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Ecuadors New Inclusive Welfare State Abstract: In this paper I argue that Ecuador has veered off its previous path as a programmatic and ideological party has become the only political force with the popular support and political will and power to change the structures of the welfare state. The lack of credibility and popularity of the traditional opposition and the governments nifty political tactics have enabled it to maintain opposition groups in check. Furthermore, the expanding welfare state is coherent with the governments goal of creating a more inclusive society and it could possibly become the path Ecuador will follow in the next decades regardless of changes in the political landscape. Since 2007, Ecuador, a small Latin American country of fifteen million people, has undertaken a path towards comprehensive political, economic, social and cultural reform. Thus, the welfare literature does not reflect the current state of the Ecuadorian welfare regime. In this paper we will analyze the changes in the Ecuadorian welfare state by focusing on social insurance and assistance, education and labor policies. We will also analyze the political landscape that has facilitated such vast changes in the structure of the welfare state and the current players in the implementation of policies. We will argue that Ecuador has a weak inclusive welfare state and is moving towards a strong inclusive welfare state given that it will take more time for the welfare institutions to accomplish the goals set by the governments National Plan for Good Living. Finally, we will discuss possible future political scenarios and what effect they will have on the welfare state. The welfare literature categorizes Ecuadors welfare state as very limited. However, Haggard and Kauffmans description of the Latin American welfare regime type is very much in line with the Ecuadorian case, if not in historical expenditure data at least in the institutional or legal arrangements. The evolution of the pension system followed the Latin American pattern
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and was characterized by low coverage like in most of the region. Furthermore, the social security system, including healthcare and pension, has historically benefitted urban waged workers while providing minimum benefits to large informal and rural sectors (Haggard and Kauffman, 30-31). Abu Shark and Gough track Ecuadors movement from categories B to C from 1990 to 2000 as its welfare regime while showing fairly good welfare outcomes, moderate state responsibility and low dependence on social protection and public spending it became heavily reliant on remittances from immigrants (40-41). This shift towards an informal security regime can be explained by the 1999 disastrous financial crisis which led to mass emigration as unemployment doubled, most financial institutions closed and the economy plummeted. Finally Seekings labeled Ecuadors early 2000s welfare regime as minimalist since the country spent little on both social assistance and social insurance. However, since 2007 Ecuadors welfare regime has evolved as social spending has dramatically increased and institutions have changed or are in the process of changing.

The Welfare State Social Spending Social spending in Ecuador, which comprises education, health, social and economic inclusion, housing, work and non-social public spending have become trademarks of the current administration. Figure 12 shows us the rise in public spending from 4.3% of GDP to 9.4% of GDP between 2006 and 2011. Figure 13 shows us how education expenditure has increased by 400% since 2000 and health expenditure has increased by 600% from 2000 to 2011. These new increases in expenditure have led to recognition abroad as Ecuador has gone from 101st to 71st in the World Economic Forum competitiveness rankings for its investment in infrastructure,

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education and innovation. Furthermore, it has become the Latin American country with the highest percentage (26%) of poor students in universities (Dinero.com). Spending in technological research and innovation has more than doubled between 2006 and 2010 (Figure 14) and it will increase to 0.75% of GDP this year which will put Ecuador above the Latin American average of 0.6% of GDP (Buen Vivir 2013-2017, 179). The data on educational expenditure shows that the government is making a great effort to educate the population to create a more productive economy where higher education contributes to the industrialization of the country. For instance, the government has shut down 14 universities for their bad quality and started three research universities. It also plans to create an Ecuadorian Silicone Valley with its Yachay-city of knowledge which will cost around $20 billion over sixteen years (Telegrafo.com). Thus, the focus on education is not only to universalize access but to also transform it into a source of economic growth.

