indebtedness, technological subordination, and extractivist regimes.
The Ecuadorian Experiment
In 2000, Ecuador became the first South American country to adopt the U.S. dollar as legal tender. Promoted as a bulwark against inflation and political instability, dollarisation became the foundation of a model reform trajectory. With constrained public spending, labour flexibilisation, and successive trade openings, including to China, the EU, and the U.S., Ecuador appeared integrated into global markets.
Integration was never meant to secure solvency; it was meant to secure compliance.
But this integration bred dependency. Ecuador lost monetary sovereignty and became reliant on oil exports, remittances, and external credit. Between 2017 and 2024, the country signed loan agreements with the IMF totalling over USD 17 billion. The most recent, signed in May 2024, granted USD 4 billion under strict conditions of fiscal consolidation and subsidy rationalisation deepening an already pro-cyclical policy orientation. Dollarisation renders Ecuador structurally pro-cyclical: it cannot devalue, adjust interest rates, or pursue counter-cyclical spending without external financing. Global downturns are transmitted directly and magnified internally, particularly through rising debt-servicing costs, falling remittances, and capital outflows. At 70% of GDP, Ecuador now carries one of the highest public debt burdens in Latin America.
These pressures coincide with escalating violence and mass displacement. In 2023 alone, over 121,000 Ecuadorians were apprehended at the U.S.-Mexico border, many of them having crossed the Darién Gap. By 2025, the situation has intensified. Deportation flights have resumed at scale, even as Panama and the U.S. implement stricter deterrence measures. These “returns” to a fragile and fiscally constrained state point to a broader contradiction: integration was never meant to secure solvency; it was meant to secure compliance.
Global Trade Wars, Local Wounds
The Trump administration’s return to power in 2025 has brought renewed tariffs and economic nationalism. On April 5, the U.S. imposed a 10% universal tariff on imports from all countries, Ecuador included, under the so-called “Liberation Day” measures. This effectively ended what remained of Ecuador’s preferential treatment under ATPDEA and GSP-like schemes, impacting core exports like bananas, shrimp, flowers, and cocoa.
Trump frames these policies as protecting American jobs and reshoring industry. But in practice, they function as economic weapons reordering global supply chains while leaving labourers exposed. Higher U.S. interest rates translate into rising repayment costs for countries like Ecuador that borrow in dollars. Meanwhile, “nearshoring” strategies benefit Mexico and parts of Central America, further displacing countries like Ecuador from investment flows.
Migrant workers are doubly affected: invited in times of labour shortages, they are expelled when it is convenient. Deportation thus becomes not only a border security measure but also a flexible mechanism for regulating the labour market. Drawing on Saskia Sassen’s analysis of systemic expulsions (see Box Systematic Expulsion), we can understand this pattern not merely as marginalisation but as a form of active dismemberment from the social contract. Deportation functions less as a failure of integration than as a designed feature of the underside of the global economy, one that preserves the free movement of capital and goods while criminalising the mobility of labour. Surplus populations are governed not by incorporation but by strategic disposability.
Caught in Reverse Corridors
The Darién Gap has become both a literal and symbolic terrain of expulsion. Once crowded with Ecuadorians risking everything to reach the U.S., it now sits eerily quiet. But this silence does not signal safety: it marks the tightening grip of deterrence and enforcement. In 2023, over 520,000 migrants traversed it, Ecuadorians were the second-largest group. But by mid-2025, that corridor is no longer a route forward but a loop backward. Under direct U.S. pressure, Panamanian authorities have begun towing migrant boats back to Colombia, a practice branded as “self-deportation” but carried out with military coordination and minimal safeguards.
The result is a violent stalling of mobility. Deportation flights from the U.S. and Mexico to Ecuador have become routine, especially under the Safeguard and expedited removal programmes that intensified after 2023. Deported Ecuadorians disembark into a country where blackouts delay hospital surgeries, extortion rackets dominate informal employment, and formal jobs remain scarce or inaccessible. Many return indebted from their journeys north, debts often owed to smuggling networks, family lenders, or predatory loan schemes.
In this context, deportation emerges not as a bureaucratic end to migration but as a transnational instrument of labour discipline. It operates across borders to ensure migrant labour remains insecure, circular, and disposable, maximising its extractability while externalising the social costs to sending states. Migrants are cycled through humanitarian and security regimes that promise protection but deliver deterrence.
You can go your own way now
Ecuador cannot borrow its way out of dependency, nor can it rely on external trade or migration as substitutes for development. As both the pandemic and ongoing trade wars have made clear, resilience must be generated internally. This requires investing in food sovereignty, revitalising public infrastructure, implementing progressive taxation on wealth and capital flight, and reclaiming regulatory control over the extractive and financial sectors.
Ecuador cannot borrow its way out of dependency, nor can it rely on external trade or migration as substitutes for development.
As Jostein Hauge argues, Trump’s trade war may inadvertently catalyse a long-overdue global reckoning. For dollarised economies like Ecuador, this reckoning is existential. Without monetary sovereignty, they lack the means to respond to external shocks, such as U.S. interest rate hikes, capital flight, or tariff barriers, rendering the balance of payments a site of acute vulnerability.
In dollarised states, trade deficits cannot be mitigated through currency devaluation, nor can domestic monetary expansion be deployed to stimulate demand. As a result, governments are left to choose between politically costly austerity or further borrowing, often under conditions imposed by international financial institutions. Foreign direct investment becomes a lifeline, yet one frequently tied to geopolitical alignment and structural concessions. This situation creates what dependency theorists have long cautioned against: integration without autonomy.
Ecuador exemplifies this condition. Its economy is open but brittle, heavily reliant on commodity exports, remittances, and external credit. As Enrique Dussel Peters explains, Latin American countries are now navigating a coercive framework where “alignment” with U.S. geopolitical and commercial interests secures market access and financing while divergence invites exclusion. Ecuador’s recent constitutional amendment permitting foreign military bases is not merely about national security: it is a structural concession in a context where foreign policy is constrained by economic precarity.
The global economic system remains more committed to fiscal discipline and creditor confidence than to human development.
At the CELAC summit, President Lula da Silva stated: “freedom and self-determination are the first victims of a world without multilaterally agreed rules.” Echoing this, Honduran President Xiomara Castro urged Latin American unity amid unilateral reconfigurations of global trade geographies by powers like the United States.
This moment, when viewed through Latin America’s historical experience with debt regimes and structural adjustment, evokes a deeper critique: the global economic system remains more committed to fiscal discipline and creditor confidence than to human development. Yet, as Ecuador’s experience makes clear, the first step toward resisting this systemic disposability is recognising the asymmetry not as a failure but as a design.
