Innovation,public policies and social cohesion

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Collection of Studies into Local and Regional Public Policies on Social Cohesion

Innovation, local public policies and social cohesion in Latin America

Orientation and Coordination Office - OCO

Innovation, local public policies and social cohesion in Latin America

Javier Esguevillas Ruiz Javier Esguevillas Ruiz is President of the Council on International Law and Politics (USA). He has been a tenured professor of International Public Law and International Relations at the Rey Juan Carlos University in Madrid (Spain), as well as visiting professor at the Notre Dame University (USA). His most recent academic position is in the Department of Law at the University of the Americas in Puebla (Mexico). He has collaborated as an external consultant in several projects for the Economic Commission for Latin America and the Caribbean (ECLAC). In addition, he is the Director of the Foundation for Alternative Democracy and Debate (Mexico). His research focuses on development in the 21st century, processes of regional integration in Latin America, the definition of the political rights of national minorities and the legal issues surrounding migrants’ rights.

This study has been written by the author in collaboration with Dr. Juan H. Flores and Dr. Sandra Bustamante.

This document has been produced within the framework of a European Union grant. The content of this document is the exclusive responsibility of the author and should not in any way be considered a reflection of the position held by the European Union.

Editor: URB-AL III Programme Travessera de les Corts, 131-159 Pavelló de Mestral, 4 08028 Barcelona Tel. +34 934 049 470 Fax +34 934 022 473 E-mail info@urb-al3.eu www.urb-al3.eu © Publisher: Diputació de Barcelona (URB-AL III Programme Orientation and Coordination Office) Editorial Board: Jordi Castells, Octavi de la Varga, Carla Cors, Beatriz Lantero and Verónica Sanz Editing: Directorate of Communication Diputació de Barcelona Design: Estudi Josep Bagà Printing: DRG LD: B. 19544-2013

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Collection of Studies into Local and Regional Public Policies on Social Cohesion

Innovation, local public policies and social cohesion in Latin America Javier Esguevillas Ruiz

Orientation and Coordination Office - OCO

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Contents

9 Prologue 11 Introduction 15 Executive summary 19 19 20 21 25 29 29 29 30 31 33 35 35 38 45 49 49 50 54 56 59

1. From economic and technological innovation to social innovation.

Introduction.

A. From innovation to social innovation: transformation and change.

B. The journey towards social innovation from economic and technological innovation.

C. Social innovation.

2. Latin America: the relevance of social innovation.

Introduction.

A. Latin America’s economic, social and political outlook.

B. Latin America and the private sector: businesses and social development.

C. Latin America: challenges and problems of effectively implementing public policies.

D. Civil society in Latin America. Its relationship with the State.

3. Social innovation and its spaces in Latin America.

Introduction.

A. About social innovation, its spaces and agents.

B. Territorial development and social innovation: some clarification regarding a complex relationship in Latin America.

4. Experiences and examples of social innovation on a local and territorial scale.

Introduction.

A. Social innovation and the public sector.

B. Social innovation and civil society.

C. Social innovation and the business sector.

5. Conclusions and proposals for the discussion about social innovation.

63 Appendix I. Social innovation in Latin America: a methodological framework for assessing its economic and social impact.

63 Introduction.

65 A. The difficulties of assessing the economic and social impact of social innovation.

74 B. Proposals for a good evaluation.

83 Conclusions regarding methodological aspects.

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Bibliography

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Prologue

This series of Studies into Local and Regional Public Policies on Social Cohesion has been produced by the URB-AL III Programme Orientation and Coordination Office. Its aim is to present the current situation regarding a set of issues that form part of the bi-regional agenda for political European UnionLatin American discussions on social cohesion.

This study deals with the evolution, content and scope of social innovation, which in times of crisis emerges strongly as a fundamental factor for fostering development and social cohesion based on the local situation and its specific problems.

In recent decades, the concept of innovation has gradually evolved from a purely technological meaning to a much broader interpretation. Currently, its conceptual definition is multidimensional and encompasses both economic and technological innovation and processes of change that seek to directly influence aspects of citizens’ daily lives, models of administration and local management, the democratic quality of governability and social movements.

Innovation is not necessarily the fruit of political initiative, but the result of action by different territorial actors: public, private and social. However, local governments should set the benchmark and foster supportive environments for innovative initiatives to appear in, given their potential to offer community

solutions to their citizens’ most pressing problems.