Social Security As in many other Latin-American countries, the social security system in Ecuador has its roots in the early 20th century. In 1905, 1915 and 1918 the government put in place laws that provided social insurance benefits to public servants, teachers, telegraphists and members of the Judiciary. In 1928, the government established a pension fund that expanded previous coverage to private sector formal workers, all public servants and the military (Sasso, 19). The more contemporary Instituto Ecuatoriano de Seguridad Social (IESS), Instituto de Seguridad Social de las Fuerzas Armadas (ISSFA) and Instituto de Seguridad Social de la Polica Nacional (ISSPOL) have their origins in this pension fund and they now form the social security system in Ecuador which has been divided into three institutions that provide benefits for formal workers in the private and public sector (IESS), the military (ISSFA) and the police (ISSPOL). This division in
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the social security system reflects the lack of trust between the civilian power and the armed forces. According to the ISSPOL website, the police leadership distrusted a social security system administered with political overtones (Policiaecuador.gob.ec). Thus, the police and the military lobbied for the creation of separate institutions that would work independently from the regular social security system. By 2007, the ISSPOL and the ISSFA covered 0.6% of the population and the IESS 26.3% of the labor force (Buen Vivir 20013-2017, 253). Since its creation, the IESS has endured great public scrutiny and has suffered from its infamously corrupt, incompetent and politicized administrations. However, the institute has an ambitious mission as it not only works as a pension fund financed by employees, employers and the government but also provides health, disability, life and work-related accident insurance; additionally, it provides coverage for informal rural workers who contribute voluntarily (IESS.gob.ec). Nevertheless, the quality of the healthcare services for workers has been historically deficient. Furthermore, the pensions lost most of their monetary value after Ecuador surrendered its national currency and dollarized at a rate of 25,000 Sucres to the dollar in 2000 which was five times higher than the rate in 1998 (5,000 Sucres to the dollar) (Dolarizacionecuador.com). In addition to these problems, most workers are not part of the social security system as neither they nor their employers contribute to the system. The social security in Ecuador has existed for a long time with laws that are favorable to those participating in the system but has suffered from low membership, a lack of operability and a bias towards formal urban workers. Nevertheless, the new government started reorganizing and strengthening the social security system since 2007 and the population has been able to witness revamped services and a higher membership. Figure 1 shows the increased participation of the labor force in the social

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security system. The enrollment of the labor force increased from 25.9% in 2003 to 41.4% in 2012. Furthermore, as we can see in Figure 2 all quintiles have experienced a significant increase in enrollment ranging from 40% to 100% increases in enrollment between 2006 and 2012. However, Figure 2 shows us that the top quintiles have the highest enrollment rates in social security before and after the current administration. In 2008, a new Constitution was established via referendum. Article 34 of the 2008 Constitution establishes social security as an unwaivable right. The article also establishes that the state should guarantee and ensure the exercise of this right to all workers including people who carry out unpaid work in households, livelihood activities in the rural sector, all forms of self-employment and those who are unemployed (Georgetown.edu). The government has a constitutional responsibility to expand the access to social security and the data shows that it has been carrying out its constitutional mandate but the structure of the labor market places limits on this expansion and on the distribution of the enrollment. Nevertheless, policies implemented by the government like expanding health care access to the contributors families and expanding non-contributory pensions to the disabled and the elderly from 198,000 in 2006 to 594,000 in 2013 further the goal of universal coverage; 72% of seniors are protected by a mix of contributory and non-contributory pensions by 2012 (Buen Vivir 2013-2017, 120).

Labor Policy Similarly to other Latin American countries, Ecuadors labor market is very dysfunctional. Historically, most of the labor force has worked in the informal sector. Figure 3 shows us the recent evolution of the labor market and a reduction between 2007 and 2012 of approximately 16% of the informal sectors share of the labor market. Despite the reduction, the informal sector currently represents 50.9% of the labor market which hinders the possibility for
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universal social security coverage in the short or medium-term. The reduction of the labor force participating in the informal sector will have the biggest impact on the governments ability to universalize coverage and on households ability to afford the basic basket of goods. In Figure 4 we can see that 93.8% of workers in the formal sector live in households that can afford the basic basket of goods but when we analyze the labor market as a whole, in figure 5, only 45.5% of the labor force is able to afford the basic basket of goods per household. Furthermore, the 2010 Production Code established that companies can only declare profitability if all their formally employed workers receive dignity wages (basic basket of goods per household divided by average number of workers per household) (Buen Vivir 2013-2017, 276). Thus, increasing the share of the labor force in the formal sector will increase the percentage of households covered by social security and households with incomes that can cover their basic needs. These changes in the labor market are related to the governments efforts to reduce the informal sector. In 2008, the government banned outsourcing of companies main labor to ghost companies which avoided employer contributions to social security (Buen Vivir 20013-2017, 57). Furthermore, since 2010 employers have had to enroll domestic workers in the IESS (ElTiempo.com). Finally, after a national referendum in 2011, the government established that employers that do not enroll their employees in the IESS are subject to criminal prosecution. (LaGaceta.com). As we can observe from these policies, the government sees the formalization of the labor market as critical for the expansion of social security coverage. Nevertheless, the dramatic increase in enrollment in social security cannot be solely attributed to the more modest formalization of the labor market. The institutionalization of social security was not a priority for previous governments which opted for labor market deregulation. Even though extensive

