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Redefining Development and Quality of Life

For those who believe that we are not necessarily condemned to the gloomy status quo and that societies can do things differently, what is happening in Ecuador provides inspiration and even guidance. Ecuador could be one of the most exciting places on earth at present, in terms of new thinking about and actively working towards an alternative development paradigm based on new relationships between economy, society and nature. This article gives an account of Ecuador which is particularly important because it shows how much can be achieved if there is sufficient political will and popular support, even by a small country operating under numerous constraints in uncertain economic times.

INSIGHT

Redefining Development and Quality of Life

New Economic Strategies in Ecuador

Jayati Ghosh

operating under numerous constraints in uncertain economic times, if there is sufficient political will and popular support.

Background

Ecuador is a relatively small country, with slightly more than 14 million people, more than two-thirds of whom are urban residents. But it is also one of the most

For those who believe that we are not necessarily condemned to the gloomy status quo and that societies can do things differently, what is happening in Ecuador provides inspiration and even guidance. Ecuador could be one of the most exciting places on earth at present, in terms of new thinking about and actively working towards an alternative development paradigm based on new relationships between economy, society and nature. This article gives an account of Ecuador which is particularly important because it shows how much can be achieved if there is sufficient political will and popular support, even by a small country operating under numerous constraints in uncertain economic times.

The web version of the published article incorporates a few corrections to the print version.

Jayati Ghosh (jayatijnu@gmail.com) is with the Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi.

Economic & Political Weekly

EPW
february 18, 2012

A
t last, some good news. As the rest of the global economy stumbles and falls further into a trajectory of stagnation or decline of incomes and employment mixed with financial volatility, one region provides some source of optimism. In the past decade, a number of Latin American governments have embarked upon alternative economic and social strategies that benefit people rather than capital. While the various left-of-centre governments in the region vary greatly in terms of actual policies, they have broadly heterodox economic approaches, which effectively question and reject the mainstream thinking that continues to dominate the rest of the world, from the United States (US) to Europe to Asia. But there is more. These are regimes that, in different ways, move beyond tired ideas of all kinds, not just those prevalent in the mainstream. Thus, they also transcend the traditional socialist paradigm, with its emphasis on centralised government control over an undifferentiated mass of workers, to incorporate more explicit emphasis on the rights and concerns of women, ethnic minorities, indigenous communities and other marginalised groups, as well as recognition of ecological constraints and the social necessity to respect nature.

Within Latin America, one of the less talked about countries may well provide the most interesting economic model. Ecuador could be one of the most exciting places on earth at present, in terms of thinking about and actively working towards an alternative development paradigm based on new relationships between economy, society and nature. The example of Ecuador is particularly important because it shows how much can be achieved even by a small country

vol xlviI no 7

varied and biodiverse regions of the world, with physical terrain ranging from lush tropical coastline to the Andean plateau and mountains that contain several active volcanoes. The territory also includes the famous Galapagos Islands, now a protected area that still contains many of the animal species identified by Charles Darwin, as well as several other ecologically rich and varied nature reserves.

Ecuador has been a poor country, suffering for much of its independent history features similar to other Latin American countries, such as political instability punctuated by bouts of military rule, economic backwardness and very high disparities of income and assets. The everlooming impact of the US on its domestic policies and politics made it a quint e ssential “banana republic” – and in fact, it happens to be the world’s largest exporter of bananas. It experienced external debt crises and subsequent structural adjustment, along with the rest of the region.

Even as recently as 10 years ago, Ecuador was seen as more or less a basket case, with large balance of payments deficits and external dependence despite its oil reserves, high inflation and domestic political and economic volatility. In the decade until 2007, Ecuador was ruled by five successive governments, all pursuing relatively similar economic policies mandated by the globally dominant mainstream neo-liberal economic model. This had created a fairly typical internally disarticulated economy, with a primary export sector (for oil and hacienda crops like bananas and coffee) controlled by multinational companies or local elites, hardly any manufacturing, and a largely backward domestic economy based on peasant production and low grade services.

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In 2000, as a response to hyperinflation and external payments problems, the then government dollarised the economy, replacing the sucre with the dollar as legal tender. This subdued inflation, by containing inflationary expectations and forcing real wages down. But it did nothing to address the core economic problems, and further constrained domestic policy space by making domestic monetary policies completely dependent on the level of the dollar reserves. The economy continued to lurch on in chaotic manner, buffeted by global winds and unable to achieve stable development.

