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Social and Solidarity Economy in Ecuador: Fostering an Alternative Development Model?

Unai Villalba-Eguiluz
Asier Arcos-Alonso
Juan Carlos Pérez de Mendiguren
2,3 and
Leticia Urretabizkaia
Department of Applied Economics I, Faculty of Economics and Business, University of the Basque Country, UPV/EHU, Comandante Izarduy n° 23, 01006 Vitoria-Gasteiz, Basque Country, Spain
HEGOA, Institute of Development Studies and International Cooperation, Avda. Lehendakari Agirre 81, 48015 Bilbao, Basque Country, Spain
Department of Management, Faculty of Economics and Business, University of the Basque Country, UPV/EHU, Comandante Izarduy n° 23, 01006 Vitoria-Gasteiz, Basque Country, Spain
Author to whom correspondence should be addressed.
Sustainability 2020, 12(17), 6876;
Submission received: 30 July 2020 / Revised: 14 August 2020 / Accepted: 17 August 2020 / Published: 24 August 2020


The social and solidarity economy (SSE) has gained worldwide attention over the last decade. It represents a host of diverse economic activities which take different forms in each country, but which share solidarity values that are alternatives to mainstream market economic logics. In Ecuador, the SSE acquired legal status in the 2008 Constitution that aimed to foster an alternative development model based on the Buen Vivir (BV) paradigm. However, despite a broad new regulatory framework for the SSE, the implementation of specific policies faces significant challenges. This article, based on fieldwork and interviews with many stakeholders, critically analyzes the transformative scope of the policies of the main newly created institution (IEPS—Instituto de Economía Popular y Solidaria). We discuss policy challenges focusing on trade-offs for small rural producers due to their dependent market integration and overall flaws in fulfilling SSE solidarity values.

1. Introduction

The start of the 21st century brought political and economic changes to Latin America, especially reflected in the new progressive governments of South America. These changes led several authors to speak of a “post-neoliberal turn”, although controversy persisted over its different qualities and the degrees to which it advanced in different countries [1,2,3]. Many of those progressive governments have already been replaced, but some of the institutional structures and policy options they created remain, as it is the case for the popular and solidarity economy (PSE) in Ecuador.
The case of Ecuador is also highly significant given that the Buen Vivir paradigm (“Good Living” or “Sumak Kawsay” in Quechua, henceforth BV) was proposed as an alternative development model, which acquired constitutional status and was reflected in the subsequent “National Plans of Good Living” (henceforth PNBVs; equivalent to National Development Plans). However, there have been discrepancies at both the academic level and in political practice over the content, priorities and gradualness that the transition strategies towards a BV model should follow [4,5,6,7].
One of the most relevant debates around any transitions towards BV concerns the economic policies that would make it possible. Such policies would need to be oriented towards overcoming the primary extractive export model [8,9,10,11] and would help to foster the social and solidarity economy (SSE). In fact, the new 2008 constitution in Ecuador advocated a “social and solidarity economic system” and offered the starting point for a new regulatory framework—aimed at the sector known in Ecuador as the “popular and solidarity economy” (PSE). From here onwards, we will use the term “SSE” to refer generally to the broad diversity of SSE theories and experiences emanating from the social economy tradition, both worldwide and in Ecuador, and we will use the term “PSE” to refer to the specific approach of the Ecuadorian public policy.
In parallel, but quite independently, during the last decade, interest in the SSE has grown worldwide for many reasons, in both OECD countries and “developing” countries [12,13,14,15]. The SSE is now seen as an efficient approach for generating decent work, fostering social cohesion, reducing poverty, and achieving sustainable development models. Many South American countries have enacted laws and implemented specific policies to foster this approach, but such experiences have adopted different and particular forms in each country [16,17,18,19].
Recently, the SSE has also been seen as a way to foster sustainable development goals (SDGs) and the 2030 Agenda of the UN [20,21]. Convergences and contributions of the SSE to the SDGs have been critically analyzed, identifying limitations from field studies of current practices in achieving transformative change [22,23]. Here, it is important to consider that the SDGs represent a comprehensive and integrated set of 17 goals orientated to achieve environmental sustainability, economic prosperity and social inclusion focusing on people, planet, peace and partnerships [24], based on mainstream interpretations of sustainable development and, therefore, some authors warn about the fundamental differences between the SDGs and the BV approach that represents a novel paradigm shift far from western modern development [25,26]. In this sense, it appears to be contradictory or ambiguous at least that the SSE could foster both approaches, i.e., the SDGs and BV. This is why we try to answer from the concrete experiences to what extent the SSE is able to foster alternative development models.
In this context, this paper tries to respond to the following interrelated questions: What are the main characteristics shaping the particular new PSE framework in Ecuador? What are the difficulties in its implementation? To what extent are the current policies fostering a development model transition and how close are these policies to SSE transformative values? We seek for context-specific answers in Ecuador, but they also could be useful for many other countries aiming to foster SSE policies. The article’s main contribution is to critically analyze the Ecuadorian Government’s policies, and it offers the first comprehensive analysis of the IEPS’s main activities (Institute for the Popular and Solidarity Economy—Instituto de Economía Popular y Solidaria), based on all stakeholders’ voices thanks to an extensive fieldwork.
The remainder of the article is structured as follows: Section 2 explains the methodological steps. Section 3 contextualizes the potentiality of the SSE to foster a transition in the development model. Section 4 analyses the context and main data of the policies implemented by the newly created Institute for the Popular and Solidarity Economy. Section 5 discusses the main results and explains them with quotes by fieldwork interviewees. Section 6 summarizes the main findings and conclusions.