The study presents an overview of the evolution of the concept of innovation, from a purely economic viewpoint in the post-Second World War social context to the current approach which is linked to transparency, democracy, governance and citizen participation. Furthermore, this publication presents a series of reflections on the added value of social innovation in the context of Latin America and highlights some successful experiences in this area. Finally, the study proposes evaluation criteria and parameters to measure the effectiveness and impact of new social innovation policies on the social dynamic of the 21st century.

The aim of this study is not to offer closed solutions, but instead to contribute elements to fuel the current debate about the great potential of social innovation, with the intention of promoting transformations that contribute towards progress and improving individual and community quality of life on a local scale.

Jordi Castells i Masanés, Director of International Relations at Diputació de Barcelona and General Coordinator of the URB-AL III Programme Orientation and Coordination Office

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Introduction

This study systematises the reflections and debates on the concept of social innovation that were generated in the framework of the URB-AL III Programme, based on the public discussion about the document presented at the 5th Regional Dialogue on social innovation, held in the city of Recife (Brazil) in May 2012.

At the 5th Regional Dialogue a document was discussed which established that, in the current international context of crisis, social innovation (SI) has emerged as a fundamental factor and a key strategy for obtaining development, social cohesion and stability based on the local situation and its specific problems.

After defining the conceptual questions, competences, challenges and areas of action surrounding SI, the document argued that it was necessary to take SI as an obligatory point of reference for generating positive proposals for progress and cohesion to face the great economic, political and cultural challenges posed by the current socioeconomic context.

Promoting SI requires revising some paradigms in the design of public policies, as well as identifying and articulating participation channels through which citizens can take an active role in generating new perspectives, methods and tools that provide solutions together with public and private institutions, entrepreneurs and creators of business networks and non-governmental organisations, as active members of civil society. SI is, therefore, at the centre of the debate about regenerating spaces for

development, where the search for public consensus in the design of the measures to adopt is of particular importance for systematising the strengths and weaknesses of the situation.

In the framework of the indicated context, a large part of the promotion of SI can and should be carried out at a territorial level. The new scenarios and challenges of the global development model imposed by the crisis call for an extraordinary effort by public administrations on a territorial scale to respond to unsatisfactory situations in various areas of social life.

Against this backdrop, SI emerges as a key factor for providing novel solutions that help to renew ways of doing things and forms of organising social action and government action on a local scale.

SI appears, therefore, as a key element in the (re)construction of new models for the positive integration of the social universe.

With regard to Latin America, this regional subsystem is experiencing an important cycle of economic growth, which is reinforcing the economic and political stability in the region. However, from a more long-term perspective, the results in terms of wellbeing may be scarce and ephemeral if the present discussion, centred on growth and competitiveness, does not fully incorporate goals of social cohesion.

The aim of the present document is to contribute to the open and ongoing debate about the actions that should

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be adopted by public and private institutions, in addition to those already undertaken, in order to achieve the goal of social cohesion in Latin America as the basis for the new policies of the 21st century. Thus, this document argues that SI offers a space for reflection on the future capable of generating realistic solutions and proposals that enable us to advance along the path to social cohesion.

The study presents a series of measures developed beyond Latin America and which, under the adjective of ‘socially innovative’, have allowed us to build examples and positive answers in the setting of global crisis. These measures, as argued here, may be perfectly applicable to a Latin America that is open to seeking innovative solutions to its still very serious problems of social inequality among its citizens.

This work also offers a series of reflections on the added value of social innovation in terms of the necessary economic and social transformation of Latin America in the current international situation, and proposes new criteria and models for assessing the impact of new social innovation policies on the social dynamic of the 21st century. The methodology selected for evaluating social projects is, without doubt, a fundamental aspect for positive implementation in projects of broad social importance. This chapter has been written specifically for the present work

by Dr. Juan H. Flores, from the University of Geneva.

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The work is divided into six chapters.

The first makes a brief review of the transformation of the concept of innovation after the Second World War, from a clear economicist connotation, until arriving at today’s model which adds concepts linked to transparency, democracy, social equity and citizen participation, among others, to the initial concept.

The second chapter considers the pertinence of applying models in Latin America which foster social innovation as a complementary mechanism to the efforts carried out by Latin American public and private institutions.

The third chapter presents the at times complicated scenarios of coexistence between SI policies and the situation in Latin America. The chapter also attempts to show the characteristics of development centred on the regional and local sphere applied to Latin America.

The fourth chapter presents a series of measures and proposals for social innovation on a local and territorial scale.

The fifth chapter proposes a broad range of conclusions and proposals which aim to open the door to subsequent debates and research and analysis work.