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legislation on social security existed it was not operationalized as the data demonstrates. Additionally, the current administration has not reformed the social security system or the labor code but rather operationalized them to increase enrollment in the IESS. Thus, the changes in the social security system in Ecuador have not occurred through ambitious reform but by a renewed political will to improve the administration of social security and pursue universal coverage through the existing mechanisms.

Social Assistance Ecuadors welfare state does not only rely on social insurance but also has a social assistance component. However, the cash transfer program currently in place has only ben operating for fifteen years. It must be noted that the non-contributory pension we mentioned earlier is part of the current cash transfer program which targets poor mothers, seniors and the disabled. In 1998, the government created its only social program, the Bono Solidario, to compensate the poorest households for eliminating natural gas and electricity subsidies and it had a $212 million budget (2007 dollars) which represented 0.9% of the GDP(explored.com.ec, arrepim.com, Banco Central del Ecuador). At the time Brazils famous Bolsa Familia had not been in place and this program was relatively larger as Bolsa Familia only represents 0.4%% of Brazils GDP (PulitzerCenter.org). However, the Bono Solidario only provided $15 to mothers and $7 to seniors and the disabled. Additionally, it was emergency based assistance rather than rights based assistance. By 2003 the subsidies had been reinstated and the program was renamed Bono de Desarrollo Humano (BDH). It became conditional on childrens school attendance and health clinic visits. The program also became means tested as it shifted its focus towards breaking the cycle of poverty. However, the grants were reduced to $12.50 and the number participants
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increased by 20% from 1 million in 1998 to 1.2 million in 2003 (Acosta, EcuadorLibre.com). In 2007, when the current administration came into power, the grant was raised for all participants to $30, to $35 in 2009 and to $50 in 2013, three electoral years. Table 1 illustrates a noteworthy 60% increase in the number of recipients between 2006 and 2012 led by a surge in enrollment of seniors and disabled children and adults and a 30% increase of participating mothers. Historically, the cash transfer program has enjoyed high coverage, when compared to other Latin American countries. Figure 7 shows that Ecuador has had the cash transfer program with the highest covered population since 2005. Furthermore, the BDH is also the most expensive program in the region relative to GDP. Figure 8 demonstrates that the BDH is by far the most costly cash transfer program in Latin America consuming 1.2% of the GDP when the regional average cost is 0.4% of GDP (GlobalSherpa.org). In the near future, Ecuadors BDH will maintain its position as the most costly cash transfer program with the highest coverage rate but it will be closer to the regional averages. Last October, the Ecuadorian President, Rafael Correa, announced that the BDH would be reduced from $1 billion to $700 million next year as many recipients are above the poverty line (ElUniverso.com). Thus, in 2014 the BDH will constitute between 0.7% and 0.75% of GDP and approximately 30% of the population would be covered by the program (unofficial estimations). Figure 6 shows us that there has been a reduction and continuous decline in the number of mother recipients and that the number of senior and disabled recipients has stabilized. Although we do not have data on the distribution of BDH beneficiaries for 2012 or 2013, data from 2008 and 2010 and poverty reduction data demonstrate that the purge of recipients from the BDH is justified. Figure 9 shows that between 2008 and 2010 there was a reduction in the share of BDH beneficiaries from the poorest quintiles. In addition, given the 8 percentile point reduction in

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poverty and 4 percentile point reduction in extreme poverty between 2006 and 2012 (figures 10 and 11) we should observe the same trend in the BDHs recipients distribution between 2010 and 2013 which is what most likely caused the governments decision to purge the lists. The BDH, the proportionally biggest cash transfer program in Latin America, has become a rights-based program that aims at providing access to education and healthcare to poor children, breaking the trans-generational cycle of poverty and protecting seniors and the disabled (Ministerio de Inclusion Economica y Social). However, the program has a very innovative entrepreneurship empowerment and financial inclusion complement that seeks to integrate working age recipients into the labor market. The Credito de Desarrollo Humano (CDH) provides guidance and up to two-year $2500 loans to BDH recipients who want to invest in profitable activities. The monthly payments are made by foregoing the monthly cash transfer for until the loan is paid (Ministerio de Inclusion Economica y Social). The CDH is unique in the region. It is the productivist side to a pro-poor program given that it uses the BDHs resources to decommodify women, seniors and the disabled.

