According to Parsons, soils throughout western Ecuador are “good to excellent” and “perhaps as promising as any to be found within the rainy tropics of the New World.”14 Other observers provide more tempered assessments, emphasizing that soil properties vary. All experts agree that fertility levels are high on average, although problems such as excessive clay content and poor drainage are encountered in many settings.15
While the soils of western Ecuador may not be superior to soils in different parts of the Caribbean Basin, the costa enjoys geographic advantages of considerable importance. Since the region extends from one degree north of the equator to a few degrees south, bananas are harvested year round. Production peaks from September through March, which coincides with the time of year when demand is elevated in North America and Europe. This timing is advantageous for Ecuadorian growers because bananas cannot be warehoused for months on end, as is an option with apples, for instance.
The costa is also largely free of severe tropical storms, of the sort that hammer one part of the Caribbean Basin or another each and every year. Weather-related risks are correspondingly modest for the costa’s banana farmers. The significance of such risks in other places was put in sharp relief as growers in northeastern Colombia were making a sizable investment in order to convert from Gros Michel to Cavendish. In 1966, when this conversion was under way though not yet complete, a hurricane destroyed 45 percent of the banana crop. Another hurricane struck the following year, which reduced harvested area from 15,000 to 11,000 hectares.16
By no means are the costa’s environmental attributes valued only by Ecuadorian growers and exporters. So that Chiquita, Dole, and Del Monte can supply their customers with fresh produce regularly and without fail, the three companies purchase bananas in western Ecuador, especially when production falls short in other places. Doing business in the costa is a good way for any firm to cope with the disruptions in Central American and Caribbean supplies caused by hurricanes, which helps explain why multinationals have been willing to share technology with the region’s growers.
While natural resources, the climate, and a location astride the equator all work in the costa’s favor, great obstacles formerly stood in the way of the region’s agricultural development. Yellow fever, which is often fatal, was not brought under control until the second decade of the twentieth century, when critical assistance was provided by the Rockefeller Foundation and the U.S. Public Health Service.17 Likewise, the Ecuadorian and U.S. governments launched an anti-malaria program in the late 1940s, which among other things involved disease monitoring and eradication of the anopheles mosquito.18 As long as illnesses such as these were unchecked, there was untold human suffering. Also, agricultural activities that put large numbers of people in close proximity to one another, such as banana production, were impeded due to the risk of disease transmission.
Tropical illnesses were a problem that the costa shared with the Caribbean Basin. However, the region had an additional disadvantage owing to its location. Before the Panama Canal existed and especially before completion of the railroad traversing the Panamanian Isthmus, a long and arduous voyage was needed to reach New York, Hamburg, and other places where Ecuadorian goods could be sold. Setting out from Guayaquil, a ship would first beat its way south against the Humboldt Current. Once off the coast of southern Chile, a sharp look-out had to be kept through the fog and mists that shroud the region’s fjords and mountains for the Strait of Magellan, since missing this passage would necessitate a perilous detour around Cape Horn through heavy seas and gale-force winds. Leaving the Pacific Ocean in its wake and veering north, the ship then had to travel nearly the entire length of the Atlantic before reaching the world’s leading markets.
In spite of mortal diseases and the great distances that separated western Ecuador from its most important customers, the agricultural potential of the region was extolled long before the turn of the twentieth century, including by foreign visitors. On taking up his post as French vice consul in Guayaquil, Charles Wiener was struck in 1879 by the commercial hustle and bustle of his new home as well as the flat, fertile ground surrounding the port city. Indeed, the diplomat was impressed enough to make comparisons with The Netherlands,19 a nation that coincidentally is not much larger than the valley drained by the river emptying into the Pacific a little south of Guayaquil. Pleased with Wiener’s description, the costa’s inhabitants have called the Río Guayas watershed una Holanda tropical ever since.
Tropical Burghers
While the comparison Charles Wiener made 135 years ago between the costa and The Netherlands had much to do with farmland and its productivity, Guayaquileños were particularly flattered by the suggestion that their city resembled a Dutch port, complete with its population of active merchants. It must be remembered, however, that economic progress does not result automatically whenever entrepreneurs—Dutch, Ecuadorian, or otherwise—exert themselves. As economist William J. Baumol stresses in what he modestly calls “a minor expansion of Schumpeter’s theoretical model,” business activities are often productive, in the specific sense of falling into one or more of Schumpeter’s five categories. However, there are other activities that Schumpeter did not address and which Baumol characterizes as unproductive or, worse yet, destructive. Contributing nothing to overall growth and development, unproductive entrepreneurship is exemplified by the “discovery of a previously unused legal gambit” that only creates rents (as economists call the gains resulting from unproductive pursuits) for individuals and firms able to exploit the gambit. Destructive entrepreneurship, including organized crime, directly harms people and their legitimate livelihoods, so is nothing less than “parasitical.”20
Baumol extends Schumpeter’s analysis primarily with an eye toward addressing issues of public policy—for example, the ways taxes or legal rules strengthen or weaken incentives for businessmen and women to choose productive activities over unproductive or destructive alternatives. But as the same economist recognizes, these choices have multiple determinants, including geographic and historical realities of the kind that underlie the predominance of productive entrepreneurship in Guayaquil.
These realities are best understood by considering the long-term isolation of the port city from seats of governmental authority—isolation that did not truly end until many years after Vice Consul Wiener’s arrival in western Ecuador. During the colonial era, the Spanish viceroy held court in Lima, far to the south. For nearly a century after Ecuador achieved independence, a grueling ascent into the Andes on foot or perhaps on horseback was required to reach the national capital. Before a rail line into the mountains was constructed, in the early 1900s, the authorities in Quito were unable to interfere much with foreign trade and other varieties of commerce in the costa. At the same time, the trouble and expense of reaching the capital city from Guayaquil limited the appeal of trying to win favors from representatives of government.
As unrewarding as unproductive (or destructive) pursuits were, the port city’s entrepreneurs have been productively inclined, routinely putting their talents to use in the wider commercial world. They have sometimes introduced foreign buyers to Ecuadorian products previously unknown outside the country. Far more often, they have opened new markets for goods that Ecuador produces efficiently. Entrepreneurs from the western part of the country even have reorganized global markets in a few instances, always toward greater competition.
For nearly 300 years beginning in the sixteenth century, Guayaquil was the leading ship-building center on the Pacific coast, from Cape Horn