and medium-scale farms. One consequence of this process was the development of intermediate cities and transportation netorks dedicated to facilitating the export of traditional crops such as coffee, cacao, and since 1948, bananas. The Costa has been the engine of grwth of the Ecuadoran economy for the past ten years as real economic activity expanded on average by _5_ per cent, largely due to a primary export market boom for shrimps, and to a lesser extent, for bananas.

Economic activity in the _Onente_ consists of resource extraction and small-scale agriculture by the indigenous and migrant population. Extractive activities (e.g., gold and rubber) have been carried out since the colonial period. The region remains relatively isolated, howvever, because of poor roads and difficult terrain. Since the early 1970s, the defining elements of development in the region have been the petroleum boom and settlement of migrants which have had the effect of accelerating the production of coffee, wood, citrus crops and beef cattle not only by the settlers but also by the indigenous inhabitants.

Over-exploitation of fragile tropical resources is threatening the Amazon rainforest. The incorporation of the region into the national socioeconomic and political system has obliged the indigenous population to abandon traditional and sustainable, rotational horticulture and, like mestiz colonizers, to settle on fixed landholdings provided for in colonization legislation. On these holdings, indigenous households now grow market crops such as coffee in the tropical region, and naranjilla in the subtropical cloud forest region. To a large degree, this process has initiated a vicious circle of poverty and environmental degradation, chamacterized by deforestation, soil erosion, and water pollution.

The regional heterogeneity is further enhanced by ethnic factors. While there is no general agreement on the precise definition of ethnic boundaries, many Sierra and Oriente communities can be characterized as indigenous by any measure. Ethnic identity is based on many cultural factors, including community, nuclear and extended family relationships, which are reinforced by language, dress, and sets of common norms and values. Racial discrimination has historically excluded the indigenous population from the political arena.<sup>3</sup> Intra-r=ional heterogeneity. The case studies included in the Rural Qualitative Assessment illustrate the considerable heterogeneity among apparently similar rural communities even within regions, especially in the Sierra. Historically, some communities obtained access to more or better resources than others through agrarian reform or purchase. Some communities have also started to diversify their economic activity, e.g. textile production. Further, development projects of the national government, often funded by international or bilateral donor organizations, have improved the access of a number of communities to basic services but by far not all. In sum, almost neighboring communities can exhibit considerable differences in living standards and type of economic activities.

Intra-community heterogeneity. Although we conducted the RQA in only a few communities, we observed that living standards and the distribution of income within the same community can vary significantly between households. For example, in Jatun Era, a community in

**Annex 1** to **this** Working Paper provides a short averview of the different forms of indigenous organizations.

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