A turning point came when the economist Rafael Correa Delgado was elected as president in late 2006. He won the run-off election against Alvaro Noboa, the richest man in Ecuador and owner of the Noboa Group, a Fortune 500 company. Noboa was typical of what was known as the “partidocracia”, or oligarchic political system characterised by what even Michel Camdessus of the International Monetary Fund (IMF) had called “an incestuous relationship between bankers, political-financial pressure groups and corrupt government officials” (quoted in R Burbach 2008).

Correa had served briefly as the minister of economy in an earlier government, but was thrown out after two months for trying to overturn neo-liberal policies. His election as president was backed by indigenous and social movements, several small political parties on the Left and a broad mass of Forajidos rebelling against the established system. This combination influenced subsequent policies. Despite the low-key changeover, this election effectively became an economic and political game-changer of dramatic dimensions. Correa’s position when he took over in January 2007 was initially weak, with no real party structure and little backing in the elected assembly. He called for a popular referendum on fresh elections to the assembly as well as the people’s desire for a new constitution. The answer to both questions was a resounding “yes” vote. A hallmark of the economic and political changes that have occurred since then is that plenty of major policies have first been put through the referendum process.

The popular support explicitly expressed through such referenda has given the government the political ability to take on major vested interests and powerful lobbies.

Having brought in a new constitution in 2008 and convincingly won the next elections held in 2009, the government is now the most stable in recent times. It will soon become the longest serving in Ecuador’s tumultuous history. The president’s approval ratings in polls in the past year have been around 70%, even after five years of rule, and he is widely expected to win the next election due within a year. This expresses popular support for the significant reorientation of the government’s approach, which in turn derives from a new constitution remarkable for its recognition of human rights and the rights of nature, and its acceptance of plurality and cultural diversity.

New Constitution and ‘Good Living’

The constitution that was approved in October 2008 was the 20th in the country’s history, but it was marked by many significant changes. Its preamble notes that the goal is to build a “new form of public coexistence, in diversity and in harmony with nature, to achieve the good way of living, the sumak kawsa›dzand “a society that respects, in all its dimensions, the dignity of individuals and community groups”. The good way of living (known in Spanish as el buen vivir but more effectively translated from the original Kichwa as “life to the fullest”) is both a philosophical-ethical approach and a material concept, rooted not just in a broad humanitarian tradition, but also in the specific outlook of Kichwa-speaking people and other indigenous groups.

This focus on “the good way of living” involves a development structure with the following objectives:

  • To improve the quality of life and life expectancy, and enhance the capacities and potential of the population.
  • To build a fair, democratic, productive, mutually supportive and sustainable economic system based on the egalitarian distribution of the benefits of development and the means of production, and on the creation of decent, stable employment.
  • february 18, 2012

  • To foster participation and social monitoring, acknowledging diverse identities and promoting their equitable representation, at all stages of governance.
  • To restore and conserve nature and maintain a healthy and sustainable environment ensuring for persons and communities equitable, permanent and quality access to water, air and land, and to the benefits of ground resources and natural assets.
  • To guarantee national sovereignty, promote Latin American integration and boost strategic insertion into the global context, which contributes to peace and a democratic, equitable world system.
  • To promote balanced, equitable land use planning, integrating and coordinating sociocultural, administrative, economic and management activities and bolstering the unity of –Š‡–ƒ–‡Ǥ
  • To protect and promote cultural diversity and to respect its spaces of reproduction and exchange; to restore, preserve and enhance social memory and cultural heritage.
  • The constitution explicitly incorporates the inalienable human right to water, as well as to “healthy, sufficient and nutritional food, preferably produced locally and in keeping with their various identities and cultural traditions”, which means that the goal of food sovereignty becomes an obligation of the Ecuadorian state. It affirms the rights of citizens to free education (at all levels) as well as to health services. It recognises that all citizens have the right to “safe and healthy habitat and adequate and decent housing, regardless of their social and economic status”. The emphasis on free access has important implications, requiring public provision rather than private delivery based on user charges.

