.
The historic 2015 Summit of the Americas—which included Cuba for the first time—marked the beginning of a much-needed discussion for the countries of our hemisphere: how can we work together to ensure more prosperous and equitable societies? Economic growth and prosperity that privileges exclusively a few people is not only an extremely unfair situation; it also leads to political and social instability that, at the end of the day, affects our societies as a whole. In this sense, the urgency of generating “prosperity with equality”, the theme of the Summit, has become an imperative for all its participants. Latin America is a diverse region. Our nations have followed different paths to address the challenge of achieving prosperity and equality. Some have embraced policies closer to free-market formulas while others have adopted measures closer to socialist paradigms. Among these different experiments, and somewhere between the two extremes, Ecuador has shown important results that we hope can provide other countries with useful lessons. Prior to 2007, Ecuador was in the midst of a “lost decade” caused by neoliberal economic policies that saddled our country with an illegitimate external debt, led to the worsening of poverty rates, forced fiscal cuts in social services including education, security and health care, and left the country without the necessary financing in key areas such as infrastructure and energy. At the same time, the failure of that economic model was accompanied by tremendous political instability: the country had eight presidents in ten years! From all perspectives, Ecuador was falling apart at the seams. Since 2007, the current Ecuadorian government has turned these trends around dramatically. 1.3 million fewer Ecuadorians live in poverty (measured in terms of income) and extreme poverty has dropped to 7.7%. According to the Economic Commission for Latin America and the Caribbean, Ecuador is the top country in the region in terms of inequality reduction. These results highlight the success of an economic model that prioritizes human beings over capital. Ecuador does not deny the relevance of markets in terms of resource allocation, but proclaims that markets should be adequately regulated in order to support financing, entrepreneurship and the achievement of the country’s development goals. The “Ecuadorian Model” has allowed both public and private sectors to work together for a common goal: prioritizing our citizens. By combining private efforts with incentives and public investment in areas such as renewable energy, education, tourism, infrastructure, and technology, we have created a balanced long-term model that guarantees sustained and diversified growth. While exclusively market-based models discourage public participation in the economy, Ecuador has shown how important it can be. An analysis of the latest Living Conditions Survey in Ecuador shows how investment has contributed to poverty alleviation in recent years. For instance, while economic growth (among other things, explained by the rise of oil prices) shows a contribution to poverty reduction corresponding to 5.4%, redistributive public policies contributed 7.1%. Poverty reduction is not the sole accomplishment; an increase in social equality has been reached as well. In 2006, the richest 10% of our country earned 42 times more the average income earned by the poorest 10%. As of 2014, that difference narrowed to 22 times. Obviously, our country still faces significant challenges. Despite a national strategy to eradicate extreme poverty by 2017, this goal requires a concerted effort between the National and local governments. Additionally, the role of individuals, families and communities must be taken into account.  For instance, child malnutrition cannot be reduced without improving infrastructure for public services such as water and sanitation systems, which is the responsibility of local governments. A structural and sustainable transformation for Latin America (and the Americas as a whole) requires a different understanding of the role of investment. Infrastructure and key economic sectors are crucial for public investment, but we must assure that resources and opportunities are provided to our people. In that sense, employment becomes a crucial target and indicator. Between 2007 and 2014, for instance, the rate of citizens who are adequately employed in Ecuador increased by more than 6.1% percent (moving from 43.2% in 2007 to 49.28% in 2014), and the proportion of people who are improperly employed declined by more than 4.1% (moving from 50.77% in 2007 to 46.69% in 2014). Unemployment decreased from 5% in 2007 to 3.8% at the end of 2014. These results did not happen spontaneously. They correspond to responsible planning for public interventions and the invitation to the private sector to be part of this model. Ecuador has the highest public investment in Latin America, which is a key element to maintain and expand our transformation. In 2014, while the average public investment in the region reached 4.6% of GDP, Ecuador invested 11%. Those resources were destined not only to ensuring efficiency and systemic competitiveness of our economic activities, but also to generating services for our people (what we call “Good Living”). Roads, hospitals, health centers and schools are the tangible expression of a model that looks at the long run and does not respond to short-term economic or political gains. Ecuador is not alone in facing the challenges that derive from the urgency of poverty eradication and the need to build a less unequal society. Communities across the hemisphere, even within the United States, are still grappling with these same issues. The “Ecuadorian model” shows that important goals can be achieved once public policy and public-private cooperation start focusing on what is best for our people instead of the exclusive maximization of capital utilities. In Ecuador, we are convinced that embracing this challenge and investing in our people, is the way to attain the historic goal of “prosperity with equality” set by the 2015 Summit of the Americas. About the author: Pabel Muñoz López is National Secretary of Planning and Development in Ecuador.

The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.