2. Methodology

The research strategy used for this study is twofold. First, we conducted an extensive text analysis of the new laws and development plans of Ecuador since 2008, and compiled and analyzed official data on public policy implementation. Table 1 below summarizes the five new different legal instruments that establish the PSE framework in Ecuador. The Organic Law of the Popular and Solidarity Economy (LOEPS) enacted in 2011 includes the main regulatory and institutional changes aiming to foster the new PSE framework. For text analysis, we identified a series of key concepts emerging from the academic literature on the topic; then, we searched for these concepts within the laws and plans and we analyzed whether these key concepts appeared or not and which was their interpretation and/or application within these official texts (we did not use any specialized software for this).
Second, we conducted a combination of semi-structured interviews and in-field participatory observation with public servants, key informants (mainly academics) and grassroots organizations involved in the SSE in Ecuador (see Table 2).
Fieldwork was conducted in two different periods of time: February–April 2018, and March 2019. The interviews covered different categories of people regarding their relation to the SSE, the geographical distribution, their rural/urban background and their sex. Some of these people (33 in total) were interviewed more than once, that is, one time each year, allowing us to trace the evolution of policies and processes over time.
The main institutions and most relevant academic references are widely covered. Among the variety of existing SSE institutions and organizations, we chose the IEPS (Instituto de Economía Popular y Solidaria) and the MESSE (Movimiento de Economía Social y Solidaria del Ecuador) as the main sources of analysis for many reasons. Regarding the new public institutions, we chose the IEPS, which was created in 2011, because it is the main actor responsible for the promotion of productive PSE activities in the field. Regarding the other new institutions, the SEPS is more oriented towards the regulation and control of the sector, while the CONAFIPS is in charge of the financial PSE sector, but they are not directly involved in productive activities in the field.
Regarding the social actors, there are a number of reasons to choose the MESSE: First, because it is a second tier organization which represents many other smaller organizations. Second, because it is present throughout the country in many different provinces. Third, because its creation more or less coincides with the elaboration of the new regulatory framework (and the creation of the IEPS itself). That is, it was not an “old” SSE organization already possessing strong dynamics prior to the 2008 Constitution and the 2011 Law, but nor is it a very recent one. Fourth and finally, because it has been an active organization in the scrutiny of public policies and action, and very active in the mobilization of other SSE actors to call for accountability and regulatory and institutional reforms.
All the interviews were recorded and transcribed. In Section 5 we explain each argument by providing also literal quotes from the fieldwork interviews. We are aware of the importance of considering the differences between the voices chosen to ground these arguments, i.e., whether they correctly represent the usual categories and lines of distinction according to gender, rural or urban settings, their position inside an institution or organization, etc. To simplify the presentation, however, we only give the initials of each person quoted followed by his/her affiliation to only one of the following three groups: a public servant working for a public institution; a member of any association or organization of the PSE or SSE sectors; or a key informant, mainly identified as academics with expertise in these subjects. The original interviews were in Spanish, so the translations included in this text are our own.

3. Framework and Literature Review. The Social and Solidarity Economy in the Context of a Development Model Transition

Ecuador’s 2008 Constitution and subsequent 2009, 2013 and 2017 PNBVs recognized BV as an alternative development paradigm that should guide public policies, and also set out an SSE system for that purpose. It is therefore worth enquiring about the complementarity found between BV proposals and SSE practices.

3.1. Buen Vivir as an Alternative Development Model in Ecuador

There is extensive literature on the origins of BV, its main strands and characteristics, and its cultural, philosophical and epistemological background [5,6,27,28,29]. The concrete understandings and practices of BV, however, are still ambiguous and are constantly being negotiated, transformed and disputed [30,31]. Many proposals of BV are underpinned by a philosophy that would involve a radical cultural and institutional transformation, often conceptualized in terms of a paradigm shift grounded on traditional Andean–Amazonian indigenous epistemologies and current critical thinking on development [7,32,33].
BV entails a search for harmony in three realms: inner or personal, social or collective, and with nature [34]. Two of its main distinctive features are: first, to prioritize the collective over individual perspectives, thus, BV underlines that individual wellbeing cannot exist without collective/communitarian concerns; and second, the reconceptualization of human/nature relationships and the search for strong sustainability in line with a deep ecology approach and recognition of the rights of nature. It is said that to implement an alternative paradigm based on BV, there are needed three kind of interrelated strategies: (i) the recognition of plurinationality and identity, through decolonial, self-determination and interculturality policies; (ii) fostering equity and post-capitalist economic systems, through regulation, redistribution, resizing and demarketization policies; and (iii) sustainability and biocentrism, through the recognition of intrinsic values of nature and the modification of use and exchange values of it (idem).
This idea of BV entailing a “paradigm shift” has been a focus of academic scrutiny regarding post-development approaches and radical transition policies. Some authors have pointed to the danger of celebrating BV as an alternative to development without sufficient recognition of a range of unresolved contradictions, such as the risk of discursive co-optation or the pervasiveness of colonial governmentality within state–civil society relations [35,36,37].
A growing number of studies illustrate the limits of a “frustrated” development model transition during Correa’s administration in several areas, such as the promotion of food sovereignty, land reforms and rural transformations [38,39,40,41,42]; the democratic renovation encouraging citizen’s participation and relationships with social movements [43]; or the rights of nature, sustainability and socio-ecological conflicts [11,44,45,46]. Many of these studies tend to conclude that there were novel and transformative policy proposals during the start of the Citizen’s Revolution (2007–2009), but that subsequently these were not implemented, or that what was enshrined in the 2008 Constitution was distorted [47].
There is still insufficient analysis regarding this supposed transition in the field of SSE policy proposals. Thus, our intention is to fill this gap. However, beyond the evolution of Correa’s or Moreno’s administrations, it is also important to analyze these SSE policies for a number of reasons. First, SSE actors and productive initiatives already existed prior to the 2008 constitutional changes and they will continue existing regardless of whether or not any administrative changes make them into a direct object of public policy; thus, it is an important field for any development strategy. Second, the SSE is gaining institutional attention worldwide, both from local and national governments and international agencies, and there is international interest in learning from practical experiences.