    Labour rights are explicitly dealt with in Articles 33 and 34: Work is a right and a social duty, as well as an economic right, source of personal fulfilment and the basis for the economy. The State shall guarantee full respect for the dignity of working persons, a decent life, fair pay and retribution, and performance of a healthy job that is freely chosen and accepted. The right to social security is a right of all persons and it cannot be waived, and it shall be the State that must bear the prime duty and responsibility for this right... which includes persons who carry out unpaid work in households,

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    livelihood activities in the rural sector, all forms of self-employed and who are unemployed.

    There is also explicit recognition of the rights of the elderly, children and young people, persons with disabilities. The acceptance of the rights of indigenous peoples, communities and nations creates the notion of a “plurinational” state.

    A significant feature is the recognition of the rights of nature. Environmental conservation, the protection of ecosystems, biodiversity and the integrity of the country’s genetic assets, the prevention of environmental damage, and the recovery of degraded natural spaces are declared matters of public interest. Articles 71 to 73 focus on the specific rights of nature.

    Nature, or Pacha Mama, where life is reproduced and occurs, has the right to integral respect for its existence and for the maintenance and regeneration of its life cycles, structure, functions and evolutionary processes. All persons, communities, peoples and nations can call upon public authorities to enforce the rights of nature... The State shall give incentives to natural persons and legal entities and to communities to protect nature and to promote respect for all the elements comprising an ecosystem. Nature has the right to be restored..., apart from the obligation of the State and natural persons or legal entities to compensate individuals and communities that depend on affected natural systems.

    All this, in turn, puts significant obligations upon the state. The Ecuadorian state is meant, inter alia, to guarantee the rights of people, communities and nature; to produce goods, to create and maintain infrastructure, and to provide public services; and to boost the development of economic activities and promote and bolster science and technology, the arts, ancestral wisdom and the creative initiative of communities, associations, cooperatives and the private sector.

    Plan and Macroeconomic Achievements

    All this is very well, but of course, having a progressive constitution is not enough. Constitutions can be good in themselves, but inadequately implemented in letter or in spirit – the Indian Constitution being a case in point. In Ecuador, however, the development planning process has been explicitly aligned to constitutional requirements, and there has already been some progress in the past four years.

    Economic Political Weekly

    EPW
    february 18, 2012

    The National Plan Figure 1: Real Annual GDP Growth Rates (in %) 10

    2009-13 (SENPLADES

    8

    2009) contains a com

    6

    prehensive and persua

    4

    sive critique of the impact of neo-liberal eco

    2

    nomic policies on Ecua-0 dor’s economy. The -2 plan eschews gross do--4

    2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 mestic product (GDP) as Source: Preliminary Overview of the Economies of Latin America and the Caribbean 2011, the only explicit goal, ECLAC, Santiago, Chile.

    and instead, emphasises Figure 2: Investment Rates (GFCF as % of GDP)universal satisfaction of 27 basic needs. Macroeco-25 nomically, the intention

    23

    is to move Ecuador away

    21

    from being a primary

    19

    producer, in four phases. In the first phase, the

    17

    emphasis is on redistri-15

    2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 bution, selective import Source: Preliminary Overview of the Economies of Latin America and the Caribbean 2011, ECLAC, Santiago, Chile.

    substitution, diversification in the form of ecotourism and strategic and consumption and reduce Ecuador’s public investment. In the second phase, import dependence. the focus is on changing the energy ma-The macroeconomics of such a strategy trix, reducing fossil fuel dependence and are far from simple, especially since expanding clean energy and bioenergy Ecuador still maintains a dollarised econoproduction and consumption, and con-my that does not allow using the exsolidation of domestic tourism and indus-change rate as a policy instrument and try. In the third phase, export diversifica-severely constrains monetary policy. In tion away from primary production, and other countries, these would be seen as in the fourth phase, the launch of more insurmountable obstacles. In Ecuador’s knowledge-intensive products, including recent past, these have been sought to be bio-services. Overall, the objective of this overcome through creative strategies strategy is to generate wealth to satisfy with respect to external economic intethe basic needs of population, but on the gration and domestic fiscal policies. basis of an intergenerational sustainable process that simultaneously results in Renegotiating the Terms democratising its benefits. of External Engagement:

