Ecuador - Development problems and prospects (Vol. 3 of 3) : Technical annexes and statistical appendix

Report NG 2373-EC 1t E COPY Development Problems and Prospects of Ecuador Special Report (in Three Volumes) Volume 11l: Technical Annexes and Statistical Appendix June 18, 1979 Latin America and the Canbbean Region Country Programs I FOR OFFICIAL USE ONLY Documrent of the World Bank Tnis document has a restricted distribution and may be used by recipients ornly in the performance of their official duties Its contents may not otherwise be disclosed without World Bank authorization  :: ~ ~ ~ ~ ~ ~ ~ ~~ ~~CREC EOUT:-VA:::::LENT &:::000: f : ; : ;:: 0:0:::x 0 r;L:: f~~~~~~~~~~ Sucr US : $0:.04f:;f:0 0t00 : -0: :::: f 0 : :~~~~~~~~ us 25 Sucres f :S:: :S: : F f~ ~ ~ ~ ~ Fsa1 Yer: Jauay It December = 0::D :: f::: 0;D0f: f: :: : :: :: 0:f: ::: ::: f +: 0:: : 00 f :00:C:0J  FOR OFFICIAL USE ONLY ABBREVIATIONS AIPSE Asociacion Independiente del Pueblo Shuar de Ecuador (Independent Association of Shuar People in Ecuador) ASA Agencia de Servicios Agropecuarios (Agency for Agriculture and Cattle Services) BCE Banco de Cooperativas del Ecuador (Ecuadorian Bank of Cooperatives) BEV Banco Ecuatoriano de la Vivienda (Ecuadorian Housing Bank) BNF Banco Nacional de Fomento (National Development Bank) CAME Conscripcion Agraria Militar Ecuatoriana (Ecuadorian Agrarian Draft) CEDECE Comision de Estudios para el Desarrollo de la Cuenca del Rio Guayas (Studies Commission for the Development of the Guayas Basin) CENAPIA Centro Nacional de la Pequena Industria y Artesania (National Center for Small Industry and Artisans Industrial Development) CENDES Centro de Desarrollo Industrial (Center for Industrial Development) CEPCO City Ecuadorian Production Company CEPE Corporacion Estatal Ecuatoriana (Ecuadorian Petroleum Corporation) CEPECA Cautivo Empresa Petrolera Ecuatoriana (Cautivo Ecuadorian Petroleum Enterprise) CIP Centro Internacional de Informacion de Pre-inversion (International Center of Pre-investment Information) COFIEC Corporacion Financiera Ecuatoriana (Ecuadorian Development Finance Compar.> CREA Centro de Reconversion Economica de Azuay, Canar y Morona (Center for the Economic Rehabilitation of Azuay, Canar and Morona) CRM Centro de Rehabilitacion de Manabi (Center for the Rehabilitation of Manal CV-CFN Comision de Valores - Corporacion Financiera Nacional (National Finance Corporation) DECE Departamento Ecuatoriano de Construcciones Escolares (Ecuadorian Departmer of School Construction) DCH Direccion General de Hidrocarburos (Department of Hydrocarbons) DINE Directorio Industrial de las Fuerzas Armadas (Industrial Directorate of Armed Forces) - DNP Direccion Nacional del Personal (National Personnel Directorate) ECUFINSA Ecuatoriana Financiera, S.A. (Ecuadorian Financiera S.A.) EMAG Empresa Municipal de Alcantarillado de Guayaquil (Guayaquil Municipal Sewerage Company) ENPROVIT Empresa Nacional de Productos Vitales (National Vital Products Company) ENAC Empresa Nacional de Almacenamiento y Comercializacion de Productores Agropecuarios (Storage and Sale of Agricultural Products Company) ENDES Empresa Nacional de Semen (National Semen Company) FECOPAM Federacion de Cooperativas Agricolas y de Mercadeo (Federation of Agricultural and Marketing Cooperatives) FINANSA Financiera Nacional S.A. (National-Financ4era-S.A.) FODEM Fondo de Desarrollo Municipal (National Municipal Development Fund) FODERUMA Fondo de Desarrollo del Sector Rural Marginal (Development Fund for the Rural Marginal Sector) FONADE Fondo Nacional de Desarrollo (National Development Fund) FONAPAR Fondo Nacional de Participacion (National Participation Fund) FONAPRE Fondo Nacional de Pre-inversion (National Pre-investment Fund) FOPEX Fondo de Promocion de Exportaciones (Export Promotion Fund) IEOS Instituto Ecuatoriano de Obras Sanitarias (Ecuadorian Institute of Sanitary Constructions) IERAC Instituto Ecuatoriano de Reforma Agraria y Colonizacion (Ecuadorian Institute for Agrarian Reform and Colonization) This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  IESS Instituto Ecuatoriano de Seguro Social (Ecuadorian Institute of Social Security). IETEL Instituto Ecuatoriano de Telecomunicaciones (Ecuadorian Tele- communications Institute) INEC Instituto Naciosial de Estadisticas y Censos (National Institute of Statistics and Census) INECEL Instituto Ecuatoriano de Electrificacion (National Electrificat&Urn Institute) INERHI Instituto Ecuatoriano de Recursos Hidraulicos (Ecuadorian Institute of Hydraulic Resources) INCRAE Instituto Nacional de Colonizacion de la Region Amazonica Ecuato- riana (National Institute for the Colonizacion of the Ecuadorian Amazon Region). INIAP Instituto Nacional de Investigaciones Agropecuarias (Agricultural Research National Institute) JNV Junta Nacional de la Vivienda (National Board for Housing) JUNAPLA Junta Nacional de Planificacion y Coordinacion (National Board for Planning and Coordination) MAG Ministerio de Agricultura (Ministry of Agriculture) MFF Mecanismo de Fondos Financieros (Financial Funds Mechanism) MICEI Ministerio de Industrias, Comercio e Integracion (Ministry of Industry, Commerce and Integraticn) MRNE Ministerio de Recursos Naturales y Energia (Ministry of N4atural Resource and Energy) MOP Ministerio de Obras Publicas (Ministry of Public Works) MSP Ministerio de Salud Publica (Ministry of Public Health) iIE Instituto Nacional de Energia (National Institute of Energy) OIPE Oficina Integrada de Planificacion de Esmeraldas (Integrated Bureau for Planning of Esmeraldas) PIDA Proyectos Integrados de Desarrollo Agropecuario (Integral Agricultural Development Projccts) PREDESUR Programa Regional para el Desarrollo del Sur de Ecuador (Regional e Program for the Development of Ecuador's South) SECAP Servicio Ecuatoriano de Capacitacion Profesional (Ecuadorian Professional Training Institute) SPA Sector Publico Agricola .