Politics of the New Welfare State

The Rise of Correa and AP The continuous economic crises and political instability in Ecuador have shaped the politics of welfare. Between 1995 and 2006, the country fought Peru in a costly armed conflict, it underwent its most fatal economic crisis, devastating floods and was governed by eight different presidents. Thus, social policy was not a priority to the short-lived administrations which confronted popular unrest, corruption and inefficient public institutions. The regional trends of deregulation of the labor market, the privatization of government enterprises and the elimination
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of subsidies were the focus of these unpopular administrations. The cash transfer program was the only social policy implemented in the nineties as a reaction to the critical situation of the poorest citizens rather than as a strategy to reduce poverty or inequality. The cash transfer program was not upgraded until the current administration. Figure 15 shows how the cash transfer only underwent decreases in the grants to the beneficiaries given that the budget remained the same while the amount of recipients increased. Social insurance and social assistance in Ecuador were virtually abandoned as the political elite struggled to retain political power. The nearly complete discredit of the traditional political forces led to the rise of the current administration headed by Rafael Correa, an Economics professor and political outsider. Correa was Minister of Economy for four months in 2005 and ran for president in 2006 with Alianza Pais (AP), a new leftist movement which united leftist political and social organizations. He ran on a platform of anti-party politics, proposed to draft a new constitution and presented an ideological government plan that aimed at reducing inequality and poverty. He was also the only one who introduced BDH program into electoral politics as he proposed to double the grant for all recipients. Since the 2006 presidential election, the grant has increased during every electoral year. After being elected in 2006, Correa doubled the grant from $15 to $30; after the 2009 elections he raised it to $35 and before this years election he raised it to $50 (EcuadorLibre.com). This last increase is very significant since it happened during the presidential campaign as a rightwing candidate, banker Guillermo Lasso (CREO), proposed the increase and the government took initiative and increased it before the elections and financed it with bank profits. Furthermore, the formerly overthrown president, Lucio Gutierrez, offered to raise the grant to

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$65 (Ecuavisa.com). As we can observe, social policy has become an important part of electoral politics. This years election was also significant because CREO, a new, programmatic and ideological based opposition party obtained second place with 22.7% of the votes which represents more votes than all the traditional parties combined (Consejo Nacional Electoral). President Correa also recognized CREO as the only legitimate opposition (Diario Hoy). The work plans presented by the different candidates during the last presidential elections demonstrate the nature of their electoral intentions. The traditional parties like MPD-Pachakutik, PRE, PSP and PRIAN presented 13-32 page work plans while AP presented a 274 page proposal and CREO presented a 100 page proposal (Diario Hoy). This vast difference in the length of the proposals illustrates the rise of a programmatic opposition and the waning of the traditional populist parties with only electoral proposals rather than government proposals.