    As Figure 1 shows, even though the Oil and Public Debt government’s explicit focus has not been One major source of inspiration for GDP growth, in fact, this strategy has much of the developing world must be been associated with reasonably high the way in which Ecuador’s government rates of aggregate income growth, gen-has managed to change the terms of exerally slightly higher than for the region ternal engagement with forces that are as a whole. Figure 2 suggests that one generally seen to be much more powerimportant reason for this is because of ful. This has been particularly evident in higher investment rates, enabled by two areas: oil rents of transnational significantly higher public investment companies; and the external debt held which has also drawn forth more private by the government. investment in a crowding-in process. Ecuador is an oil exporter with oil ex-The purpose of such public investment is ports accounting for more than half of not simply to provide much-needed infra-exports and more than a quarter of govstructure, especially transport links and ernment revenues on average in the past access to electricity, but also to contri-few years1 (Weisbrot and Sandoval 2009). bute to the diversification of production It is often supposed that Ecuador’s ability

    vol xlviI no 7 39

    Ecuador LAC
    Ecuador LAC

    INSIGHT

    to bring about positive macroeconomic changes is essentially the result of the fact that it has been an oil exporting country in a period of high and rising global oil prices. But oil exports alone do not guarantee much economic progress, as the obvious example of Nigeria shows among many others. The presence of natural resources can even generate opposite outcomes, associated with the “resource curse”, as high export prices generate “Dutch disease” effects that discourage diversification of production, and the economic rents from these resources are appropriated by a small minority of the population. Indeed, until recently, Ecuador displayed both of these tendencies quite sharply. It is not the presence of oil resources per se, but rather the recent ability of the government to transform the nature of control over oil and use these rents for improving material conditions for the population as a whole, which is at the heart of the improved performance.

    The first important element of this strategy was the renegotiation of oil contracts with multinational companies. Ecuador had benefited relatively little from its oil exports because of the high shares of oil sales that went to foreign oil companies. A new law in July 2010 dramatically reversed the terms of the contracts, increasing the Government of Ecuador’s share from 13% to 87% (on average) of the gross oil revenues. This was met with anger and consternation in the international industry. Seven out of the 16 foreign oil companies operating in the country decided to pull out, and their fields were taken over by the state oil companies. But the others stayed on, finding it profitable to operate even on these new terms because of the relatively low costs of extraction in most Ecuadorian fields. As a result, the government was in a position to benefit much more substantially from any increase in global oil prices. State revenues increased by $870 million in 2011 from this source alone. (Incidentally, while this led to substantially increased hydrocarbon royalties for the state it also meant lower tax revenues from this source). This was important because it enabled oil revenues to be used in public spending directed towards social goals.

    External debt service was previously a major drain on the government’s and country’s resources. The Correa government declared that it would not continue to service and repay debt that had been contracted by unelected regimes on unfair terms for the country. This has involved a complicated process of auditing the external debt and

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    r enegotiating and/or repudiating illegitimate external debt, as more than 90% of bonds were withdrawn from the market. The process led to a dramatic reduction in debt service payments, saving an estimated $7.5 billion for the public exchequer.

    Public Finance

    What is remarkable is that the government has confronted not just powerful external forces, but also dominant domestic lobbies that were deeply embedded in the domestic political structure. The clearest example of this is in fiscal policies, particularly revenue mobilisation strategies that have involved directly taking on the large domestic bourgeoisie. Despite the very large increase in oil revenues, the public exchequer has actually reduced its dependence on oil during the Correa regime. The share of oil revenues in total government revenues has come down from 28% in the period 2001-06 to only 23.1% in 2007-10 – in other words, non-oil revenues now account from nearly three quarters of government revenues. This is mainly because of a massive effort towards efficient tax collection, which has caused more than doubling of tax revenues in five years. Total tax collection rose from $4.86 million in 2006 to $9.51 million in 2011. As a result, from around 35% of tax revenue collection, direct taxes

    – mainly corporation taxes – have increased to account for more than 40%.