3.2. The SSE as a Vehicle for Alternative Development Models

The SSE has become a referent at the international level for posing other modes of practicing economy that are to some extent different from and/or alternative to capitalist logic [48,49,50,51]. The term “social and solidarity economy” emerges from the amalgamation of two concepts (social economy and solidarity economy) that arose in different contexts [52].
On the one hand, social economy, initiated in Europe, represents “a different way of organizing an enterprise”, which is manifested in the commitment by these organizations (cooperatives as a main example) to a series of principles of action that structure their organizational logic and economic activity. Prevalent among these principles are the pre-eminence of people over capital (both in decision-making and in the share out of the surplus), commitment to autonomy and democracy in management, internal and external solidarity, and the priority of providing service to their members and the local community over obtaining profits [53].
On the other hand, the concept of solidarity economy emerged from the common ground of the social economy traditions, and it brings together concepts and ideas originating in both Latin America and Europe [54,55], and refers to a heterogeneous set of practices oriented to democratizing the economy [49,50]. By placing people rather than capital accumulation at the center of the economic system, solidarity economy represents both a theoretical attempt to construct an economic paradigm different from capitalism and a political proposal for social transformation [48,56,57]. It follows a set of values, including redistributive justice, autonomy, self-management, liberating culture, solidarity and equity, sustainability, cooperation, not-for-profit, commitment to local communities.
Thus, as a juxtaposition of both approaches (social economy and solidarity economy), it seems clear that the reference to ethical values and principles is a central question for the SSE. Its transformative potential for the construction of an “other economy” is mediated by the degree of coherence between its organizational and institutional practices and the alternative values and principles that ground the approach. In fact, in some countries, these organizations have developed their own instruments to measure this degree of coherence between practices and values through a social auditing mechanism [58].
Over the last decade in Latin America, interest in the SSE has grown in nearly the whole region, with the model adopting particular forms in each country [17,18]. Some authors argue for a plurality of logics of economic activity and organizational forms [59,60] with reference to Polanyi’s four principles: redistribution, mediated by a centralized institution like the state; a free exchange through the market, which entails a competitive interrelation; reciprocity, which implies horizontal and symmetrical relations in complementary interdependence; and domestic administration. This plurality argues against the hegemony of mercantile logic at the service of capital accumulation, but does not reject the opportunities that might be offered by the market principle. From this point of view, development strategies and public policies based on the SSE should not seek the spread of a single economic form or the supremacy of only one of the principles of economic integration, but complementarity and a suitable balance amongst them instead.
In this context of plural perspectives and diverse realities depending on the country, Veltmeyer [19] warns about the double and conflicting political significance of the spread of the SSE in Latin America. It could be identified as an alternative to conventional development, but it might also be functional to the capitalist system if it only seeks to attend to the needs of the marginalized population without trying to transform the economic system as a whole.
Nonetheless, other authors [61,62] underline the potentiality of the SSE to foster alternatives if it proceeds in line with the BV proposals. One problem arising here is that some attempts to identify these alternatives are linked to very specific rural contexts, which may not be replicable elsewhere. One of this specific contexts are indigenous Andean–Amazonian communities, where the communitarian economy aligned with BV can only be developed under very restrictive characteristics: an extended sense of a living territory, self-sufficiency linked to solidarity and reciprocity, natural sustainable management, or non-commercialized economic relationships [63].
For a broader transformative scope, it is argued that many SSE experiences (both rural and urban) already follow a series of principles and organizational practices that help transforming the economic system through demarketization, dematerialization, decentralization and economic regulation strategies in line with BV principles [64]. These practices need to be backed by public policies oriented towards “participatory governance” and “democratic management”, “resizing and re-localization” of economic circuits, “wealth and income redistribution”, “inter-cooperation, reciprocity and solidarity”—all of which are common topics to both BV and the SSE (idem). Some of these issues are mentioned in the new regulatory context in Ecuador, but not implemented in practice.
To summarize, there is a number of issues that arise from both the literature on BV and on the SSE that form a kind of framework regarding the relation between the SSE and alternative paradigms for development. This framework will be assessed and discussed later regarding the actual PSE policies in Ecuador, as well as (i) the importance of local communities, (ii) the relevance of nature and sustainability, (iii) the risk of cooptation and conflicting political significance, (iv) pre-eminence of people over capital, (v) autonomy and democracy in management, (vi) priority of providing services to the local community over profits, (vii) a plurality and diversity of logics, (viii) demarketization, and (ix) decentralization.