Finally, the appendix defines and establishes the parameters necessary to provide the evaluator with instruments for measuring the effectiveness and pertinence of applying SI models.

The aim of the present document is not to close a debate but, on the contrary, to contribute towards opening it with a serious and professional perspective that helps to define a second generation of policies that emphasise social inclusion and local collective collaboration in Latin America. Opening up the debate on the

need to develop policies that seek new paradigms of development from a local level will enable better links to be formed with citizens and will emphasise the central problems affecting the population in the territorial base of these countries, from a new scenario of democracy, stability and even economic growth in Latin America.

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Executive summary

After 1945, innovation, until then solidly linked to the development of new technologies and the creation of new spaces for commercial and productive innovation, became a key element in the creation of development spaces.

Post-war innovation has been, to a certain extent, a phenomenon linked to developed countries, where scenarios of social cohesion fostered the creation of innovation spaces, but exclusively as an economic and productive factor. It is clear that innovation, understood exclusively as an economic concept, has not been able to solve social issues or structural inequalities in the societies of developing countries.

the generation of economic improvements (Rodríguez Herrera and Alvarado Ugarte, 2008), which, in turn, has paved the way for new and relatively ambitious policies to be implemented by the public sector to close the poverty gap and reduce inequity in Latin American societies.

The appearance of the concept of social innovation, at the turn of the 21st century, opened up a debate and helped to create new development scenarios in which the main aim was to achieve social cohesion and a substantial improvement in citizens’ living conditions.

Despite Latin America’s relative success in terms of growth, these public policies, which are still incipient and not widespread in the region, are being developed in a context of crisis, which may affect the region’s still weak social and political economies and structures. The effects of the relative bonanza situation should be reflected in a series of medium and long-term economic and development measures and plans that provide society with certainty and confidence. The history of breakdowns in processes of social and economic change experienced in Latin America, however, could generate reasonable doubts about the stability and sustainability of the processes underway.

The concept arose against the backdrop of an international crisis. However, Latin America’s economy has grown during this period (between 2003 and 2008 there was an average growth of 5% according to data from the World Bank and the International Finance Corporation, 2011).

There are reasonable doubts, both on an economic and political level, about whether this has been simply a period of cyclical bonanza or whether it is a stable process over time. This question is important in the design framework of present and future public policies, but beyond the fact in itself, this broad time span has enabled

The reduction of poverty (from 44% in 2002 to 33% in 2008, according to the World Bank and the International Finance Corporation, 2011), should not be interpreted only as an opportunity to come up with a sustainable development plan that seeks equity and social cohesion in conjunction with social justice in Latin America. It is also an opportunity to move forward with the restructuring and improvement of the State’s working structures and models on a federal-central level –and its regional and local administration levels– to make it more effective and efficient. It is necessary to provide the State with stability

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and confidence beyond simply having more economic resources to support its necessary reforms. The success of policies of redistribution, growth and the fight against poverty must be designed and implemented with the broad participation of local and regional governments which support and strengthen central/national policies.

Today the Latin American theoretical and political discussion has some important focal points: / Achieving greater generation of public resources through a new and effective fiscal policy. Collecting the resources needed in a just and proportional way will enable them to be used later within the framework of new public policies. In order for this to be possible, a fiscal redefinition is required.

This should include local and regional taxes, and propose new imaginative and realistic forms of taxation. There is an important group of innovative examples of these which, however, in order to be applied, depend on the existence of an innovation environment. They are not, in some cases, traditional examples of new forms of taxation, which makes their acceptance more complicated. / The appearance of a new ethic in civil society and in public and business management in Latin America that does not correspond to the current high rates of tax evasion and avoidance, low taxation levels, chronic informality and a lack of public awareness of the concept of paying taxes. A new social taxation agreement is required between citizens, businesses and governments in order to achieve sufficient

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new and stable financing for the public sector. Without these funds and without the necessary transparency in the policies, it is impossible to think about social innovation. / The necessary launch of a series of specific measures focused on the area of education, creating and improving infrastructures and on new dynamics of social innovation. This would be added to the necessary economic flows available to the State so that it could invest in strategic sectors with high leverage that will enable a new social model to be built. / The strengthening of government action, embodied in strategic measures and adopted on a central, intermediate and local level.

At a local level, the implementation of these new dynamics of innovation should mainly be based on seeking social cohesion and other complementary measures in the framework of social action, and this process calls for an increase in citizen participation.

This requires coordination schemes between the different stakeholders acting in society in order to achieve greater democratic strength and genuine solidity.