    Tax authorities in Ecuador note that in the case of corporation taxes, this did not involve any increase in rates. Carlos Marx Carrasco, the head of the Internal Revenue Service (SRI), argues that this

    Table 1: Fiscal Balance and Public Debt (as % of GDP)

    2007 2008 2009 2010 2011

    Fiscal balance LAC -0.5 -1.2 -3.4 -2.3

    Fiscal balance Ecuador -0.1 -1.1 -5.1 -2 -1.5

    Public debt LAC 30 28.6 30 29.5 28.1

    Public debt Ecuador 27.7 22.9 18.2 23 20

    Source: Preliminary Overview of the Economies of Latin America and the Caribbean (LAC) 2011, ECLAC, Santiago, Chile.

    success is due primarily to better enforcement, collection of tax arrears and reducing tax avoidance, which, in turn, has only been possible because of breaking the cosy political nexus that had existed in the past between the tax administration and the large businesses that reaped most of the benefit of domestic economic growth in the past. The SRI

    Economic Political Weekly

    EPW
    february 18, 2012

    achieved this through systematic use of information technology and more detailed reporting requirements for companies, combined with strict measures to punish tax evaders. Since April 2006, the SRI has required com

    22.3 26 29.3 27.3 28 30.8 23.2 23.4 19.7 26.8 26.1 21.22009 2010 2011

    Figure 3: Government Revenues and Expenditures (as % of GDP) 35 30 25 20 15 10 Government Government exp Government Government revenues Ecuador Ecuador revenues LAC exp LAC Source: Preliminary Overview of the Economies of Latin America and the Caribbean 2011,

    ECLAC, Santiago, Chile.

    panies to submit a range of detailed information on monthly VAT filings, financial yields, credit-card movements and income tax withholdings. Despite complaints from businesses about the time and difficulty of filling in these forms, these have proved to be very useful in curbing tax evasion. The SRI has used this information to monitor exports, imports, purchases, sales, voided receipts and withholdings in general. This has allowed it to come up with much more systematic (and higher) estimates of the revenues due to it. Once these estimates have been made, companies have been forced to pay up their taxes, and the estimated arrears. Commercial outlets and private professional offices of proven tax evaders in most main cities have been shuttered until their tax obligations are met. The process is still only partially complete, and the SRI estimates that there is much more potential to increase tax revenues through further tightening and further compliance. The stick of more stringent and effective enforcement has been combined with the carrot of lower rates – corporation tax rates are to be lowered to 22% from the current 25%. Partly as a result of the tax enforcement drive, government revenues in Ecuador increased significantly as share of GDP, as indicated in Figure 3, even while they were falling in the region as a whole.

    This process has been effective but is still only partially complete, suggesting that there is even more scope for extracting such revenue in the near future. Remarkably, the government did this without any adverse effects on either the rate of investment (which kept increasing over the period and is now a healthy 26% of GDP) or the aggregate growth rate (expected to be as high as 8% in 2011). So the usual arguments against such a drive – that it will affect “investor

    vol xlviI no 7

    confidence”, and therefore, investment

    – clearly have not been relevant.

    These increased government revenues were put to good use in infrastructure investment and social spending. Figure 3 shows that government expenditure rose to more than 30% of GDP in the recent period, once again contrasting with the regional average. Ecuador now has the highest proportion of public investment to GDP (above 10%) in Latin America and the Caribbean. The largest increases have been in social spending, which has doubled since 2006, to 10% of GDP. This has enabled real progress towards the constitutional goals of free education at all levels and access to free healthcare for all citizens. Investment in health has increased by 129%, and the education budget has also more than tripled, from $235 million over 2003-06 to $941 million in 2007-10. There has also been a major expansion in public housing, conforming to the constitution’s affirmation of the right of all citizens to dignified housing with proper amenities. Direct investment in public housing for the poor has been complemented by increased home loans by a public housing bank.

    These substantial increases in public expenditure were not accompanied by any increase in either fiscal deficit or public debt ratios, precisely because they were largely funded by increased revenues from oil and taxes. Table 1 shows that the government’s fiscal balance has been extremely low (except in the crisis year 2009) and the public debt to GDP ratio is much smaller than the Latin American average and minuscule when compared to most countries in the world.