4. Context and Data Results: The IEPS’s Recent Policies

The IEPS has three axes of activity: (i) organizational strengthening of the PSE entities; (ii) productive promotion in general; and (iii) facilitating access to public, private and international markets. To date, no integrated academic analysis has been made of some of these areas, so we have gathered original data to explain these policies and put them in context. In that sense, our first results are based on data that show two main findings: (i) a diminishing budget over time for PSE promotion policies and an unstable distribution among programs; (ii) an increasing role of public purchasing regarding access to markets. In this article we focus on the productive promotion and access to markets; the question of the organizations has been recently analyzed elsewhere [65]. It is worth noting here, however, that in the new context, a huge number of associations have been created, and they have officially registered themselves to become beneficiaries of the public policies on the PSE sector. Nevertheless, this positive achievement in the spread of associations is not exempt from many other tensions, such as the lack of articulation of the sector and lack of participation in the co-construction of policies, the auto-exclusion of some organizations, and the intrusion of ordinary capital companies as PSE beneficiaries.
Subsequently, we will consider how the “productive promotion” is irregular due to the scarce resources derived from an economic policy fragmentation and how “access to markets” policies create tensions with some of the solidarity and reciprocity values of the SSE.

4.1. Productive Promotion Activities

Considering the increasing number of organizations affected by the LOEPS, a growing economic incidence of the PSE sector could be expected. However, in Table 3 we can see that the IEPS has a diminishing operational budget. In fact, in 2017 and 2018 the budget for programs to foster production (investment) was practically non-existent (USD 101,033 and USD 127.988, respectively). For three years the IEPS budget has been mainly dedicated to current expenditure and therefore has been lacking in capacity for productive investment.
A new program started at the end of 2018 (FAREPS, Fortalecimiento de los Actores Rurales de la EPS—Strengthening Rural Actors of PSE), but this is only benefitting a few provinces, and it depends on a loan from the IFAD (International Fund for Agricultural Development). Thus, the autonomy of national policies is reducing, and they are relying in international institutions that do not have a specific expertise in the SSE. It seems that the IEPS is in some way regressing, since the IEPS itself was the heir to other earlier big projects related to rural development that were already financed through external debt from international financial institutions before the 2008 Constitution. The IEPS [66] itself cites two large-scale projects that are well known in the rural sphere in Ecuador as antecedents of the policies carried out by the institution. These are PROLOCAL (Proyecto de Desarrollo Local—Local Development Project), which functioned between 2002 and 2007 with funding from the World Bank, and the PRODER (Proyecto de Desarrollo Rural—Rural Development Project).
Beyond the diminishing budget, however, there has also been a high volatility of funds between different national sub-programs, as shown in Table 4. This impedes suitable strategic planning by both the IEPS itself and the organizations receiving these funds.

4.2. Access to Markets

The main mechanisms established to promote access to markets (public and private, principally national, although they could be also international) are named “mercado público solidario” (solidary public market), “ferias y catálogo inclusivo” (fairs and inclusive catalogue), “ferias solidarias” (solidary fairs), “ruedas de negocios” (business conferences), and “ferias hecho a mano” (handmade fairs). In practice, these mechanisms facilitate engagement between SSE enterprises and organizations with different kind of potential buyers, that is, public institutions, private companies and direct consumers or families.
In Table 5, we can observe how the main fomentation tool is public purchasing, which for the year 2018 rose to USD 123 million. The textile sector is by far the main sector under the program named “hilando el desarrollo” (spinning development), which is dedicated to elaborating school uniforms that are compulsory in public schools. Other important sectors are catering (also with an important relation to public schools) and cleaning services.
Meanwhile, private purchasing from PSE actors has also been growing, but by amounts that are much more modest, currently around USD 10 million. In this field of the private market, the most important sector is the agricultural or agrifood sector, and this is in part related to the link between small producers and the big distribution chains linked to big supermarkets in main cities.
It is of vital importance for the PSE to advance in the establishment of integrated economic circuits that move up the value chain, as was already contained in the LOEPS and successive planning. Nonetheless, to date, there have been few experiences of official PSE actors that have managed to move up these value chains in an articulated way.

5. Results and Discussion: Limits of the PSE Policies’ Transformative Scope

Based on the fieldwork we have identified a number of issues and challenges that limit the transformative scope of the PSE policies—those cited above of productive promotion and access to markets—to foster an alternative development model. As a general finding from our empirical work, we have been able to categorize a series of tensions and challenges that limit the PSE policies’ transformative scope (four related to market integration and another four regarding coherence with SSE principles). These are key themes that we have identified and which are commonly signaled by all stakeholders in our interviews. Interestingly, it is worth to point out that these are common key themes across the three different stakeholders, that is, both public servants and SSE organization leaders and participants tend to agree on the challenges we address. Table 6 below summarizes these challenges that we have classified into two groups: market integration vs. solidarity logics and overall coherence with SSE principles.

