Evaluation of the socio economic impacts in Ecuador due to refinery matrix change using a General Equilibrium Model

In 2014, Ecuadorian oil exportation contributed 50.54% to its total exports, while the import of oil products – main diesel, gasoline and LPG – represented 24.20% of the total importation. Due to limited crude oil refinery capacities, Ecuador’s domestic fuel production does not satisfy its internal demand. Within its policy The 2013-2017 National Plan for Good Living, the Ecuadorian Government outlines its planes to double crude oil refinery capacities by building a new refinery site. As an outcome, Ecuador would have a surplus of fuel. In this context, this paper estimates the socio-economic impacts of the implementation of the Ecuadorian governmental policy using a General Equilibrium Model (GEM). Shocks in the exogenous variables: supply of factor capital, exports, imports of petroleum and refining sectors are defined according the policy’s implications. Results of the evaluation show a decrease for the Ecuadorian unemployment rate of 10.83% and an increase of 4.39% for the Ecuadorian Nominal GDP due to the fall of the price index, and revaluation factor work. However, at the same time foreign savings, governmental income as well as family income are estimated to decrease.