Politics of Good Living The weak opposition, the popularity of Correa and a coherent government program have led to the transformation of the Ecuadorian welfare state. In 2007, the newly created Secretary of National Planning (SENPLADES) drafted a 500 page document called the National Development Plan 2007-2010 (Plan Nacional de Desarrollo 2007 - 2010). This plan details the governments vision for a State that views its citizens as bearers of rights and responsibilities rather than consumers; a State that upholds equality, social justice, universal rights and seeks the empowerment of human capabilities, that promotes inclusion, harmonious relations of citizens with nature and with each other and a participatory, representative and deliberative democracy (Plan Nacional de Desarrollo 20072010, 44-51). This document explains in detail how the government will achieve these goals making it the first attempt in modern Ecuadorian political
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history to delineate such a holistic long-term plan for the country. After the current constitution was approved via referendum in 2008, a similar document was produced, this time named National Plan for Good Living 2009-2013 (Buen Vivir 2009-2013) which stated similar goals and had similar length but evaluated the results of the previous plan and provided updated strategies to accomplish the goals. This year the National Plan for Good Living 2013-2017 mirrored the previous plans structure. The idea of Good Living was captured by the new constitution that establishes governmental responsibilities to guarantee collective and welfare rights. Furthermore, the concept of Good Living sets itself as an alternative to the American Dream. Last year, the government released a TV spot called the Ecuadorian Dream which presented a mother teaching her son about it so that he would withdraw from pursuing the American Dream. In the ad, the goals of the Plan for Good Living are illustrated by foreigners describing the vibrant democracy in Ecuador, the social protections for workers, the infrastructure development, the changes in education and the harmonious cohabitation with nature (CNNespanol.com). This TV spot illustrates the shift that has occurred in Ecuadorian politics and the guiding principles that have led to the construction of a more extensive welfare state.

Politics of the BDH Although the government has enjoyed massive popular support during the last six years there has been opposition to its social assistance and insurance, labor and education policies, among others. The increases in the BDH grant have been labeled as clientelistic and electorally motivated given the three different electoral years in which it was increased. Furthermore, opponents have claimed that the poverty reduction statistics (Figure 13 and Figure 14) contradict the expansion of the BDH program because poverty reduction would imply also a reduction of
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beneficiaries (Guardian.com). There is no evidence that the recent presidential decision to purge the rolls is connected to these critics as the official explanation, as we discussed earlier, bases the decision on the reduction of poverty. Furthermore, a LAPOP survey shows that 47% of Ecuadorians believed in 2010 that people on social assistance were lazy (Figure 16). Thus, we could infer that open criticism to the program and a significant prejudice against the beneficiaries of the BDH might have an effect on the decision. We should take notice on the timing of this decision as local elections will take place next February and this decision would seem to break the trend of increased grant amounts and recipients in the BDH program every election cycle. Nevertheless, it would be interesting to think about the role of the BDH program in the 2017 presidential elections as candidates could either use it to critique the government or to propose an increase of the grant which seems now electorally risky as the government could just raise it before the elections as it did in this years elections. Nevertheless, the program will still cover a third of the population after the planned reduction and the projected reduction in poverty might lead to less reliance on social assistance and increase dependence on social insurance.

Politics of Labor Policy In 2008, the Constitutional Assembly, elected to draft the new constitution, mandated the elimination of outsourcing or subcontracting labor in order to limit the flexibilization of the labor market and to increase the proportion of the labor force in the formal sector. However, this decision had great political consequences for the government. The business and industrial community protested the decision and threatened to lay off their workers hoping to create public rejection against the measure (Ecuadorinmediato.com). Before the measure was debated in the assembly, Mauricio Pinto, one of the most important players in the textile industry, laid off a
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hundred of his employees and threatened to leave for Peru. The President responded by calling him an unpatriotic businessmen with his heart in his pocket (Ecuadorinmediato.com). Additionally, the President took the opportunity to support the laid off workers by providing them with productive credits and guidance to create their own company which was contracted to produce uniforms for students in rural public schools in the Amazon region. Finally, Pinto was politically neutralized by this fast response and was asked to pay a $400,000 fine for harm caused to the 119 workers (Diario La Hora). This swift government response is representative to the political strategies used to confront critics. They start with publicly discrediting opponents and then fervently promoting official policies as more sensible and ethical. Although the government has stood against flexibilization of the labor market and has taken definitive measures to curve it, the labor unions still openly oppose some of the governments labor policy. For instance, the minimum wage has been an issue of contention between the labor unions and the government. Every year business and labor fail to reach an agreement on the annual minimum wage increase and the government has to set the increase which is usually closer to the business proposal rather than labors. In the last years the government has raised the minimum wage to counteract inflation and reflecting increased productivity but the business sector believes that it should only account for inflation and the labor unions believe it should be closer to the basic basket of goods per household (Diario Hoy). Thus, this issue could become contentious in future elections as candidates could propose greater increases to minimum wage or lower increases depending on to which sector they are appealing. Another issue of contention is the new labor code which is being debated. Ecuador has had the same labor code for over 75 years and this year the government has decided to draft a new one. The Ministry of Labor was planning on sending the proposal to the legislature this year

