Before the Spanish arrived in Ecuador in 1533, a group of diverse cultures lived in various areas throughout the country. Many of these cultures, including the Valdivia, Machalilla, and Chorrera, may not have left any written records, but the highly sophisticated pottery, beautifully designed artwork, and gold masks that have been unearthed in Ecuador prove that these cultures were highly developed. By the 16th century, the Incas had conquered the highland areas of the country of Ecuador. At its height, the Inca empire encompassed an estimated 15 million people, belonging to roughly 100 ethnic or linguistic communities, and covered an area of over 6,000 sq. km (2,340 sq. miles), within which were more than 25,000km (15,500 miles) of roads. Cuenca, in southern Ecuador, was the second-most important city in the Inca empire. In 1526, when the Inca leader Huayna Capac died, he divided the empire between his two sons. Huáscar gained control of Cusco and Peru, while Atahualpa inherited control of Cuenca and Ecuador. This split led to a bloody war, which weakened both sides. In part, because of this conflict, when the Spanish arrived in the mid-16th century, they had little trouble defeating the Incas.
Ecuador's indigenous cultures had a hard time under Spanish rule. Newly introduced diseases decimated the local population, and the Spanish system of encomienda (forced labor) broke the spirit and the health of the local people. Ecuador wasn't rich in natural resources and therefore wasn't of great value to the Spanish. In the 300 years before independence, Ecuador was alternately governed by the viceroyalty of Peru to the south and the viceroyalty of New Granada in Bogotá to the north.
Ecuador declared independence in 1820, but the independence forces weren't able to defeat the Spanish royalists until the Battle of Pichincha on May 24, 1822. At that time, Ecuador became a part of Gran Colombia, which consisted of Colombia and Venezuela. In 1830, Ecuador seceded from Gran Colombia and became its own republic. The rest of the 19th century was marked by political instability. Conflicts flared between the Conservatives, led by Gabriel García Moreno, and the Liberals, led by Eloy Alfaro. The Conservatives sided with the Catholic Church and Ecuadorians of privilege, while the Liberals fought for a secular government and social reforms.
At the end of the 19th century, Ecuador was getting rich off cocoa exports, and the economy was booming. Later in the early 20th century, when the demand for cocoa decreased, political unrest ensued. In 1925, the military seized power from the former procapitalist leaders. The 1930s were a time of uncertainty for Ecuador: From 1931 to 1940 a total of 14 different presidents spent time at the helm. In 1941, war erupted between Ecuador and Peru over land in the Amazon basin region. In an attempt to settle the dispute, Ecuador signed the Protocol of Rio de Janeiro in 1942 and surrendered much of the disputed land to Peru.
The post-World War II era was a time of prosperity for Ecuador. The country became one of the world's leaders in banana exports. From 1948 to 1960, there were three freely elected presidents who were all able to serve their full terms. In 1952, President José María Velasco implemented social reforms, including improvements in both the schools and the public highways. But in 1960, when Velasco was again elected president, he was faced with a failing economy, and he was unable to hold on to power. During the next 10 years, a series of military juntas controlled the country.
The economy rebounded in the 1970s. Ecuador became the second-largest oil-producing nation in South America, after Venezuela. The oil boom led to an increase in public spending and industrialization. But by the 1980s, when the oil bubble began to burst, the country was again faced with serious economic troubles, including inflation and an insurmountable international debt. In 1986, the price of oil collapsed, and in 1987, an earthquake partially destroyed one of Ecuador's major pipelines.
Rodrigo Borja came to power in 1988. In an attempt to alleviate his country's problems, he increased the price of oil while severely cutting back on public spending. But that wasn't enough -- inflation soared, and civil unrest increased. In 1992, in a conciliatory move, the government ceded a large region of the rainforest to the indigenous people. In 1995, Ecuador again disputed its border with Peru in the Amazon area; it wasn't until 1998 that it finally settled with Peru and secured its access to the Amazon. The 3-year war proved to be a drain on the economy. In 1997, a national protest, with overwhelming support of all the Ecuadorian people, succeeded in ousting the corrupt President Abdalá Bucaram. The national congress appointed a new president and reformed the constitution. But again, low oil prices and the devastating effects of El Niño brought the economy to its knees.
In recent years, the instability of Ecuador's executive branch has drawn international attention. Between 1996 and 2006, seven presidents attempted to govern the nation. They all failed to ameliorate the political volatility, either because of a hostile Congress, a military coup d'état, or sheer incompetence.
On July 12, 1998, the mayor of Quito, Jamil Mahuad, was elected president. His biggest success was negotiating a peace treaty with Peru over the country's borders in the Amazon, but he was unable to turn the economy around. His popularity reached a low point on January 9, 2000, when he announced his decision to eliminate the sucre, the national currency, and replace it with the U.S. dollar. On January 21, 2000, the military and police failed to quell chaotic nationwide protests. Mahuad was forced to resign, and his vice president, Gustavo Noboa, became president. Noboa continued on the course of dollarization, and in September 2000, the U.S. dollar became the country's official currency. This move helped to decrease the country's international debt, but it has never really been able to stem inflation.
In April 2005, President Lucio Gutiérrez was fired by Ecuador's congress for interfering with the Supreme Court. He was granted asylum in Colombia and Alfredo Palacio became president. In October 2005, Gutiérrez returned to Quito and was arrested upon his arrival.
Ecuador Today -- In 2006, Ecuador went to the polls once more and elected Rafael Correa. The eighth president in 11 years, Correa is a center-left former economist who considers himself a personal friend of Venezuela's Hugo Chávez. He made waves early on in his presidency, winning an April 2007 public referendum allowing him to call a Constituent Assembly to rewrite the national constitution. On September 29, 2008, Ecuadorians voted by a large margin to ratify the new constitution, and President Correa's PAIS Alliance (Alianza PAIS) party controls 74 of the 130 seats in the new Constituent Assembly (national congress), giving it broad powers to enact legislation.
In late 2008, Correa announced that Ecuador would cease interest payments on the country's outstanding international bond debt. So far, the country has been able to buy back over 90% of its bond debt at around 30 cents on the dollar, vastly reducing the country's foreign debt.
Despite the debt reduction and income from higher petroleum prices, the gap between rich and poor remains wide. Estimates vary as to what percentage of the population lives below the poverty line, but most agree the rate is at least 40% and perhaps as high as 70%.
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