Elimination of the diesel subsidy in Ecuador: A critical analysis of socioeconomic impacts and mitigation strategies in the context of Latin American energy policy
DOI:
https://doi.org/10.71112/bwk23q05Keywords:
energy subsidies, fiscal policy, Ecuador, diesel, socioeconomic impact, distributive justice, Latin American political economyAbstract
This research critically analyzes the diesel subsidy elimination policy implemented in Ecuador through presidential decree, examining its socioeconomic implications in the Latin American context. Through a mixed methodological approach combining documentary analysis, systematic literature review (68 studies, 2017-2024), and comparative analysis with six regional and international experiences, the study evaluates economic-fiscal motivations, differentiated impacts on various population and productive sectors, and internationally implemented mitigation strategies. Results show that while subsidy elimination responds to fiscal sustainability imperatives—representing approximately 7% of Ecuador's public budget—it generates disproportionate impacts on vulnerable sectors (10% welfare loss in the poorest quintile versus 1.5% in the richest), significant inflationary pressures (2.8-4.5 projected percentage points), and risks of social conflict. Comparative analysis using Qualitative Comparative Analysis identifies that reform success critically depends on combining prior governmental legitimacy, gradual implementation, effective compensations, and transparent communication. The study concludes that policy viability depends on articulation with effective redistributive mechanisms and participatory processes of social legitimation, questioning technocratic approaches that prioritize economic efficiency over distributive justice.
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