5.1. Trade-Offs Regarding Market Integration vs. Solidarity and Reciprocity Logics

There can be a series of trade-offs (even unintended or unpredicted ones) derived from the incentives and mechanisms for promoting the PSE dictated by the new laws and policies (Andino 2013). Here, we analyze the effects of the incentives of the PSE policies that are directed towards obtaining greater market quotas (be they public purchasing or private sales).
First, we find a crowding-out effect of non-market logics of the solidarity economy (reciprocity, self-consumption, etc.). Sometimes, this is achieved with a simple calculation regarding where the priorities and producer’s efforts are focused—if they concentrate their limited resources and time into external markets, then they are deviating those resources from locally oriented consumption. In other cases, there are more grounded incompatibilities.
(Ed.Pi, organizations): ‘In our space there is also barter, that is, non-monetary exchange, internally between producers, at the end of the fairs, it isn’t a logic of profit-making. [..But] some organizations are losing these spaces because of their dedication to public purchase’.
(B.C., organizations): ‘If you go to enter public purchasing, your criteria get shifted, and it’s necessary to differentiate from the solidarity sector practices’.
(A.L.M., public servant): ’Strengthening the local consumption networks clashes with the big commercial chains’.
Second, some of the organizations that enter the public purchase mechanisms experience an increased dependence on the public sector as a result of the investments required to reach these markets and of the growing relevance of revenues derived from these markets in their total revenues. These very same problems occur with the policies related to private markets derived from the “inclusive businesses” and “productive linkages” mechanisms, in which the small producers of the PSE are inserted in the business supply chain of big companies and supermarkets [39].
(A.L.M., public servant): ‘The organizations have to get into debt and provide guarantees [in order to enter public purchase], for example to buy machinery that the legal procedures require to be of their own property, if they want to qualify for public purchasing. […] But then this investment through debt makes them dependent on public purchasing’.
(El.Po, organizations): ‘First [the big supermarkets] tell you everything is fine, but then they delay payment, they make you pass quality control in Quito [the capital, far away from rural producers], and since we don’t use plague control, we don’t qualify and they return the product to us, which is then lost. […] So finally you are dependent on them and lose other opportunities’.
Linking local producers to bigger markets is not the problem. In fact, one of the main demands of many producers of the SSE is often to obtain better access to greater market quotas. The problem is not the market option in itself (rather than to reinforce reciprocity or solidarity logics), but the unequal articulation and the different enabling conditions for developing one logic or another. The issue is that this articulation is asymmetrical and, in practice, it can involve subsuming poor rural economies into big companies’ accumulation processes. Therefore, this suggests a form of subordination, dependence and transfer of value from these popular economies towards the centers of capital accumulation [67]. Referencing here Polanyi’s already cited principles and organizational forms of economic activity, the issue is not the plurality of logics, but the supremacy of competitive market logic versus the logics of reciprocity and solidarity more suitable for the SSE, which makes small rural producers dependent.
Third, entering public purchase or big private markets requires focusing on big quantities of production instead of ecological quality. This problem is underlined by rural agro-ecological producers, as a large quantity is better obtained in extensive mono-crops than in the diversified small plots, homogeneity of the products is not obtained so naturally, and the delivery terms are not exactly measured since they depend on multiple natural element. All of these add to the previous challenges, since small producers do not have the financial resources to survive for long periods of time without recovering their investments.
(J.J., key informant): ‘The state is interested in the question of [quantitative…] indicators, production and employment, in order to see macroeconomic results. But this cannot wear down the logics that characterize the [agroecological] movement. The same is true for supermarkets, it’s OK to try and get inside, but without neglecting [the own] networks. Yes with the state, yes with the market, but being careful. The horizon of the SSE should be its principles and values’.
(J.G., public servant): ‘The actors who get involved are obliged to have quantity parameters […] there are going to be asymmetries’.
Fourth, there are rigid requirements of some public purchases which could be difficult to meet. Public purchases of the PSE are now managed through a national online centralized catalogue. These requirements relate to the following: the (relatively big) quantities of each product required; the need for homogeneity among products; rigidity in the delivery terms; and delay in payments (in some cases up to eight months, while the law establishes just one month). These requirements limit access, especially to the smallest producers (usually the poorest).
(V.J., key informant): ‘In public purchasing and inclusive catalogues, the requirements for participating cannot be met by small organizations”.
(El.Po, organizations): ‘[To qualify for public purchasing] we had to contract someone to upload all the information onto the centralized system; we then benefit from that or maybe we don’t […] But what definitively prevented us from continuing was late payment by the state; they were supposed to pay in 15 days but it took them 8 months, and that was unsustainable […] we had to request loans from the bank in the meantime, and it was the bank that took the profits […] Now that service is provided by bigger companies’.
(A.M., public servant): “The legal procedures [needed for public purchasing] are also discouraging, it’s a matter that is centralized in Quito […] sometimes for a US$ 10,000 credit requirement, they ask for guarantees and requirements that the organizations can never meet’.
For these four reasons, some SSE initiatives and already existing organizations (for instance those of the MESSE) prefer to connect among themselves instead of entering public purchase markets or big companies’ supply chains. These organizations are trying to create what they call “Circuitos Económicos Solidarios Interculturales” (CESI—Solidarity and Intercultural Economic Circuits) [68,69]. They relate to each other and exchange products but on their own terms (spaces, periods, prices, etc.) that respect and reinforce their own organizational processes oriented towards the fulfillment of their needs and self-sufficiency.
To summarize, we can point out that these challenges make it difficult to advance on some of the common issues of alternative development models that were signaled from the review in Section 3. For instance: (i) prioritizing external markets makes it harder to strengthen local communities’ networks, and it is against the principle of prioritizing providing services to local communities instead of only seeking monetary profits; (ii) entering supply chains in conditions of asymmetry makes SSE organizations more dependent; thus, it is against the principles of autonomy and also heightens the risk of being functional to capitalism instead of trying to transform into an alternative development model; (iii) focusing on quantitative monetary results can become an obstacle for the principle of strong sustainability and respect the rights of nature; and (iv) the rigid requirements of public purchasing go against the principle of autonomy and democratic management and also against the principle of decentralization.

