A beacon of hope for progressive change

As the living standards of the majority come under fire across Europe, Latin America continues to be the beacon of hope that burns brightest for those seeking to build a better world.

The progressive path now being taken by several Latin American countries followed the worst long-term economic failure in the region in over a century.

For two decades from 1980, economic growth on the continent practically collapsed - coinciding with the implementation of the so-called "Washington consensus" economic policies.

Today the region is benefiting from a new consensus. One independent of Washington. One that defends the majority.

One of the most successful examples of a state-led developmental model that has challenged the very core of neoliberal thinking is Ecuador, which faces presidential elections this coming Sunday.

The country joined the "pink tide" of progress in 2007 when Rafael Correa was elected president on a programme dubbed the "citizens' revolution."

Last year leading development economist Jayati Ghosh described Ecuador as "one of the most exciting places on Earth right now" due to its radical break from the politics of austerity and neoliberalism.

Its innovative social and environmental policies are transforming one of the poorest countries in south America.

Reclaiming an economic role for the state has been at the core of taking Ecuador on a new progressive path. The country successfully renegotiated its external debt and has retaken control of its natural resources, the main source of wealth, in recent years.

Several tax reforms have ensured that the wealthy and the foreign companies can no longer avoid paying their taxes.

As a result government income tax revenues have nearly tripled in the last six years, even though the "tax burden" has increased only 4 per cent in this period.

All this has boosted the state's income and now the people are the dominant beneficiary of wealth.

As President Correa recently explained, "At one time, servicing the debt consumed 40 per cent of the budget, three times what was spent on the social sphere - education, health and so on.

"The allocation of resources demonstrated who was in charge of the economy - bankers, creditors, international financial institutions.

"Now the situation is reversed. We spend three times as much on education, health and housing as on debt service."

Ecuador has indeed been able to triple levels of social investment threefold in the past five years and today has the highest rate of social investment in Latin America.

By putting people first in this way, the country has forged ahead despite the backdrop of a global economic crisis.

Poverty has fallen by a third in five years. Free health care has been introduced, with the government investing more than twice as much in health than the previous three governments combined. As a result medical consultations in public health facilities have trebled.

Investment in education has more than doubled. Now poorer children get free school meals, free text books and free uniforms.

University is now free and the expansion has benefited the poorest and most excluded groups with participation rates of low-income, Afro-Ecuadorian and indigenous communities doubling between 2008 and 2011.

The effectiveness of an economic model should be measured not by how well those who have always done well are doing but by the progress made by those who have always done badly.

To ensure a decent wage for everybody, companies' profits now have to go to workers first until their wages meet Ecuador's living wage. Only after that do they go to shareholders.

Outsourcing, employment on an hourly basis, hiring agencies and any form of employment that increases job insecurity have been prohibited.

By reducing unemployment to a historic low - at 5 per cent it's the lowest in the region - and improving the quality of employment and real salaries, Ecuador is showing up the neoliberal myth that growth and employment depend on low salaries and "flexible" contracts and proving it wrong.

But structural changes in society involving redistribution of power and wealth unavoidably bring strong resistance.

Ecuador's old elites are losing historic privileges. In 2010 President Correa was kidnapped in a failed coup d'etat by the police force - which even attempted to assassinate him.

Rejecting the extreme free market and the austerity policies pushed by the IMF and World Bank has brought the wrath of the world's most powerful countries on Ecuador. Its decision to close the US base on its soil in 2010 further angered the superpower.

And most recently its decision to grant political asylum to WikiLeaks founder Julian Assange led to a storm of media misrepresentation of the country.

Despite all this President Correa remains deeply popular in Ecuador. Polls show him the overwhelming favourite to be re-elected on February 17, with leads over his rivals of more than 30 per cent

Ecuador looks set to remain an inspiration for all those who still believe that another world is possible.

• Jose Maria Guijarro is an economist and sociologist and an adviser to the Ecuadorian Foreign Minister.