Are Ecuador’s social capabilities progressing and developing resilience to shrinking? A regional comparative study, 1970-2020

Abstract: New research suggests that the key to explaining the development gap might be resilience to shrinking instead of increasing growth rates. Latin America is considered an improving region from the growth rate point of view in development, but not so much from the shrinking perspective. Plus, country case study is needed as the region itself is highly heterogenous. One of the countries that has lagged in comparison to the whole region, the Andean community, and its neighbor countries with highly similar initial conditions is Ecuador. By employing the novel framework centered around five interrelated dimensions of social capabilities (inclusion, transformation, social stability, state autonomy and accountability), this study investigates Ecuador’s progress of social capabilities as a determinant to develop resilience to economic shrinking, reduce poverty, and improve economic performance. Using public data this study builds a database from the 1970s until 2020 proxying the five dimensions for Ecuador, Peru, and Colombia. Peru and Colombia were chosen for regional comparison purposes, as learning about its neighbors helps to contextualize the country narrative of Ecuador. Their comparison is needed to understand the evolution of the dimensions of social capabilities, especially inclusion and social stability. The results obtained from the qualitative and quantitative analyses (fixed- effects model) reveal that Ecuador has made great improvements in terms of some social capabilities in inclusion and accountability while others stagnated such as transformation, autonomy and social stability have stagnated. Further research is necessary to expand the understanding of the dimensions of transformation and autonomy and to explore the interrelations between all five dimensions in Ecuador.