Public spending and economic growth in Ecuador: Empirical evidence in contexts of prosperity, adjustment and crisis (2010–2022)

Abstract

The study examines the effectiveness of public spending as a driver of Ecuadorian economic growth in a context characterized by the volatility of crude oil prices and the presence of external shocks during 2010 to 2022, the objective was to describe the trajectory of total spending and evaluate its link with the real Gross Domestic Product throughout phases of boom, adjustment and crisis, to achieve this, a longitudinalcross-sectional design with a mixed approach was used that combined descriptive statistics, time series graphs and scatter diagrams, estimation of the Pearson correlation coefficient and documentary review of official data from the Central Bank of Ecuadorand ECLAC, the findings indicate that in the oil boom from 2010 to 2014 the budget grew on average 26 % annually while nominal GDP advanced between 10 % and 16 %, during the adjustment from 2015 to 2018 the fall in oil revenues led to a more cautious paceof spending and in the health crisis from 2019 to In 2022, a contraction was observed in 2020, followed by rebounds of 4.2% and 12.4% in 2021 and 2022, respectively. In addition, the coefficient of 0.8735 confirms a positive and significant association between spending and nominal GDP, evidencing the countercyclical function of fiscal policy. Consequently, state investment operated as a stabilizer in divergent scenarios and underlines the convenience of prioritizing high-return items to reinforce the multiplier and preserve the sustainability of public finances.