To summarise, the design and implementation of public policies from a new perspective of cooperation opens up a new panorama for regional and local public institutions. Coordination with the different sectors of society, private institutions, civil society, local political parties, local social participation groups and citizens should be established by local and regional public institutions. Local governments will no longer merely transmit the policies of other levels of the administration but will become

the creators and promoters of their own policies and proposals.

In this risk society (Beck, 1995, 2004, 2005), precisely what we must consider are the transformations of the national government. On the one hand, it transforms into a transnational state, in processes of neoliberal economic globalisation and in the possibility of forming a new global counterforce against global economic power and international terrorism. On the other hand, it demands a more participative democracy to turn the citizens of risk societies into autonomous and free individuals. Inevitably, another different way of coordinating actions and political debates is needed, and this would be the sub-policy.

Beck considered sub-policy to be the grey or intermediate area between the political system (formed of parliament, political parties, unions, the judiciary, etc.) and civil society. Thus, it is the area of action for new social movements, but also local governments in their role as new important ‘political’ actors. It is in this area that democracy is fully realised, as throughout the industrial society, different decisions on social matters have been monopolised by some sectors of interest, such as groups of experts, entrepreneurs and politicians. We are witnessing the rebirth of new political actors who will play an increasingly important role and who bring with them a new political culture far removed from the one we have known until very recently.

Local governments undoubtedly understand the needs of their citizens and are, or

should be, natural leaders in this process.

An effective and efficient local government coordinates and collaborates with the private sector and with civil society.

Everyone agrees that education, development and innovation are the keys to new development in Latin America, and this requires some changes: / Citizen education, understood in the classic sense and as an effort aimed at preparing citizens to understand these changes and the new dynamics of innovation. / The current business model should also be subject to changes and adaptations, through corporate social responsibility, or the design of business models that value the weakest pyramid of the population, providing them with the basic instruments to enable them to form an active part of the system. / Civil society, as consumers and recipients of business products/services, creating responsible and ethical consumer markets and supporting local production, and as part of the new model, as an instrument of participation, consensus and support by public and private institutions.

Change and transformation should not only be part of a one-way state process.

And social innovation is not a slogan, nor should it be a goal. SI should be the path and series of instruments for achieving social cohesion. Whether this becomes a reality depends to a great extent on the decisions and actions of all the relevant actors in a territory.

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1. From economic and technological innovation to social innovation

Introduction Numerous efforts have been made in recent decades by experts and researchers in the field of regional economy, development geography, the design and planning of public policies and in many other disciplines of the social sciences, to find and define a new open, plural, inclusive, effective, efficient, just and equitable model of development for the entire population. This study attempts to determine some very specific and useful processes for progressing in this direction.

The aim is to define a model (or models) from the regional and local sphere.

Specifically, a model that is closest and most sensitive to citizens, and their desires and opinions, whose implementation is capable of creating a cohesive society and preventing this from breaking up into distinct groups. A model that socially includes and does not exclude; a model that provides realistic answers to social demands that have for many years seemed outside the realm of the possible or desirable.

The current international situation presents us with a deep crisis that extends beyond present circumstances and which stems from a crisis in the economic model that has dominated the world since the mid-20th century. This statement does not mean that we need a totally new model that is completely different to the present one, but it does imply a need to establish certain substantial differences that affect the principal focus of the model.

In general, growth strategies that are linked in some way and have different nuances to the model represented by the market economy have not been able to meet many of the basic human needs of a wide sector of the population. The income gap, poor distribution of wealth, inequity and the lack of social cohesion seem inherent in the current model.

Nowadays, in a legacy from earlier times, we find ourselves to a certain extent with a model of transition that goes from an interventionist State to a State under the action of deregulation, which certainly shows signs of failure. It is not only the failure of grounded and apparently solid models and actions, such as the welfare State, which has been in crisis in recent years, or of hard-to-balance movements between more economicist or more social proposals. It is not, ultimately, a merely ideological or partisan debate, where the application of one model excludes another.

Quite reasonably, the need arises of finding a model whose fundamental objective is, above all, social cohesion and balance, and whose core element is SI. The new model should be more flexible and multidimensional; it has good coordination capacity with the key stakeholders in society, the State, businesses, the third sector and society in general. It works based on consensus, coordination and the acceptance of common and achievable goals.