5.2. Overall Coherence with the SSE Principles

We argued in Section 3 that the transformative scope of the SSE initiatives depends largely on the degree of coherence they show between their organizational and management practices and their theoretical principles and values. Besides, the evidence on how these values operate in reality is one of the keys for identifying whether a transition towards another development model is actually underway, or whether the SSE is just being promoted as a limited sectorial niche focused merely on reducing poverty (“economy of the poor for the poor”).
The first identified challenge is that for a long time, there has not been any control regarding the fulfillment of SSE values recognized also in the LOEPS. In the 2011–2018 period, there was no commitment by any of the public institutions to the assessment of whether or not PSE organizations involved in public policies were following the principles declared in plans and laws. The SEPS controlled the registration of the associations and cooperatives, and they were aware that many of them did not abide by PSE principles. However, all they cared about was if the “tramitología” (bureaucracy and paperwork) was correctly fulfilled. Meanwhile, the IEPS has accumulated a large number of complaints regarding beneficiary enterprises that are not even correctly registered, let alone in compliance with SSE values and principles.
(A.A., public servant): ‘There are many interest groups that only seek to participate so as to gain access to credits or public purchasing […] We even think that they do not meet the principles of the LOEPS’.
(P.O., public servant): ‘Some units aren’t solidary […] We have received verbal complaints about units that are later subcontracting […] other ordinary companies which do not follow the values of the SSE’.
It was only very recently in 2019 that for the first time the IEPS presented an analysis of how the organizations subject to public policy fulfill the principles stated in the law. The results show that only 10.3% of the organizations fulfill all these principles, 44.6% fulfill at least one of the principles, and 45.1% of the organizations do not fulfill any of the principles stipulated [70].
A second challenge is that in practice there are multiple situations in which the transformative elements mentioned in Section 3 are not met. For example, we pointed to the importance of the demarketization processes and the “not for profit logic”, but in fact, we found that one of the cornerstones of public action is precisely to foster a greater access and presence of the PSE in the different markets. We focused on the relevance of decentralization, but instead we found that the public purchase catalogue creates problems due to its centralized management. We also spoke about democratization, but we found that organizations can barely participate in public policy governance, and the LOEPS sets limits on their political integration and representation. Furthermore, we underlined the need for a reconceptualization of the nature/society divide and respect for the rights of nature, but we then found that some requirements for accessing markets are not favorable to agro-ecological small producers that seek food sovereignty. We can therefore conclude that many of the principles are simply rhetoric rather than practical and operationalizable mechanisms and measures.
A third challenge is that both BV and the SSE plea for a wealth and income redistribution, but in practice, the IEPS’s own evaluation documents [71] find that when small producers enter into any of the two markets (public or private) through their programs, the poorest farmers are the ones who obtain the least benefits due to their initial asset limitations. It is not that the poorer do not benefit, but that the revenues of the programs tend to be proportional to initial investment. Thus, they are not fulfilling the principle of “people over capital”, as the reward depends on the initial capital and not on the people’s needs or capacity to work.
(C.C., key informant): ‘It is not rare to find out that even within poor small rural producers, the poorer are those who benefit the less […] regardless of the “Solidarity” intended in the programs’
Fourth and finally, there is a general problem of focusing on only some subsectors of the economy instead of trying to transform the economic system itself. That is, public programs are oriented towards productive actors that they consider to be insufficient in regard to efficiency and integration into markets, but they do not try to transform other already existing companies. Thus, there is a problem of economic policy fragmentation, as some public institutions with few resources are dedicated to the economy “of the poor for the poor” and other different public institutions with more resources are dedicated to “companies efficiently integrated into markets”. Therefore, finally we reach the point addressed in Section 3 of becoming functional to the capitalist system. There exists a risk of discursive cooptation, addressing solidarity values for some small spheres, while at the same time paving the way for the benefits of capital companies in other spheres, if not linking the first to the latter in the precise case of agricultural products and big supermarkets’ chains.
(J.G, public servant): ‘the first necessity is not to transform the [PSE] sector, but to change the whole economic system. For that purpose it is not necessary to divide ‘the popular’, ‘the solidary’ and ‘the private’ […] in terms of public policy’.