(Agriculture Public Sector)  DEVELOPMENT PROBLEMS AND PROSPECTS OF ECUADOR SPECIAL REPORT TABLE OF CONTENTS VOLUME III - TECHNICAL ANNEXES AND STATISTICAL APPENDIX Page No. A. TECHNICAL ANNEXES I. Population growth and Projects .......................... 528 1. Population Size, Growth and Distribution .... ........ 528 2. Population Dynamics ................................. 530 3. Future Population in Ecuador ........................ 531 4. Implications of Projections for the Educational System 535 5. Implications of Population Projections for the Economically Active Population .... ................ 537 II. The Health Sector . 1. Introduction ........................................ 539 2. The Nation's Health ................................. 539 3. The Health System .................................... 541 4. Main Issues in the Delivery of Health Services ...... 547 III. Estimates of the Elasticity of Substitution of Labor and Capital in Ecuadorian Manufafturing .... ............ 550 IV. The Public Sector Framework for Principal Goods Sectors 571 1. The Structure of Public Sector in Agriculture ...... 571 (i) Overview ...................................... 571 (ii) The Role of the Public Sector in Agriculture .. 571 (iii) The Ministry of Agricutlure .... ............... 573 (iv) Decentralized Institutions .... ................ 580 (v) Functional Programs ........................... 584 (vi) The Results of Public Intervention in Agriculture .................................. 588 (vii) Conclusions and Recommendations .... ........... 590 2. The Structure of the Ecuadorian State Petroleum Corporation (CEPE) ................................ 592 (i) Background .................................... 592 (ii) Structure ..................... 592 (iii) Staff .592 (iv) Administration .596 (v) Planning .596 (vi) Conclusions .597 B. STATISTICAL APPENDIX  Text Tables Page No. A-1 Distribution of the Population according to the Three National Population Censuses .529 A-2 Trends in Birth and Dead Rates 1920-74 .............. 530 A-3 Expectation of Life at Birth by Sex and Gross Repro- duction Rates /a assumed for the years 1974-2009 532 A-4 Total Population for Selected Years and Average Annual Rates of Growth for Five-Year Periods according to Three Different Assumptions on the future course of fertility 1974-2009 .534 A-5 Index of Per Capita Income under Three Different Rates of Growth of Real Income and under Three Projections of Population 1974-2009 (Base 1974 = 100.0) 535 A-6 Population in School Age for Selected Years according to Different Assumptions about Future Population Changes .536 A-7 Economically Active Population under Three Different Assumptions on the future growth of the total popu- lation ............................................. 538 A-8 Structure of Health Services, 1977 ..... .............. 539 A-9 Human Resources for Health in the Country and Working in the Ministry of Health, 1977 ..... ............... 545 A-10 Estimates of the Elasticity of Substitution of Labor and Capital in Ecuadorian Manufacturing Industry ... 551 A-11 Employment, Wage Bill and Value-added, 1966-75 ........ 553/556 A-12 Wages per Employee, 1966-74 ........................... 557 A-13 Real Wages per Employee, 1966-74 ..... ................. 558 A-14 Value-Added in Constant Prices, 1966-75 .... .......... 559 A-15 Value-Added per Worker in Constant P-rices, 1966-74 560 A-16 Value-Added per worker (v) and real wage cost per worker (w) in manufacturing, 1966-74 .... ........... 561 A-17 Total, Manufacturing Industry ..... ................... 562/570 A-18 Personnel in the Public Sector in Agriculture, 1970, 1973, 1976 .......... ............................... 572 A-19 Consolidated Public Sector Fixed Investment .... ...... 573 A-20 Expenditures in Agriculture by Public Institutions, 1973-77 ............ ................................ 574 A-21 The Zonal Offices of the Ministry of Agriculture, 1978: Staff, ASAs, PIDAs and Production Units to be assisted ..................................... 578 A-22 Yields of Major Export and Domestic Consumption Crops, 1965-78 . ............................................ 588 A-23 Personnel of CEPE by Category, 1972-77 .... ........... 594 A-24 Location of CEPE Staff by Categories, 1977 .... ....... 595  A. TECHNICAL ANNEXES  I I I I I  - 528 - I. POPULATION GROWTH AND PROJECTIONS 1. Population Size, Growth and Distribution 1045. The population of Ecuador was expected to reach 7.8 million by mid-1978. This is about eight times as much as it was at the beginning of the century and reflects an acceleration in the rate of growth from about 1 percent per year in the late 1800s to about 3.4 percent per year at present. The Ecuadorian population is now one of the fastest growing in the world. Only three national censuses have been taken in Ecuador, but the intercensal rates of growth clearly show the acceleration. Between 1950 and 1962 the average annual rate of growth was 2.8 percent; between 1962 and 1974 that rate had already risen to 3.3 percent; a further, though small, increase is expected to have taken place in the last four years. 