We must accept the validity of the widest possible concept of the term SI, far

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removed from the economicist vision or one tied to the development of new economicist technologies, which dominated until the 1980s. In this situation, the research community has only been able to work on designing processes and definitions to construct a new and daring social, economic and political model, and tackle the situation in the future from two clear and possibly complementary positions. On the one hand, we could continue trying to find a solution using a ‘classic’ approach to the situation, applying the technical and methodological parameters and aspects of the current global model to find an alternative that aims to achieve social cohesion throughout Latin America. In this model, the State, from its wider, centralised position, takes the leadership role of defining and controlling the process.

On the other hand, we could tackle the situation from a new angle that combines innovative economic, social, political and technological action with its application from a local and regional level; the closest possible level to citizens, in which participative democracy is a fundamental part of the social dynamic and accountability and citizen participation at all levels of decision-making and control of public action is a reality.

In both models, the central government must fulfil the common function of coordinating the combined efforts and situations. However, while in the first scenario the leading role is exclusively

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maintained by the central sphere, the second scenario is structured around local and regional institutions, which are valued and granted importance.

This document is inclined to raise the debate and its proposals from this second viewpoint, where the theoretical and practical results allow us to analyse local development as a likely and closely-linked factor in innovation. As a consequence of this, it is necessary to take SI as an obligatory point of reference as a generator of positive proposals for progress and cohesion in the face of the huge economic, political and cultural challenges caused by the current crisis, as well as in processes of economic development which force us to review some paradigms in the design of public policies. These proposals must be adopted in common agreement with citizens’ wishes and from the closest level to them. The idea is, therefore, that citizens become the driving force of development, imbued with the spirit generated by processes of social innovation on a local level, by positive, real visions and proposals that revolve around a key element in the analysis of the situation in the future, i.e., local action.

A. From innovation to social innovation: transformation and change It is in the current international context of crisis where SI emerges as a fundamental factor and key strategy for achieving development and social cohesion based

on the local situation and its specific problems.

Trying to define, first of all, the conceptual questions, definitions, competences, ideas, challenges and areas of action surrounding SI first requires us to look more closely at the research conducted by numerous theorists and researchers of innovation models (in a broad sense of the term). In addition to the classic definitions of innovation, centred on technical and economic issues, we must add the series of characteristics that lead to an acceptance of SI. In this area we will encounter two challenges in the theoretical design of the concept of social innovation: firstly, ensuring that the idea of innovation is permeable to new definitions and areas of action; secondly, determining to what extent the success of processes associated with SI are linked to achieving inclusion and social cohesion.

SI involves the appearance of new forms of relationships between the actors in the community. These new forms of relationships, in turn, will pave the way for the emergence of social dynamics that could be reinforced by public policies in favour of social cohesion.

B. The journey towards social innovation from economic and technological innovation After the end of the Second World War, new forms of organising work were

adopted based on regional mechanisms and development networks. This opened the door to new development scenarios for the countries that were devastated by the war. New opportunities arose to diversify work for a population that had been uprooted from its traditional work in factories and farms towards other production systems, some of them new.

In his report to the President of the United States, Science: the endless frontier, Vannevar Bush (1945) stated that “scientific research directly linked to technological developments will be the principal source of wealth and economic progress and competitiveness of the nations�. The report opened up the theoretical space to the birth of a school of thought which established that innovation does not only come from technological developments but in fact helps to promote them. Along this line of thought, the market should support (and lean on) scientific-technological research to help promote, develop and boost competitiveness. As a consequence of this, investment in exclusively business areas of activity linked to scientific and technological progress became a key issue.

Economic development appears to be energised by innovation, new technologies replace old ones, radical innovations are those which go on to generate great changes in the world and progressive innovations ensure that this change is constant. The five types of innovation identified by Joseph

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Schumpeter (1939) are in full force, “new products; new production methods; new markets; new sources of raw materials; new market structures in an industry”. Schumpeter emphasised in his work the importance of entrepreneurs in their vital role of stimulating investment and innovation, factors that determine the increase or decline in prosperity. To him we owe the concept of ‘creative destruction’, which assumes that innovation is accompanied by the destruction of a model, of a previous value.

There is a fairly direct relation between what the market seeks and wants and innovation as the single greatest source of change and transformation. Thus, businesses’ own desire to innovate and take risks is the key to the process that links, in an economicist sense, work with development. The purely social aspects of innovation do not appear in a close relationship.

This way of approaching the phenomenon of innovation, from the technological and economic angle, began to decline with the economic and social crisis of the 1970s. It was in the 1980s that small businesses and local and regional levels began to make a clear and solid attempt to open up new innovation spaces. This process occurred particularly in the framework of European construction and provided a conducive setting for a shift towards the regional and local

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levels in the design of public-private policies. Concepts such as subsidiarity1 broke into the definition of spaces and models in the European Union (EU).

