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When Can Public Policy Work for SSE?

5 Oct 2016

When Can Public Policy Work for SSE?
This blog is published as part of The Transformation Conversation: Blogs on the UNRISD Flagship Report 2016 and Agenda 2030. The series explores what it takes to design and implement innovative eco-social policies that will lead to transformative change and fulfil the potential of the 2030 Agenda for Sustainable Development. Together with the evidence, analysis and case studies in the UNRISD 2016 Flagship Report they are part of the global conversation on implementing of the SDGs.

As awareness about the role of social and solidarity economy (SSE) in inclusive and sustainable development grows, an increasing number of governments are adopting policies and programmes that aim to support different types of SSE organizations and enterprises. This potentially bodes well for implementing the UN Sustainable Development Goals. But whether or not such initiatives are effective is an open question. While establishing or strengthening state institutions and initiatives can mobilize much-needed resources, and level the playing field for SSE organizations and enterprises, the state-SSE relationship is fraught with tensions and contradictions. These include, for example, top-down policy design and implementation, instrumentalizing SSE to serve state or market interests, co-optation and clientelism.

Under what conditions might such tensions be mitigated? Much can be learned from the case of Central American countries where some government administrations are actively supporting SSE. Recent research related to Costa Rica and Nicaragua has examined the challenges involved in promoting public policies and institutionalizing state support for SSE.

It highlights four key variables: state capacity; the degree of coherence between policies supporting SSE and other policies; the extent and quality of participation of SSE actors in policy design and implementation; and whether or not policies and institutions that work for SSE can be institutionalized and survive the rotation of leaders and parties in power.

Mitigating tensions?

How these variables play out in Costa Rica and Nicaragua varies considerably. Despite a fairly well-developed public sector and functioning bureaucracy, and laws that earmark revenues for certain types of SSE organizations, Costa Rica is currently experiencing a fiscal crisis that constrains state capacity and resource mobilization for SSE. Nicaragua has a much weaker set of public institutions, yet has created a ministry specifically tasked to support ‘family, community, cooperative and associative economy’. Furthermore considerable resources have been mobilized through the regional cooperation programme known as ALBA (Bolivarian Alliance for the Peoples of Our America), part of which support SSE programmes.

In both countries policy coordination has been improved through mechanisms for interministerial coordination and the creation of a ministry (Nicaragua), or a vice-ministry (Costa Rica), with responsibility for SSE. But policy coherence is compromised by free trade agreements that not only favour export orientation rather than the development of the domestic economy—where SSE producers are concentrated—but also the import of agricultural products that compete, often unfairly, with SSE production.

The situation regarding participation varies considerably. Costa Rica has a long tradition of social dialogue and established institutions that facilitate consultation related to policy design and implementation. But the SSE ‘movement’ lacks cohesion. Indeed, certain leaders of the cooperative sector have been critical of pro-SSE government policy and current efforts to pass an SSE framework law. In Nicaragua, close relations between certain SSE actors and the current party in power has been a double-edged sword. On the one hand, various projects and programmes have favoured SSE. On the other hand, vociferous advocacy by SSE-related associations and movements has declined, partly because several SSE leaders have entered the public sector. Meanwhile the government has placed considerable emphasis on dialogue with the private sector.

As regards long-term sustainability, public policy support for SSE faces major challenges. In both countries, the momentum behind state support has been closely connected to particular political leaders or parties in power. In Costa Rica, support could wane following the next general election, to be held in 2018. Nevertheless, certain sectors of SSE in Costa Rica will continue to benefit from laws that mandate resources. Whether the current proactive SSE agenda can be locked in will depend partly on whether the initiative to pass a framework law for SSE is successful. In Nicaragua, continuity in government does not presently seem to be an issue. What is at stake, however, is the vast quantity of resources mobilized through ALBA, which is threatened not only by the decline in world oil prices but also the economic and political crisis in Venezuela. Furthermore, Nicaragua currently has no SSE law on the books or in progress that could lock in government support.

Focusing, then, on these four variables is useful for understanding whether current initiatives by governments around the world effectively support SSE in both the short- and long-term. Find out what else is needed to support SSE and develop its transformative potential, in particular as a means of implementation of the SDGs, in the SSE chapter in the UNRISD Flagship Report, now available!

The research on which this piece is based was coordinated by the author on behalf of the ILO SSE Academy and can be accessed in the following publications:
  • Utting, Peter and Yasy Morales. Forthcoming. Políticas públicas para la economía social solidaria en Costa Rica: oportunidades y desafíos de la institucionalización. Paper to be presented at the ILO SSE Academy, 21-25 November 2016. San José, Costa Rica. (English version forthcoming)

See also:
Utting, Peter. 2015. “Introduction: The challenge of scaling up social and solidarity economy.” In Social and Solidarity Economy: Beyond the Fringe, edited by Peter Utting, London: Zed Books/UNRISD.

Peter Utting is UNRISD Senior Research Associate, International Coordinator at the Centro para la Economía Social based in Managua (Nicaragua), and former Deputy Director of UNRISD.


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This article reflects the views of the author(s) and does not necessarily represent those of the United Nations Research Institute for Social Development.