    Other Measures

    There are numerous other measures that have already been taken, which amount to an impressive amount of activity in five

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    years, especially in policies that affect the conditions of workers. The expansion of public employment has occurred not just because of more people hired to deliver public services, but by eliminating contractors and outsourcing of public employment, thereby providing around half a million previously outsourced workers with more stable conditions and better wages. The legal minimum wages have been increased and – even more importantly – sought to be rigorously enforced. A law in May 2008 made it mandatory for all employers to provide social security coverage for their workers. A referendum in May 2011 also sanctioned penalties of up to two years’ imprisonment for infringement, though the details are still to be worked out. Social security coverage has increased from 39% of all workers before 2006 to more than 55% at present. Women working in domestic service have also been covered by minimum wage laws for the first time in the country’s history and are increasingly sought to be affiliated to the Social Security Institute, to enable them to receive pensions and other benefits. Of course, there is still a long way to go in terms of providing workers adequate protection or even their labour rights: The International Trade Union Confederation (ITUC) report of November 2011 notes that “the law limits the rights to organise, collectively bargain and strike” and that “in practice, women and persons of indigenous and Afro-Ecuadorian origin face discrimination in employment”. However, the direction of change

    Real minimum wage index (left axis) Urban unemployment rate (right axis) Urban unemployment rate (left axis)

    is important, especially Figure 4: Minimum Wages, Employment and Unemployment Rates

    160 9

    given the overall context of surplus labour. 140

    8

    The same ITUC report

    120 7

    notes approvingly that

    “the government makes 100 6

    significant efforts to 80 address the problems

    5 of disabled persons”. 60 Figure 4 shows that 40

    4 2002 2003 2004 2005 2006 2007 2008 2009 2010

    real minimum wages Source: Economic Survey of Latin America and the Caribbean 2011, ECLAC Santiago Chile.

    have increased throughout the past decade, and the rate of increase accelerated after 2006. It is estimated that real minimum wages have increased by more than one-third between 2006 and 2011. Urban unemployment rates do remain high, however, and the recent decline may have more to do with the decline in the employment rate than with expanding employment opportunities. What is to be noted, however, is that the increase in minimum wages and their enforcement and the attempts at formalisation of the workforce have not been associated with significantly higher unemployment rates, as is generally argued by opponents of such policies.

    There have been attempts to reduce dependence on oil exports and diversify trade partners. Exports to the US now account for only 35% of total exports, compared to 53% in 2006. The plethora of bilateral investment agreements that had been signed by earlier governments has been examined, and some of them have been rejected. Current efforts include reform of the justice system, which is another major source of social and political friction at present.

    The Economy and Nature

    One exciting recent initiative is the Yasuní-ITT biosphere reserve, perhaps the world’s first attempt to create a mechanism of net avoided greenhouse emissions by leaving oil underground. The initiative is designed to keep underground in perpetuity an estimated 850 million barrels of oil under two lakh hectares of rainforest inside the Yasuní National Park, which is a protected biosphere reserve. The initiative would keep over 400 million tonnes of carbon dioxide from being released to the atmosphere. In exchange for its commitment, the Government of Ecuador seeks $350 million a year from governments as well as private donors over the next 10 years, which is approximately half of what it would have made if it had allowed oil drilling in the Yasuní. This not only protects the extraordinary biodiversity of the area, but also the lives and habitats of its indigenous peoples. The scheme proposes to use ecotourism to make human activity compatible with nature.

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    This is a daring, and therefore, difficult initiative. One source of concern is the lack of interest shown by governments of rich countries, who have thus far shown very little inclination to put their money where their mouth is in the climate talks, by supporting this initiative. But without some of that solidarity, the government is likely to find it hard to resist pressures for drilling in the region, and in fact, there are already complaints about some recent licences that have been granted for oil extraction in an area just bordering the Yasuní reserve (Ruiz Marrero 2010).

    Politics of Economic Transformation

    All this may sound too good to be true, and certainly the process of economic and social transformation has only just begun. René Ramírez (currently the minister for science, technology and higher education, and until recently the minister for planning) describes the process under way since early 2007 as a “citizen’s revolution” – a kind of middle path between those who seek to “manage capitalism” and push it in a more equitable direction, and those who aim for a complete overhaul and transformation of the capitalist system into something completely different. The purpose is to use the state as an instrument to transform patterns of accumulation, production and distribution so as to meet the needs of citizens now and in the future. The process is naturally uneven and challenging, but the scope of the ambition and the successes already achieved are remarkable.