1046. Ecuador's main regions have experienced different rates of popula- tion growth (see Table A.1). Consequently, their relative position in terms of population has changed. In 1950 the Sierra had more than half of the popula- tion (58 percent); in 1962, it had 51 percent; and, by 1974 the proportion had decreased to 48 percent. By contrast, the Costa region increased its share of the population from 40 percent in 1950 to 49 percent in 1974. The Oriente also gained in population between censuses; it had only 1.4 percent in 1950 and reached 2.6 percent in 1974, due in part to the development of the oil industry in that region. 1047. M4ore important from the point of view of modernization, is the changing rural-urban composition of the country 1/. In 1950 only 28 percent of the population was classified as urban; by 1962 this proportion had in- creased to 36 percent and in 1974 it reached 41 percent. The three major cities of the country--Guayaquil, the largest; Quito, the capital; and Cuenca--increased their share of the total from 16 percent in 1950 to 23 percent in 1974. This increase, however, was not out of proportion with the increase in urban population. The proportion of the urban population living in the three largest cities remained more or less constant between 1950 and 1974, at about 56 percent. In the first intercensal period (1950-1962) Guayaquil grew faster than either Quito or Cuenca, but in the 1962-1974 period the order was reversed with Cuenca growing faster than Quito, and Quito in turn growing faster than Guayaquil. 1048. The age structure of the population has also undergone some changes between the three censuses. Due to the high rate of growth, the population became younger between 1950 and 1974. The proportion of the population under age 15 went from 42.5 percent to 44.5 percent during the period, ensuring high birth rates in the future unless there is a substantial decline in fertility. 1/ In Ecuador, the concepts of rural-urban population are given by the administrative divisions. Ecuador is divided into provinces, which are in turn divided into "cantones", in turn subdivided into "parishes". The population living in the provincial capital or in the "canton" principal agglomeration is considered an urban population. The rest is rural population.  - 529 - Table A-1: DISTRIBUTION OF THE POPULATION ACCORDING TO THE THREE NATIONAL POPULATION CENSUSES Enumerated Population 1950 1962 1974 1978 Total Population (000) 3,203 4,476 6,552 7,814 Males 1,595 2,236 3,282 Females 1,608 2,240 3,270 Population by Region (000) Sierra 1,856 2,271 3,167 Costa 1,298 2,127 3,189 Oriente 46 75 174 Galapagos 1 2 4 Population by Residence (000O Rural 2,289 2,864 3,846 Urban 914 1,612 2,706 Age (%) 0-14 42.5 44.6 44.5 15-49 46.2 44.8 44.5 50-64 7.7 7.3 7.1 64+ 3.5 3.2 3.8 Cities (000) Guayaquil 259 511 823 Quito 210 355 600 Cuenca 40 60 104 a/ Estimated June 30, 1978. Sources: Direcci6n General de Estadistica y Censos: Informaci6n Censal; Resumen de los Resultados Definitivos del Censo Nacional de Poblaci6n de 1950. Quito, Ecuador, 1952 Junta Nacional de Planificaci6n y Coordinaci6n Economica. Divisi6n de Estadistica y Censos. Segundo Censo de Poblaci6n y Primer Censo de,Vivienda, 1962. Quito, Ecuador, 1964 Junta Nacional de Planificacion y Coordinacion Economica. Divisi6n de Estadistica y Censos. III Censo de Poblaci6n y II de Vivienda, 1974 Resultados Definitivos. Quito, Ecuador, 1977  - 530 - 2. Population Dynamics 1049. The increase in the rate of population growth which took place in Ecuador in this century is due mainly to changes in mortality, as illustrated in Table A.2. During this period, the crude death rate (deaths per thousand population) declined by about 65 percent, from about 29 to about 10. Fertility, on the other hand, as expressed by the crude birth rate (births per thousand population) has decreased by about 6 percent. Migration has not affected the total population of the country in any meaningful way. Table A-2: TRENDS IN BIRTH AND DEATH RATES 1920-74 Events per thousand persons Growth Period Birth Deaths (%) 1920-1924 47.7 28.9 1.9 1940-1944 46.0 24.0 2.2 1960-1964 45.4 14.7 3.1 1965-1969 45.2 11.1 3.4 1970-1974 45.0 10.2 3.5 Sources: Collver, O.A., Birth Rates in Latin America: New Estimates of Historical Trends and Fluctuations, University of California, Institute of Inter- national Studies, Berkeley, 1965 Merlo, Pedro. Caracteristicas Demograficas de la Poblacion del Ecuador y su Distribucion en el Territorio Nacional, Junta Nacional de Planifi- cacion y Coordinacion Economica, Instituto Nacional de Estadistica y Censos, Quito, Ecuador, May 1977 1050. The actual level of mortality is better expressed by the expectation of life at birth. In 1950 the expectation of life at birth for both sexes was about 45.5 years. The Centro de Analisis Demografico of Ecuador 1/ used an expectation of life of 60.5 years as base for its projections in 1974. This implies a gain in expectation of life of 15 years, or about 3.1 years per five- year period, between 1950 and 1974. 