Ecuador is an extremely poor country. Thirty-five percent of its population lived in poverty in 1994 and an additional seventeen percent were highly vulnerable to poverty. In addition, rural poverty is undoubtedly more severe than urban poverty. Also, the relationship between poverty, household characteristics, and social indicators varies considerably across - and even within - regions and areas. The present poverty report consists of two parts. Part one summarizes the main results of the analysis. It begins with a background section on the incidence and distribution of poverty and its main correlates, then it turns to each of the main components of a poverty reduction strategy. Chapter two discusses the financing of social programs and targeted interventions. Chapter three presents the basic nutrition and health programs for the poor. Chapter four explains how to strengthen the assets of the poor. Finally, chapter five reviews the stable and growing demand for labor. Part two of this report consists of ten working papers. Each one of these papers is a self-contained, in-depth study that addresses a specific poverty issue. The studies range from the determinants of rural poverty to the incident of fiscal expenditures, and from targeting social programs to the impact of labor market deregulation on employment.