5.3. Key Limitations in the Pursuit of BV

All the main pieces of the new regulatory framework regarding the PSE include clear references to BV as a guide for policy options. However, this is done more in the rhetoric and discursive fields than in any real or operationalizable measures. The 2008 constitution clearly stated that BV should be the main objective to achieve and, so, it recognized various BV rights and the BV regime. Despite this, the more practical interpretation of these rights was closer to conventional development approaches than to a BV radical paradigm shift. In the same vein, the 2009 PNBV clearly declared BV as the main guideline of all policies—it dedicated its third chapter to explaining it, and then the PNBV defined in its seventh chapter the main BV objectives, within which nº 11 was “to establish a social and solidarity economy system”. Again, however, the concrete policy orientations and indicators prioritized were more similar to conventional macroeconomic growth, investment, exports and consumption measures than to innovative BV solidarity and reciprocity options. Finally, the 2011 LOEPS itself, in art.1, art.3 and art.4 declared BV (or Sumak Kawsay) as an objective and a principle to follow, along with other principles such as solidarity and reciprocity. Once more, however, the rest of the operationalizable articles were not dedicated to developing these concepts, but to regulate the PSE sector in a conventional way.
In general, we have identified many BV and SSE key transformative concepts within the new regulatory framework, but these concepts are located in the declarative or discursive introductory sections. Then, in the more practical orientations, these concepts tend to disappear, and other measures or indicators emerge, sometimes even apparently in contradiction with the previous declarations. We would like to address that these inconsistencies and challenges are very relevant and evident mainly in three key areas from which an alternative model for development can be found: (i) the need to strengthen local communities (instead of individualistic approaches), and the need to foster their capacity, autonomy and democracy in the management of their resources; (ii) the need to foster demarketization economic strategies with reference to the value of a plurality of logics, especially that of reciprocity; and (iii) a paradigmatic shift in ecological terms, based on a different humankind’s relationship with nature that should evolve from an anthropocentric standpoint to a biocentric perspective.

6. Concluding Remarks

First, we must point out that there is no single way of understanding the SSE, nor is there a single model as an alternative to development, which is why there cannot be a single path to their attainment. However, there are important similarities between the main objectives of the alternative BV paradigm that emerged in Ecuador and the SSE values. Some of these values and principles are reflected in strategies based on the following: strengthening local communities; reformulating the relationship between humans and nature; prioritizing people over capital; autonomy and democracy in management; prioritizing the provision of services instead of looking for profits; etc.
Second, we have explained that in Ecuador, a broad new regulatory framework for the PSE has been elaborated since the 2008 Constitution. There was a new law (LOEPS) and a new government agenda, the PSE was also reflected in the National Development Plans (PNBV), and new institutions were created to regulate and foster the sector. However, this framework lacks sufficient clarity, coherence and articulation within itself. Besides, the PSE policies aimed at the productive sector currently implemented by the IEPS show a big number of limitations regarding the following: registration and strengthening of organizations; lack of resources and continuity in the main projects; difficulties in accessing public purchase programs for the smallest rural organizations; and lack of a sufficient budget.
Third, notable challenges for the implementation of policies that could foster a new development model are therefore reflected in many areas. Regarding access to markets, the problems arise due to the asymmetric and dependent integration of small producers into global market chains; the crowding-out effect of solidarity and reciprocity practices and logics due to the focus on gaining greater market quotas; the focus on quantity production instead of quality; and public purchase processes’ rigidity and restrictions in requirements. Regarding the overall fulfillment of the SSE principles and their links with alternative paradigms like BV, we observe the following: there is a lack of control over the fulfillment by the organizations of the LOEPS principles; there is an incoherence between principles and public policy practices; poorer producers benefit the least, so there is no redistribution; and there is a focus on the PSE subsector instead of looking for the economic system transformation, so there is a risk of being functional to capitalism.
It has been argued elsewhere that under certain premises, the SSE could foster a BV paradigm that is an alternative to capitalist development [64], but we find here that the current Ecuadorian government’s policies do not foster that kind of SSE initiative. Therefore, we can conclude that there is no development model transition underway in Ecuador, and nor are the official PSE policies fostering the SSE radical values that could be useful for transforming the economic system overall. We also found out that there are social actors, like the MESSE, that still are looking for this transition.
Transformation opportunities were opened up following the new 2008 regulatory framework, but over time these have been frustrated by the challenges addressed. Several years since the approval of a new Constitution (2008) and the LOEPS (2011), we have not found an alternative development paradigm being fostered through the SSE. However, this does not mean that the postulates of BV and the SSE do not mark out an interesting path to travel in the search for alternative development models in theory, but simply that the practical implementation has lost this path.
Fourth and finally, worldwide, many policies are being reoriented and reevaluated in the light of their usefulness in achieving the SDGs; the case of the PSE in Ecuador is not far away from this tendency. We could say that the PSE policies fall short in the pursuit of three paradigmatic transformations necessary for BV: (i) from and individual approach to a community vision; (ii) from a market orientation to a plurality of logics valuing reciprocity; and (iii) from anthropocentric perspectives to biocentric approaches. None of these transformations are demanded by the SDGs and, thus, the PSE policies in Ecuador still could be valid to foster them. In fact, we have shown elsewhere [23] that the SSE could be useful to foster some of the SDGs (for instance SDG nº 5, 8 or 12), but this process is neither linear nor free from challenges, so this reorientation could be a very interesting area for further research in the case of Ecuador.

Author Contributions

Conceptualization, U.V.-E., J.C.P.d.M., and L.U.; formal analysis, U.V.-E., investigation U.V.-E., methodology, U.V.-E.; project administration U.V.-E.; resources, U.V.-E.; supervision U.V.-E., validation U.V.-E., visualization U.V.-E; writing—original draft preparation, U.V.-E.; writing—review and editing, U.V.-E., A.A.-A., J.C.P.d.M., and L.U. All authors have read and agreed to the published version of the manuscript.