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but opposition from the labor unions let to a delay and it will be sent next year (Diario Hoy). Thus, it will not be approved till the end of 2014. The unions oppose: the greater requirements to form unions, that unions can only be formed based on economic activity and that strikes have to be approved by the government. Furthermore, some employers obligations like day-care, food and medicine services will be assumed by the government (Diario Hoy). On the other hand, the business sector is dissatisfied with the higher fines, establishing minimum wage per economic activity, among other issues (Diario Hoy). Thus, the approval of the new labor code will be somewhat controversial. However, it will be a departure from the previous one which focused on urban formal workers as the proposed code defines work more inclusively incorporating housewives, informal, rural and self-employed workers. The labor code will probably not be a salient issue in future electoral campaigns but it might affect the sectorial support that the government can garner before the next elections.

Politics of Education Policy The great increases in education spending and the institutional reforms that followed also garnered political opponents. In 2009, the Teachers Union (UNE) protested against the mandatory evaluations that the government decided to carry out as a plan to improve the quality of primary and secondary education. As a response, the President publicly discredited the unions actions and the Ministry of Education stopped withholding a portion of teachers salaries that was destined to fund the union (Diario Hoy). This conflict between the government and the UNE ended in the debilitation of the union in the fight to control the education system which is a critical knot in the governments Good Living plan. Although the government does not currently face opposition in primary and secondary education, it has not been able to subdue opposition at the university level. The governments
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push towards higher quality at the tertiary level has led to the categorization and closing of universities, pressuring universities to hire foreign or national professors with PHDs and to become research institutions, has led to resistance from students and administrators. Last year, the government closed 14 universities after they failed to meet certain standards demanded after the first evaluation in 2009. Administrators, students and professors protested the decision but it was not reverted and the students had to complete their degrees in other universities with the governments guidance (Eluniverso.com). This years evaluation has instigated protests from students and administrators from a state university because they were downgraded to the B category (Eluniverso.com). However, these protests do not seem to have an effect on education policy as the government is determine to improve the quality of education and will continue to use the same political strategies to confront its critics. The initiative taken by the government in education has not been questioned by the population as it generally trusts the governments intentions.

Politics of Social Security In contrast, the government has faced mild opposition in the social security flank. As we mentioned earlier, the measures taken regarding social security have mainly been to improve administration, services and expand coverage without any major reforms. In 2011, criminalization of employers who do not enroll was passed through a national referendum with little opposition from the business community as the regime has weakened their political influence (Elcomercio.com). However, it seems that the current social security system has reached its limits and needs to be reformed to guarantee the constitutional right. The International Labor Organizations website informs that the government has asked for technical assistance to draft a reform and earlier this year the head of the IESS (ILO.org, Diario Hoy). The
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reform proposes raising the retirement age to 65 and expanding social insurance access for housewives, informal, self-employed and sexual workers, bus drivers, fishermen and farmers. The proposed law also contemplates unifying the public health services with the IESS health services and to reach universal social security benefits (Diario Hoy). The reform to the Social Security Law will take more than a year to approve. Considering that 100 of the 137 representatives in the National Assembly are members of AP, there will not be much opposition in the legislature but the government could face opposition from pensioners and formal workers. These groups will probably oppose the elimination of the healthcare system and the expansion of coverage to other groups because they dont want their contributions to be redistributed to other uninsured groups (Diario Hoy). It is difficult to predict what the outcome will be a year from now but it is definitely a controversial reform that will change the way social security has historically work in Ecuador and will shift the country away from the traditional Latin American social insurance schemes. The government has the political power and political will to make these sweeping changes to the structures and logic of social security which will lead to future decades of increased expansion and closer to fulfilling Good Living goals; not to mention breaking the path dependent social security system. Furthermore, this reform also might also imply less focus on social assistance and more on universal social insurance which could also explain the Presidents recent announcement to purge the BHD roles.

