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Private investment, government expenditure and tax burden in Ecuador

Abstract:

We analyze empirically the determinants of private investment in the 24 provinces in Ecuador in the 2007-2014 period. Since our analysis is at the province level and we cannot use the exchange rate as the representative variable of the foreign sector as it is done in the previous literature, the main novelty that we propose is the use of remittances to capture the effect of the foreign sector in Ecuador. Ecuador is an Andean country with various characteristics typical of tropical nations, and is located in the northwestern region of South America. It is made up of four natural regions, which are called Costa (or Litoral), Sierra (or Interandina), Oriente (or Amazónica) and Galápagos (or Insular). These regions also have 24 provinces (and their respective capitals), which are Azuay, Bolívar, Cañar, Carchi, Chimborazo, Cotopaxi, El Oro, Esmeraldas, Galápagos, Guayas, Imbabura, Loja, Los Ríos, Manabí, Morona Santiago, Napo, Orellana, Pastaza, Pichincha, Santa Elena, Santo Domingo de los Tsáchilas, Sucumbíos, Tungurahua, Zamora Chinchipe.