1051. Another index of mortality, the infant mortality rate (deaths before age one per thousand births) declined by at least 50 percent between 1915-1920 when it was about 180 and 1974 when it reached about 70. Since figures are taken from registered data, they are likely to be on the low side. In any 1/ Junta Nacional de Planificacion y Coordinacion Economica, Centro de Analisis Demografico. Ecuador: Provecciones de Poblacion por Grupos de Edad y Sexo, 1974-2009. Quito, February 1976, p.4.  - 531 - case, they are indicative of an improvement which still has some way to go (e.g., Panama has an infant mortality rate of 36 per 1,000 live births and Venezuela about 46 per 1,000). 1052. Deaths of children under one year of age in Ecuador constitute, even today, about 26 percent of total deaths in the country, children dying under the age of five constitute about 42 percent of total deaths. The high percentage of deaths at early ages is the product of high morbidity among these age groups, and unfavorable environmental conditions; it is also due to the high proportion of the population in those age groups. 1053. In contrast with the decline in mortality, fertility levels have not changed significantly in Ecuador during the present century. The crude birth rate, which was about 48 births per thousand population in the early 1920s, decreased to about 45 in the first half of the 1970s. The average number of live births per woman living through her childbearing age is now about 6.7, a figure which has remained fairly constant throughout this century. 1054. Despite Ecuador's high level of fertility, there are significant differences in fertility among groups of women. An analysis of the 1974 census, undertaken by the Centro de Analisis Demografico 1/ shows differences in fertility according to level of education, female economic activity and urbanization. The total fertility rate (average number of births per woman living through her childbearing years) was 7.7 for illiterate women; 7.6 for women with some primary education; 5.9 for women with completed primary education; and 4.4 for women with secondary or higher education. Economically active women had a total fertility rate of 4.6 in contrast to the 7.2 for economically inactive women. Women residing in cities with over 50,000 popu- lation had a total fertility rate of 5.7 compared with 7.2 for women living in places with less than 50,000 people. 1055. In interpreting the above differentials it is important to bear in mind that the number of women with relative low fertility is small and those women share several of the characteristics related with family size: a large majority of them live in urban areas, participate in economically productive activities outside the home and generally share a relatively high level of education. 3. Future Population in Ecuador 1056. Projections of future population trends have been made by the Centro de Analisis Demografico de Ecuador. This section relies completely on those projections. The projections use as basic data the results of the 1974 census (adjusted for underenumeration) and observed trends in the last two intercensal periods 1950-1962 and 1962-1970. The projections include one assumption about the future course of mortality and three assumptions about the future course of fertility (see Table A-3). 1/ Ibid. p. 51-56.  - 532 - Table A-3: EXPECTATION OF LIFE AT BIRTH BY SEX AND GROSS REPRODUCTION RATES /a ASSUMED FOR THE YEARS 1974-2009 Year Expectation of Life Gross Reproduction Rate /b at Birth in Years Projections Males Females HiRh Medium Low 1974 59.11 61.83 3.28 3.17 3.05 1979 61.28 63.63 3.28 3.05 2.82 1984 62.84 65.21 3.28 2.95 2.61 1989 64.23 66.61 3.28 2.84 2.39 1994 65.47 67.84 3.28 2.75 2.21 1999 66.58 68.95 3.28 2.66 2.04 2004 67.50 - 69.93 3.28 2.58 1.87 2009 /a The gross reproduction rate is the average number of female births per woman living-through her childbearing age. This number multiplied by the sex ratio at birth (about 2.05) gives the total fertility rate. /b The figures on gross reproduction rate are for five-year periods, therefore, the ones for the period 1974-1979 are different for the three projections implying that in the medium and low projections they declined between 1974 and 1979. Source: Junta Nacional de Planificacion y Coordinacion Economica. Centro de Analisis Demografico. Ecuador. Provecciones de Poblacion por Grupos de Edad v Sexo, 1974-2009. Quito, February 1976. 1057. Assumptions for future mortality and fertility trends were made on the basis of past trends. More important, however, the medium fertility assumption was based on differentials according to education, economic activity rates and urbanization. Thus, the fertility changes for the medium projection represent the expected effects of modernization in Ecuador during the 25 years of the projection. The high projection assumes fertility constant, i.e., that fertility is independent of socio-economic conditions or that socio-economic conditions will not significantly change during the period--an unlikely possibility. The low projection assumes that fertility will fall twice as rapidly as the fall indicated by the medium projection; this projection would be realized only if significant changes in fertility behavior were to take place.  -533 - 1058. For the medium and low fertility assumptions, it is implied that family planning services would be available to couples who would be willing to have smaller families. At present, family planning services are supposed to be a part of the maternal and child health services of the Ministry of Health, but in practice their availability is limited-and their existence is not widely known because there are no information efforts in connection with that program. The low population projection would be unlikely without a substantial increase in availability of family planning services and of community information and education activities. 