Relabeling the Ecuadorian Welfare State We began this paper by describing Ecuadors welfare state according to different authors. However, after extensively reviewing the current state of affairs and the likely reforms that will occur in the next year, it seems appropriate to update Ecuadors classification in the welfare state
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literature. Ecuador has the most extensive and costly conditional cash transfer program in Latin America which has a commodifying component to it that motivates beneficiaries to integrate the labor force. The country has also put great emphasis in social insurance as it has doubled the amount of workers enrolled in social security since 2003 and has implemented some very proworker measures. Nevertheless, the country is seeking to transform its economic matrix and has invested much in infrastructure and in education. Investment and policies in education have been geared towards creating a productive and competitive labor force but has they have also been inclusive as the lower classes have the most access to tertiary education relative to the region. In labor, education, social assistance and social security we have seen a constant application of principles of inclusion, universality and economic sustainability. The labor and the new social security policies are directed towards all types of workers, a departure from the formal-urban-worker centered traditional Latin American policies. The education policies are also based on affirming universal rights of citizens to access education but also to become productive members of society. Finally, the cash transfer program has upheld principles of inclusion and economic sustainability and the right to a basic income by providing significant grants to beneficiaries which now include poor elderly and disabled citizens and by shifting their dependence on social assistance towards social insurance by promoting and supporting entrepreneurship among the recipients. Thus, Ecuador no longer has a minimalist or informal welfare state. It has even started to depart from the traditional Latin American welfare state model. The country now has significant levels of public and social spending, the state has expanded the welfare state, the country has become drastically more competitive and productive and poverty and inequality have decreased. As we have seen, the government has implemented, workerist, pauperist and productivist policies but inclusion I believe has been the common

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denominator. Ecuador now possesses a weakly inclusive welfare state and will most likely possess a strongly inclusive welfare state in the years to come as it strives to fulfill the ideology of Good Living. Ecuador currently has the most politically stable government in its history. No President has lasted more than six years in power and since 1996 Presidents averaged 1.5 years in power. Furthermore, the current government has shaped the new political stage where it has amassed extraordinary political power and continuous public approval (70%-84%). Thus, it has been able to fend off all opposition movements, either partisan or sectorial. Furthermore, it has presented a clear path towards Good Living which is a utopian goal that unifies the principles underlying public policy and national planning. The National Good Living Plans help us understand the future of the Ecuadorian welfare state if there are no significant changes in the governing elite in the next twenty years. However, a new pro-business, programmatic and ideologically solid party appeared in the last elections as a possible contender. Although it might not win in the next election cycle in 2017 as the President will use his popularity to support his successor, it can impact the membership of the National Assembly and could possibly defeat Correas party (AP) in 2021. Nevertheless, the institutional changes have been profound and will continue to be so during Correas mandate and his successors. If CREO wins the presidency it will probably take similar amounts of political power and will that AP presently has, to dismantle the current and growing Ecuadorian welfare state. Thus, the next years will be crucial for AP to set Ecuadors welfare state into a more resilient path so that it can endure changes in the political landscape. Path dependency of the welfare regime was broken in Ecuador and only time can tell if the new path can be broken as well.

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Haggard, Stephan, and Robert R. Kaufman (2008), Development, Democracy, and Welfare States: Latin America, East Asia, and Eastern Europe (Princeton, NJ: Princeton UP) "Historia." ISSPOL. N.p., n.d. Web. 08 Dec. 2013. "Indignacion En Los Estudiantes De Catorce Universidades Cerradas." El Universo. N.p., 12 Apr. 2012. Web. 06 Dec. 2013. La Penalizacin De La No Afiliacin Al IESS Genera Un Reido Debate."ElComercio.com. N.p., 04 Mar. 2011. Web. 06 Dec. 2013. "Los 5 Ejes De La Reforma a La Ley De Seguridad Social." Diario HOY. N.p., 19 June 2013. Web. 06 Dec. 2013. "Los Planes Electorales Para El 2013." Diario HOY. N.p., 4 Dec. 2012. Web. 06 Dec. 2013. "Los Sindicatos Piden Otro Cdigo Laboral." Diario HOY. N.p., 13 Sept. 2013. Web. 06 Dec. 2013. "Lucio Gutirrez Propone Incrementar El Bono a $ 65." Ecuavisa. N.p., 12 Oct. 2014. Web. 06 Dec. 2013. "Mauricio Pinto Tendr Que Pagar 400 Mil Dlares Por Despedir a Trabajadoras." La Hora. N.p., 26 Apr. 2008. Web. 06 Dec. 2013. Mndez, Juan, and Jos Antn. "Anlisis Redistributivo Del Gasto Social En El Ecuador."Universidad De Salamanca. N.p., 2010. Nagarajan, Rema. "Brazil: The Rio Reality." PulitzerCenter.org. N.p., 1 Dec. 2012. Web. 06 Dec. 2013. "Objetivos (BDH)." Ministerio De Inclusion Econmica Y Social. N.p., n.d. Web. 08 Dec. 2013. Paredes, Paulo. "La Dolarizacin En Ecuador." Dolarizacin Ecuador. N.p., n.d. Web. 06 Dec. 2013. "Presidente Correa Pide a Empresario Mauricio Pinto "que Se Vaya"" Ecuadorinmediato. N.p., 19 Apr. 2008. Web. 06 Dec. 2013. "Quienes Somos." IESS.gob.ec. N.p., n.d. Web. 06 Dec. 2013. "Republic of Ecuador Constitution of 2008 Constitucion De 2008." Georgetown.edu. N.p., n.d. Web. 06 Dec. 2013.