    There are bound to be conflicts with those whose profits and power are threatened, as well as other hurdles along the way. The high expectations raised by the constitution and the plan, among ordinary people and indigenous groups, will be difficult to meet quickly. There are pulls and pressures from all directions, and the government has also been uneven in its response to several demands. Thus, when some environmental groups protested against the granting of mining and water concessions that it felt went against the spirit of the constitution, they were briefly banned before more public pressure caused a revoking of the ban. There have been objections to the

    Economic Political Weekly

    EPW
    february 18, 2012

    government’s attempts at media management, in a context of the domination of privately-owned media that oppose most of the government’s policies.

    One obvious question that arises is: how did the government manage to get away with so much, taking on both internal and external vested interests without facing more extreme and vicious resistance from previously entrenched groups? This is a complex question and the answers – and the process itself – continue to unfold. One factor behind the relatively weak resistance relates to the divisions within the opposition, which has many internal conflicts, and thus, far has not been able to unite against what is still a very popular government. The private media are controlled by three business groups strongly opposed to the government, and regularly present Correa as a wannabe dictator or populist caudillo, but it is interesting that lack of control over the media does not appear to have dented the government’s support.

    There have been attempts to destabilise the government, some of which are likely to have involved external support. In October 2010, a police revolt escalated into a potentially major violence when the president was surrounded and attacked by rebellious police forces, in what is generally perceived as an attempt at a Honduras-style coup. In April 2011 US ambassador Heather Hodges was declared persona non grata and expelled from the country in reaction to internal leaks and the publication of WikiLeaks cables that indicated insidious attempts at political destabilisation. Since the government has taken on domestic elites and international interests, efforts at destabilisation can be expected in future as well.

    However, changing geopolitics has also provided more policy space for the government. The 2010 coup was prevented not just by immediate popular mobilisation, but also by the prompt response of neighbouring friendly governments in Brazil, Argentina, Venezuela, etc, which provided backing for the president. The expansion of trade and investment relations with other developing countries has been important in generating some more autonomy. The government is clear that greater regional integration is

    vol xlviI no 7

    crucial for a small open economy such as that of Ecuador and is actively looking at the several regional arrangements that are being considered and negotiated in Latin America to see the ways in which they can be used to advance the progressive agenda within the country.

    For those who believe that we are not necessarily condemned to the gloomy status quo and that societies can do things differently, what is happening in Ecuador provides inspiration and even guidance. Clearly, despite continuing global turmoil and domestic pulls and pushes, much can be done after all. Tax revenues can be increased, by enforcing proper tax collection and cracking down on evasion. Big companies – both domestic and multinational – can be disciplined, without adversely affecting investment or GDP growth. The increased public revenues can be used for more public provision in necessary areas to ensure the social and economic rights of citizens. Labour rights and social security for all citizens can be fought for and sought to be provided. All this is clearly possible, even for a small country operating with several constraints in our globally integrated world. Clearly, the rest of the world has much to learn from this ongoing radical experiment.

    Note

    1 The export figures exclude oil byproducts. With oil byproducts, the figure rises to 57% for 2007-10. In terms of government revenues, oil revenues accounted for 23% in 2007-10, were 28% in 2010 and rose to 35% in 2011.

    References

    Burbach, Roger (2008): “Ecuador: The Popular Rebellion against the Partidocracia and the Neoliberal State”, CENSA Strategic Study, http://globalalternatives.org/rebellion_against_ the_partidocracia

    International Trade Union Confederation (ITUC) (2011): Internationally Recognised Core Labour Standards in Ecuador, Report for the WTO General Council Review of Trade Policies of Ecuador, Geneva, November.

    Ruiz Marrero, Carmelo (2010): “Yasuní: The Battle’s Not over Yet”, Latin America Energy and Environment Monitor, Issue 3, 6 September, http:// energyandenvironmentmonitor.blogspot.com/

    SENPLADES (2009): National Plan for Good Living: Building a Plurinational and Intercultural State, Summarised version (Quito: National Planning Ministry (SENPLADES)), Government of Ecuador, Republic of Ecuador. Available online at http://plan2009.senplades.gob.ec/web/en

    Weisbrot, Mark and Luis Sandoval (2009): Update on the Ecuadorian Economy, Centre for Economic Policy Research, Washington DC.

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