1059. These projections (shown in Table A-4) illustrate alternative trends; if fertility levels remain constant for the period 1974-2009, the population would reach 24.5 million in 2009 or more than three times its present size. If the medium projection is realized, the decline in fertility brought about by changes in socio-economic factors would just about compensate for the projected decline in mortality; even so, the population would be about 3 million lower in 2009 than if fertility were to remain constant. The low projection, which assumes a 43 percent decline in fertility during the projection period, would result in a population of 18.9 million in the year 2009, or 5.6 million less than in the high projection. The rate of growth in this projection would be reduced from the present 3.4 percent per year to only about 2.5 percent in the last five years of the projection. This rate of growth, however, would still be very high, since the population would continue to grow and reach a very high absolute size during the next century. Even under the assumption of highest fertility decline, Ecuador would almost triple its population in the period 1974-2009.  - 534 - Table A-4: TOTAL POPULATION FOR SELECTED YEARS AND AVERAGE ANNUAL RATES OF GROWTH FOR FIVE-YEAR PERIODS ACCURDING TO THREE DIFFERENT ASSUMPTIONS ON THE FUTURE COURSE OF FERTILITY 1974-2009 Average Annual Rate Year Total Population (in thousands) of Growth (%) Iigh Medium Low High Medium Low 1974 6,830 6,830 6,830 3.44 3.36 3.29 1979 8,112 8,078 8,052 3.54 3.37 3.18 1984 9,684 9,559 9,440 3.62 3.34 3.06 1989 11,608 11,299 11,000 3.66 3.30 2.92 1994 13,942 13,326 12,727 3.70 3.26 2.78 199.9 16,777 15,686 14,625 3.75 3.22 2.64 2004 20,234 18,428 16,685 3.79 3.17 2.47 2009 24,459 21,596 18,876 Source: Junta Nacional de Planificacion y Coordinacion Economica. Centro de Analisis Demografico. Ecuador: Proyecciones'de Poblacion por Grupos de Edad v Sexo 1974-2009. Quito, February 1976 1060. Per capita income in Ecuador today is only about one-fourth of that in Southern Europe and about one-tenth that in Western Europe. If Ecuador were to have a rate of economic growth of 6 percent a year for the next 20 years, the per capita income by 2009 would more than double under any of the three projections (see Table A-5), but still it would be only about half of that in present southern Europe. If the rate of growth of the economy fell to an average of 3 percent for the next 20 years, per capita income would decrease as much as 20 percent. On the other hand, a rate of growth of the economy at 9 percent a year would ensure that Ecuadorians would reach present Southern Europe levels of income by the year 2004. In the meantime, if Southern Europe's per capita GNP continues growing as in the period 1960-1976 (about 5 percent per year), it will increase by 452 percent in the period and Ecuador's GNP per capita in 2009, even under the most optimistic assumptions, would only be about one-third of that in Southern Europe in the same year.  - 535 - Table A.5: INDEX OF PER CAPITA INCOME UNDER THREE DIFFERENT RATES OF GROWTH OF REAL INCOME AND UNDER THREE PROJECTIONS OF POPULATION 1974-20CC a 1974 = 100.0) Projections 1974 1979 1984 1989 1994 1999 2004 2009 Economy grows at 3% per year High 100.0 97.6 94.8 91.7 88.5 85.2 81.9 78.6 Medium 100.0 98.0 96.0 94.2 92.6 91.2 90.0 89.0 Low 100.0 98.3 97.2 96.7 96.9 97.8 99.4 101.8 Economy grows at 6% per year High 100.0 112.7 126.3 141.0 157.1 174.7 193.9 214.6 Medium 100.0 113.1 128.0 144.9 164.4 186.9 212.9 243.1 Low 100.0 113.5 129.6 148.8 172.1 200.4 235.1 278.1 Economy grows at 9% per year High 100.0 129.5 167.3 214.3 274.6 351.0 447.8 570.0 Medium 100.0 130.1 163.2 220.2 287.2 375.5 491.7 645.6 Low 100.0 130.5 171.3 226.2 300.8 402.7 543.1 738.6 Source: JUPLA, Centro. Ecuador: Provecciones de Poblacion por Grupos de Edad y Sexo 1974-2009. Quito, February 1976 1061. How does population growth during the next 20 years affect. per capita income? Regardless of the rate of growth of GNP, per capita income will be about 30 percent higher in 2009 if-population grows as in the low rather than the high projection. The difference will be about 13 percent, if population grows as in the middle rather than the high projection. Population growth, therefore, will affect the standard of living of the future popu- lation. A slower rate of population growth would promote more savings, higher investment and a faster rate of economic growth. This in turn should result in a higher demand for labor, better income distribution and more Government funds to provide social services. At the same time, better living stand- ards are likely to produce lower fertility rates, reinforcing the cycle. 4. Implications of Projections for the Educational System 1062. It is the goal of every government to provide its people with enough education to make them productive members of society. Frequently this cannot be achieved because of financial constraints; a high rate of growth of popu- lation can aggravate these constraints. The population projections proposed by the Centro de Analisis Demografico in Ecuador give an idea of the magnitude of the problem that the Government will have to face during the next 25 years in providing primary and secondary schooling (see Table A.6).  - 536 - 1063. Primary School. In the school year 1973-74, there were about 1.2 million children of primary school age and a similar number of students enrolled at this level, implying availability of facilities for universal primary education. There were about 40 students per schoolroom and per teacher. In the period 1974-2009 the population aged 6-11 will increase by 1.6, 2.4, or 3.2 million under the low, medium, or high projections, respec- tively. In order to continue providing universal primary education, it will be necessary to create new school places for those numbers of students, with all the implications concerning capital and recurrent expenditures. The difference between the low and the high projections is quite important. If the population were to grow along a path similar to the low rather than the high projection, the number of school person-years to be provided during the period would be reduced by 16.3 million, which is equivalent to the services of 408,000 teacher-years. The number of new school rooms to be built would be reduced by about 40,000. Table A.6: POPULATION IN SCHOOL AGE FOR SELECTED YEARS ACCORDING TO DIFFERENT ASSUMPTIONS ABOUT FUTURE POPULATION CRANGES (In thousands) Projection 1974 1979 1984 1989 1994 1999 2004 2009 Primary (6-11) High 1,163 1,380 1,692 2,051 2,479 2,983 3,599 4,361 Medium 1,163 1,;380 1,641 1,936 2,660 2,630 3,051 3,538 Low 1,163 1,380 1,631 1,838 2,061 2,288 2,523 2,753 Secondary (12-17) High 947 1,118 1,304 1,597 1,938 2,343 2,583 3,405 Medium 947 1,118 1,304 1,567 1,834 2,144 2,490 2,889 Low 947 1,118 1,304 -1,539 1,736 1,948 2,164 2,387 Source: Junta Nacional de Planificacion y Coordinacion Economica. Centro de Analisis Demografico. Ecuador: Provecciones de Poblacion por Grupos de Edad v Sexo 1974-2009. Quito, February 1976. 1064. Secondary School. In 1973-74 there were only 300,000 students in secondary school in Ecuador. The number of children in the age group 12-17 was 947,000 in mid-1974, making the enrollment ratio about 32 percent. As some form of education should be provided to this population to make it economically productive, the deficit in school places for this age group amounted to about 647,000. In order to reach universal middle education in the years up to 2009, it will be necessary to create more school places. If the high population projection were to be realized, 3.1 million new places would be needed by the year 2009; if population were to grow as illustrated in the medium projection, 2.6 million new places would be needed; if population  - 537 - grows as in the low projection, only 2.1 million new places will be needed. The differences in population growth between the high and the low projections would, therefore, imply a saving in the construction of about 30,000 school- rooms at the present rate of 34 students per schoolroom, and reduce recurrent expenditures by 7.9 million school person-years. 5. Implications of Population Proiections for the Economically Active Population 1065. The Economically Active Population (EAP) of Ecuador reached almost 2.0 million in 1974. Only 17 percent of the EAP were women and 3.2 percent of EAP were unemployed. As the total population was 6.5 million people at the time, the implication is that for every economically active person there were 2.27 dependents, excluding the active person. Given the fast rate of population growth in the recent past, the EAP will continue to grow at least for the next 15 years. After that, the rate of growth of the EAP will depend on the prevailing fertility levels in the next few years. 1066. Based on the population projections prepared by the Centro de Analisis Demografico in Ecuador, projections of the EAP for the period 1974- 2009 have been prepared. Beginninig with the participation rates observed in 1974, the following assumptions have been made: Age Sex Assumption less than 15 both decrease linearly to reach zero in 2009 65 and over both decrease linearly to reach zero in 2009 15-64 males constant at 1974 levels 15-19 females increase linearly by 50% 20-39 females increase linearly by 25% 40-49 females increase linearly by 9% 50-64 females constant at 1974 levels These assumptions, applied to the three population projections shown in the demographic section, produce the results presented in Table A.7. 1067. The EAP for the period 1974-89 will be the same for the three population projections because the people in the EAP in this period were already born in 1974; any changes in fertility in the coming years will only influence the EAP beginning 15 to 20 years after their occurrence. From 1974 to 1989 the EAP will grow from 2.0 million to 3.2 million which means that an additional 1.2 million jobs will have to be created during this period to provide those people with employment. The number of jobs in the economy will therefore have to increase at an average annual rate of 3.2 percent.  - 538 - Table A.7: ECONOMICALLY ACTIVE POPULATION UNDER THREE DIFFERENT ASSUMPTIONS ON THE FUTURE GROWTH OF THE TOTAL POPULATION Projections 1974 1979 1984 1989 1994 1999 2004 2009 Males High 1,668 1, 947 2,280 2,674 3,159 3, 758 4,482 5,358 Medium 1,668 1,947 2,280 2,673 3,149 3,713 4,369 5,126 Low 1,668 1,947 2,280 2,672 3,139 3,671 4,259 4,903 Females High 334 392 462 547 650 775 932 1,123 Medium 334 392 462 547 647 767 907 1,075 Low 334 392 462 546 645 759 884 1,026 Total High 2,002 2,339 2,742 3,221 3,809 4,533 5,414 6,481 -edium 2,002 2,339 2,742 3,220 3,796 4,480 5,276 6,201 Low 2,002 2,339 2,742 3,218 3,784 4,430 5,143 5,929 'Rate of Growth of total: % High- 3.16 3.23 3.27 3.41 3.54 3.62 3.66 Medium 3.16 3.23 3.27 3.35 3.37 3.32 3.28 Low 3.16 3.23 3.25 3.29 3.20 3.03 2.88 Source: JUNAPLA. Centro de Analisis Demografico. Ecuador: Proyecciones de Poblacion por Grupos de Edad v Sexo 1974-2009. Quito, February 1976. 1068. From 1989 to 2009 growth of EAP will be influenced by the number of births occurring between 1974 and 1989. Depending on which fertility assumption is realized, the EAP in 2009 will vary between 5.9 and 6.5 million persons, or an increase of between 2.7 and 3.3 million new potential workers in the period 1989-2009. The number of jobs in the economy will therefore have to increase at an annual rate of between 3.1 percent and 3.6 percent.  - 539 - II. THE HEALTH SECTOR 1. Introduction 1069. In Ecuador life expectation lengthened significantly in the last 25 years. Health conditions have improved and mortality ris-ks for many diseases have been reduced. These changes are due to social and economic improvements, greater food production and distribution, extension of water and wsewerage disposal systems and, to some extent, to the curative aspects of health services. But the situation is still far from optimal; a great deal remains to be done to reduce suffering and the economic losses produced by illness and premature death. The Government, at present, is placing great emphasis on the improvement of health; however, a reoriented approach to service delivery should be undertaken in order to maximize the effects of the investments now being planned. The following section briefly discusses the present health system, the activities of the Ministry of Health (MSP) relevant to the provision of basic health services, and the main issues which will need resolution in order to improve health conditions. 2. The Nation's Health 1070. Less information is available on morbidity than on mortality and it is difficult to determine the incidence of different diseases and to discern changes over time. Statistics on hospitalization and statistics on compulsorily reported illnesses comprise the principal sources of data. The first source is not reliable because it only relates to people who have been treated as in-patients in hospitals and includes a great deal of surgery and normal deliveries of children. According to this source, infectious, parasitic, diarrheal diseases and emphysemas and asthmas account for about 16 percent of hospitalizations; cardiovascular diseases, 3 percent; and normal deliveries, 25 percent. The data show that malaria and measles constituted about 50 percent of compulsorily reported cases in 1976. 1071. There is still less information on the prevalence of disease, but from information on mortality, hospitalization and compulsorily reported diseases one can assume that diarrheal diseases and nutritional deficiency diseases are still very prevalent in the country especially among the rural population. The proportion of total deaths due to gastroenteritis and dysenteric diseases remained almost constant between 1968 and 1975. (i) Factors Related to Poor Health 1072. As in most developing countries, Ecuador's health problems are rooted in widespread poverty, especially in rural areas. Poor housing, inadequate supply of potable water, lack of proper sewerage facilities, improper personal hygiene and malnutrition can be cited as basic determinants of poor health. High mortality of women and children can also be traced to high fertility. This situation is aggravated by the lack of proper health care facilities. 1073. Environmental conditions: The lack of housing with adequate sanitary facilities shows in the results of the 1974 census. According to that census only about 42 percent of households are connected to the public water supply  - 540 - and most of these are in urban areas. In rural areas only about 13 percent are connected. Sewerage presents the same problems; about 60 percent of urban households have some form of accepted sewerage; in rural areas, by contrast, only about 13 percent of the households have this facility, making it an average for the country of only 42 percent. Thus, absence of these basic services explains, at least in part, the incidence of parasitic infections. Simply supplying clean water and providing waste disposal systems will not, however, solve the problem; a good program of health education is necessary to teach people how to take advantage of these facilities as they become available. 1074. Malnutrition: The relationship between malnutrition and illness is now widely accepted. Nutritional deficiencies interact with infectious diseases in two ways: (a) malnourished persons are more susceptible to disease; and (b) infections can precipitate malnutrition. The National Nutrition Institute estimates that about 47 percent of pre-school children suffer of some degree of malnutrition, including 1.2 percent who suffer third degree malnutrition. The Institute also points out that the average diet is deficient in calories (18 percent); in proteins (19 percent); in calcium (44 percent); and in vitamin A (44 percent). The presence of goitre indicates a lack of iodized salt at least in the past. Data from the Ministry of Public Health indicates that as of mid-1978, about 85 percent of the salt consumed in the country was iodized. 