This research was funded by Basque Government, grant number IT-1307 and the APC was funded by authors.


We would like to thank Betty Espinosa, Jhonny Jimenez, Cesar Carranza and Silvia Vega for all their help during fieldwork. We would also like to express our gratitude to our colleague Xabier Gainza for their comments on an earlier draft.

Conflicts of Interest

The authors declare no conflict of interest.


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Table 1. Main new legal framework for the popular and solidarity economy in Ecuador.
Table 1. Main new legal framework for the popular and solidarity economy in Ecuador.
AcronymLegal InstrumentYears (Promulgation)
2LOEPSOrganic Law of the Popular and Solidarity Economy2011
3AREPSRevolution’s Agenda for the Popular and Solidarity Economy2011–2013
4PNBVNational Plan for Good Living (Buen Vivir) (3 different plans)2009–2013/2013–2017/2017–2021
5---Local Regulations (Ordenanzas)Not in all the Local Governments
Source: elaborated by the authors.
Table 2. Data collection from semi-structured interviews.
Table 2. Data collection from semi-structured interviews.
Stakeholder GroupOrganizational Basis 1Numbers of IntervieweesDatesProvinces
Public Servants (Government Officials and Policy Makers)CONAFIPS
122018, 2019Azuay, Imbabura, Pichincha,
Key Informants (Mainly Academics)FLACSO
Universidad de Cuenca
Univ. Politécnica Salesiana
62018, 2019Azuay, Pichincha,
SSE Organizations (Leaders and Grassroots Participants)Colectivo Agroecológico
152018, 2019Azuay, Imbabura, Pichincha.
Source: own elaboration. 1 CONAFIPS: Corporación Nacional de Finanzas Populares y Solidarias. IEPS: Instituto de Economía Popular y Solidaria. MAGAP: Ministerio de Agricultura y Ganadería. MIES: Ministerio de Inclusión Económica y Social. FLACSO: Facultad Latinoamericana de Ciencias Sociales. IAEN: Instituto de Altos Estudios Nacionales. FEPP: Fondo Ecuatoriano Populorom Progresio. MCCH: Maquita Cushunchic Comercializando como Hermanos. MESSE: Movimiento de Economía Social y Solidaria del Ecuador.
Table 3. Evolution of IEPS’s budget, 2013–2019 USD.
Table 3. Evolution of IEPS’s budget, 2013–2019 USD.
CURRENT Salary, ordinary expenses4,213,07215,597,0843,982,7913,377,2195,119,5315,042,3274,868,622
INVESTMENT National Programs6,232,2196,253,9679,554,5694,260,042101,033127,988508,108
FAREPS External Financing------3,415,933
Source: elaborated by the authors based on the Accountability Reports (Informes de Rendición de Cuentas) of IEPS, and direct consultation with the IEPS services.
Table 4. IEPS’s national investment programs 2013–2017.
Table 4. IEPS’s national investment programs 2013–2017.
National Programs20132014201520162017
Hombro a Hombro01,406,0032,191,1311,487,742101,033
Socio Vulcanizador02,043,9901,181,70900
Source: elaborated by the authors.
Table 5. Evolution of public and private purchasing PSE 2013–2018 (USD).
Table 5. Evolution of public and private purchasing PSE 2013–2018 (USD).
Access to Markets201320142015201620172018
Public purchasing57,549,92484,803,61087,867,41683,520,40298,638,374123,903,754
Principal SectorTextile 36,500,000Textile 42,776,388Textile 43,825,646Textile 43,781,156Textile 41,855,309Textile
Private purchasing2,626,1895,610,6618,895,31412,006,11910,184,70610,334,566
Principal SectorAgriculture
International 1----------1.394.949
1 Before 2018, international sales were very low and they were not accounted independently but within private purchasing. Source: elaborated by the authors based on the Accountability Reports (Informes de Rendición de Cuentas) of IEPS, and direct consultation with the IEPS services.
Table 6. Challenges in the implementation of PSE policies in Ecuador.
Table 6. Challenges in the implementation of PSE policies in Ecuador.
Market Integration vs. Solidarity and ReciprocityOverall Coherence with SSE Principles
Market logic vs. reciprocity and self-consumption.
Entering supply chain in dependent ways.
High quantity production vs. quality (ecological) production.
Public purchase processes’ rigidity.
Lack of control over the fulfillment by organizations of the LOEPS principles.
Incoherence between policy practices and principles.
Poorer and smaller producers benefit less (no redistribution).
Focus on subsector instead of economic system transformation.
Source: elaborated by the authors.

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Villalba-Eguiluz, U.; Arcos-Alonso, A.; Pérez de Mendiguren, J.C.; Urretabizkaia, L. Social and Solidarity Economy in Ecuador: Fostering an Alternative Development Model? Sustainability 2020, 12, 6876.

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Villalba-Eguiluz U, Arcos-Alonso A, Pérez de Mendiguren JC, Urretabizkaia L. Social and Solidarity Economy in Ecuador: Fostering an Alternative Development Model? Sustainability. 2020; 12(17):6876.

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Villalba-Eguiluz, Unai, Asier Arcos-Alonso, Juan Carlos Pérez de Mendiguren, and Leticia Urretabizkaia. 2020. "Social and Solidarity Economy in Ecuador: Fostering an Alternative Development Model?" Sustainability 12, no. 17: 6876.

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