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The Legacy of the Summit of the Americas: Achieving Prosperity with Equality

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May 5, 2015

The historic 2015 Summit of the Americas—which included Cuba for the first time—marked the beginning of a much-needed discussion for the countries of our hemisphere: how can we work together to ensure more prosperous and equitable societies? Economic growth and prosperity that privileges exclusively a few people is not only an extremely unfair situation; it also leads to political and social instability that, at the end of the day, affects our societies as a whole. In this sense, the urgency of generating “prosperity with equality”, the theme of the Summit, has become an imperative for all its participants. Latin America is a diverse region. Our nations have followed different paths to address the challenge of achieving prosperity and equality. Some have embraced policies closer to free-market formulas while others have adopted measures closer to socialist paradigms. Among these different experiments, and somewhere between the two extremes, Ecuador has shown important results that we hope can provide other countries with useful lessons. Prior to 2007, Ecuador was in the midst of a “lost decade” caused by neoliberal economic policies that saddled our country with an illegitimate external debt, led to the worsening of poverty rates, forced fiscal cuts in social services including education, security and health care, and left the country without the necessary financing in key areas such as infrastructure and energy. At the same time, the failure of that economic model was accompanied by tremendous political instability: the country had eight presidents in ten years! From all perspectives, Ecuador was falling apart at the seams. Since 2007, the current Ecuadorian government has turned these trends around dramatically. 1.3 million fewer Ecuadorians live in poverty (measured in terms of income) and extreme poverty has dropped to 7.7%. According to the Economic Commission for Latin America and the Caribbean, Ecuador is the top country in the region in terms of inequality reduction. These results highlight the success of an economic model that prioritizes human beings over capital. Ecuador does not deny the relevance of markets in terms of resource allocation, but proclaims that markets should be adequately regulated in order to support financing, entrepreneurship and the achievement of the country’s development goals. The “Ecuadorian Model” has allowed both public and private sectors to work together for a common goal: prioritizing our citizens. By combining private efforts with incentives and public investment in areas such as renewable energy, education, tourism, infrastructure, and technology, we have created a balanced long-term model that guarantees sustained and diversified growth. While exclusively market-based models discourage public participation in the economy, Ecuador has shown how important it can be. An analysis of the latest Living Conditions Survey in Ecuador shows how investment has contributed to poverty alleviation in recent years. For instance, while economic growth (among other things, explained by the rise of oil prices) shows a contribution to poverty reduction corresponding to 5.4%, redistributive public policies contributed 7.1%. Poverty reduction is not the sole accomplishment; an increase in social equality has been reached as well. In 2006, the richest 10% of our country earned 42 times more the average income earned by the poorest 10%. As of 2014, that difference narrowed to 22 times. Obviously, our country still faces significant challenges. Despite a national strategy to eradicate extreme poverty by 2017, this goal requires a concerted effort between the National and local governments. Additionally, the role of individuals, families and communities must be taken into account.  For instance, child malnutrition cannot be reduced without improving infrastructure for public services such as water and sanitation systems, which is the responsibility of local governments. A structural and sustainable transformation for Latin America (and the Americas as a whole) requires a different understanding of the role of investment. Infrastructure and key economic sectors are crucial for public investment, but we must assure that resources and opportunities are provided to our people. In that sense, employment becomes a crucial target and indicator. Between 2007 and 2014, for instance, the rate of citizens who are adequately employed in Ecuador increased by more than 6.1% percent (moving from 43.2% in 2007 to 49.28% in 2014), and the proportion of people who are improperly employed declined by more than 4.1% (moving from 50.77% in 2007 to 46.69% in 2014). Unemployment decreased from 5% in 2007 to 3.8% at the end of 2014. These results did not happen spontaneously. They correspond to responsible planning for public interventions and the invitation to the private sector to be part of this model. Ecuador has the highest public investment in Latin America, which is a key element to maintain and expand our transformation. In 2014, while the average public investment in the region reached 4.6% of GDP, Ecuador invested 11%. Those resources were destined not only to ensuring efficiency and systemic competitiveness of our economic activities, but also to generating services for our people (what we call “Good Living”). Roads, hospitals, health centers and schools are the tangible expression of a model that looks at the long run and does not respond to short-term economic or political gains. Ecuador is not alone in facing the challenges that derive from the urgency of poverty eradication and the need to build a less unequal society. Communities across the hemisphere, even within the United States, are still grappling with these same issues. The “Ecuadorian model” shows that important goals can be achieved once public policy and public-private cooperation start focusing on what is best for our people instead of the exclusive maximization of capital utilities. In Ecuador, we are convinced that embracing this challenge and investing in our people, is the way to attain the historic goal of “prosperity with equality” set by the 2015 Summit of the Americas. About the author: Pabel Muñoz López is National Secretary of Planning and Development in Ecuador.

The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.