1075. High fertility: High fertility rates affect the health of both mothers and children. Maternal mortality usually increases with the number of children and the age of the mother. The reasons for this are basically malnutrition of the mother, lack of proper prenatal care, and lack of a proper environment for delivery. To this may be added the mortality due to abortion complications, which, because abortion is illegal, is usually performed under very unsanitary conditions. In Ecuador there were about 5,000 regis- tered deaths of women aged 15-49 in 1975. Of these, about 10 percent were due to complications in pregnancy or to abortion. The proportion may be higher due to misreporting or nonreporting of cause of death. In addition, in 1975 out of the total number of hospitalizations 5 percent were due to abortions and about 6 percent were due to pregnancy complications. Further- more, there were 2.3 deaths of'mothers per 1,000 live births in that year. 1076. Child health is also influenced by birth order (first, second, etc., pregnancy), period between births, and age of mother, due to basically the same reasons that affect the health of the mother, i.e., malnutrition, lack of proper prenatal care, and lack of hygienic delivery facilities. The data available do not permit estimation of mortality rates for children according to age of mother or birth order. Fetal deaths, however, give a good indication of the effects. Fetal deaths among births to women 20-34 years of age totaled 19 per 1,000 live births, but there were at least 25 per 1,000 among births to women under 20 or over 34 years of age. Moreover, there were 21 fetal deaths per 1,000 live births among births to women with one child; 17 per 1,000 among women with 2-5 children; and 20 per 1,000 among women with 6 or more children. These data show that fetal mortality is higher when mothers are either very young or very old, and that except for the first birth, fetal mortality increases with the number of pregnancies.  - 541 - (ii) Consequences of low health status 1077. Poor health has several negative consequences for society, families and individuals. First, there is the problem of high infant mortality which represents an emotional and economic wastage, often resulting in higher fertility as parents try to replace the dead child, or have many children keeping in mind a certain ultimate family size while anticipating that some children will die in infancy. A second problem is that sick and malnourished children have difficulty in taking advantage of education. A third problem of disease among adults which has considerable importance for the- economy, is the number of work days lost because of illness and resulting lower productivity. The economic consequences of illness have been estimated for countries other than Ecuador, and are presented as an illustration. A Bank study in Indonesia, for example, showed that treatment of anemic workers with elementary iron for 60 days resulted in an increase in productivity of 19 percent 1/. 3. The Health System 1078. Health services in Ecuador are provided by the Ministry of Public Health, the Social Security System, the Armed Forces, private corporations and private practitioners. The first two and the last are the most important in terms of coverage. (i) The Ministry of Health (MSP) 1079. The MSP was created only in 1967.- Before that time, public health was the responsibility of provincial beneficences and other ministries like Agriculture. It was not until about 1972 that the MSP began to have any influence, and it was only in 1977 that it took over the respoftsibility for health in the rural areas. 1080. The Minister is advised by a National Health Council. Functions are divided between an Under Secretariat of Public Health and an Under Secretariat of Environmental Health and Sanitary Works. The Under Secretariat of Public Health has a Directorate General of Health and, in addition to administrative and financial departments, it has Departments of Health Services, Family Health, Sanitary Control and Vigilance, and Rural Develop- ment and Technical Services. Immediately under the Directorate General of Health come the Provincial Health Departments which are responsible for implementing public health programs. The Under Secretariat of Environmental Health and Sanitary Works includes the Ecuadorian Institute of Sanitary Works (IEOS) responsible for building health facilities, water supply systems, and letrinization (see Chart A-1). (ii) MSP Structure 1081. The MSP structure of health services corresponds to the political- administrative divisions of the country (see Table A.8). In the major cities of the country there are specialized and university hospitals which provide one or more of the traditional services (internal medicine, surgery, gynecology- obstetrics, and pediatrics).  CHART A- I ORGANIZATIONAL CHART OF THE MINISTRY OF HEALTH Aud--it -i _ t - -T - Lt-i1l _ ~ d., S. C dGnecal inttetinnal Socia Nationad H htlth r 4, Cbmpt dthle biddinit CtammAnee- ODlpne ol the Safety PlannIngi _ Utdor-Sacr.ttoar commmt ~~~~~~~~~~~~r S1,ohtlr h)pa Corrnnleta 14Ht l1, *nd SanlOatlon Worha 0111n . - .tha - (~~~~~~~~~~~~o (100001 UnN ooalath ,du ,cmmae r _l * ~~~~~~- Adrniolatr.tlVtl Opolopoetstn Commiltet 1 itctoetat