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Sasso, Jimena. "La Seguridad Social En El Ecuador, Historia Y Cifras." Boletn De Anlisis De Polticas Pblicas (2011): 19-21. FLACSO Sede Ecuador. "Sebastin Borja: Eliminacin De Tercerizacin Viola El Principio Fundamental De Empresas."Ecuadorinmediato. N.p., 10 Apr. 2008. Web. 06 Dec. 2013. Seekings, Jeremy (2013), Welfare regimes and distribution across the global South: Theory and evidence in the construction of typologies (unpublished paper) Seligson, Mitchell A., and Amy Erica. Smith. The Political Culture of Democracy, 2010: Democratic Consolidation in the Americas in Hard times : Report on the Americas. Nashville, TN: Vanderbilt University, 2010. "Subir El Bono De Desarrollo Es Uno De Los Ejes De La Campaa Electoral."Ecuavisa.com. N.p., 25 Feb. 2013. Web. 06 Dec. 2013. Rudra, Nita (2007), Welfare States in Developing Countries: Unique or Universal?, Journal of Politics 69,2 (May): 378-96, or Globalization and the Race to the Bottom in Developing Countries (2008), chapter 4. "Trabajadores Inconformes Con Incremento Del Salario Bsico." Diario HOY. N.p., 30 Dec. 2011. Web. 06 Dec. 2013. "Yachay, Primera Ciudad Planificada Del Pas." Telegrafo.com. N.p., n.d. Web. 06 Dec. 2013.

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Figures and Tables: Figure 1 Labor force enrolled in social security system (Buen Vivir 2013-2017)

Figure 2 Percentage of labor force enrollment in social security (Sistema Nacional de Informacion)

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Figure 3 Labor market indicators (Buen Vivir 2013-2017)

Figure 4 Coverage of basic basket of goods for households in the formal sector

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Figure 5 Coverage of basic basket of goods for households

Table 1 Changes in Participation in Conditional Cash Transfer Program

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Figure 6 Monthly Evolution of Participation in Conditional Cash Transfer Program by type

Figure 7 Coverage of Cash Transfer Programs in Latin America (CEPAL)

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Figure 8 Cost of Cash Transfer Programs relative to GDP in Latin America (CEPAL)

Figure 9 Distribution of BDH Recipients (Using Global Social Protection data)

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2008 2010 Program beneficiaries in 5th 20% - Cash Transfer Program beneficiaries in 4th 20% - Cash Transfer Program beneficiaries in 3rd 20% - Cash Transfer Program beneficiaries in 2nd 20% - Cash Transfer Program beneficiaries in 1st 20% - Cash Transfer

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Figure 10 Poverty Reduction 2006-2012 (Sistema Nacional de Informacion)

Figure 11 Extreme Poverty Reduction 2006-2012 (Sistema Nacional de Informacion)

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Figure 12 Evolution of Public Spending (Yellow) (Buen Vivir 2013-2017)

Figure 13 Evolution of Education and Health Expenditures

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Figure 14 Evolution of Spending in Technology, innovation and research (Mendez and Anton)

Figure 15 Evolution of Expenditure on Cash Transfer Program (Camara de industrias)

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Figure 16 Those Who Receive Social Assistance Are Lazy (LAPOP)

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