Local action and SI as an instrument were focused in the EU framework as a successful model which, at that time, was considered transferable to other situations. The phenomenon of regionalisation as a model of integration gained particularly important strength.

In this period (the mid-1980s), we find theorists who proposed improving forms of production by building stronger links between companies and projects created at a local and regional level, clear improvements in local and regional educational and training centres, and the construction of new easy-to-access infrastructures available to society as a whole, which bring what was far away closer and contribute towards the creation of a new “borderless Europe immersed in the existence of a new Europe of the regions” (Ratti, 1992).

In this new scenario, transborder cooperation flourished as part of the new local and regional development guidelines, beyond national borders, eliminating classic concepts such as

1 The concept of subsidiarity appears in the Maastricht Treaty signed in 1992. The Treaty establishes that the Union’s action in the framework of its executive functions must be carried out at the closest level to citizens, giving clear prominence to the local, to this proximity.

fiscal border control and the same control over goods. The framework of the new legal, economic, social and political setting in the almost stabilised European Economic Community of the 1980s forced local action to become a reality, with the novelty of including the semi-regional and transborder component as a key element.

The transformation of the negative concept of borders –as an instrument of separation– into a positive sense –as an area of contact, exchange and coexistence– enabled the emergence of new regional cooperation spaces as frameworks for new work.

In the context of these transformations, in which the need to propose new perspectives of innovation is evident, two visions of development arose. “The first is more classic, in which exchanges and controls between economies take them from local to global, and the more modern vision and object of our interest, in which the phenomenon of globalisation takes the opposite path, from global to local, explained rather successfully by the Swiss case” (Ratti, 1996).

It was Komninos, Kafkalas and Tsiakiris (1998) who introduced into the academic literature the term regional development with innovation as its core element.

Along these lines, the California School of Economic Geography conducted further study into the close relationship that exists between innovation,

industrial organisation and the localisation of production complexes.

This contributed to the appearance of the concept of new industrial spaces (Storper and Walter, 1989). The emergence of this concept helped to open the debate about the need to transform the existing industrial environments into new forms, more in tune with the reality of the times. This paved the way for new opportunities for local localisation of industrial phenomena. The new industries could create their new spaces and new synergies on a local level.

All that is required is that there is no hindrance or resistance from society as a whole, whether on a public or private level. The local level is a symbol of development, not of minimisation, including in the area of industrial debate.

It is the more specific work carried out by Storper that proposes the changes that are necessary when defining the theories and models of localising economic development and the territories’ economic activity, and therefore being able to determine the reasons why industries are geographically located where they are. The economy is going to become increasingly linked to cities, to the local level, and, therefore, we must determine how much globalisation affects the new concepts of local industrial development, looking at the effects of demand, production and consumption.

Other authors have focused on closer scrutiny of “the terms of qualifying

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formal and informal social action in local entities� (Beccatini, 1981; Brusco, 1982), with a local setting of small industries as a movement factor, complemented by studies on territorial innovation by Bagdasco (1999) and Aydalot (1986).

French theorists have focused their arguments on the importance of local and regional craft production (Colletis, Courlet and Pecqueur, 1990). After multiple ideological debates and models ranging from one to fifteen years, it is feasible to structure and analyse the concept of models of territorial innovation in a new dimension distanced from the initial economic and technologic factor, thanks to the ever broader and numerous studies on this issue.

In a complementary way, economic theories based on knowledge, access to information by more members of society, improved training for professionals and new concepts, such as agglomeration economy, endogenous development, systems of innovation, evolution, learning and good governance have also appeared.

One of the newest contributions of the territorial innovation model is the view of the fundamental role played by local institutions in energising regional and local development. The French idea of milieu innovateur involves the transfer of ideas and methods from the national level to regional management. This model identifies three functional spaces

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found in the local sphere: production, the market and the support area that these are provided to meet in, get to know each other and create synergies and collaboration mechanisms.

We find certain similarities with the model of learning regions (Camagni, 2005). What stands out in this model, which complements the debate about the old industrial districts, is the importance of cooperation (Bagdasco, 1999). In fact, in these industrial development zones, based on small businesses, these do not only maintain the usual competitive relationship, but they also have to complement each other. In this framework, these businesses build formal and informal relationships with each other (Beccatini, 1981; Brusco, 1982). These development areas do not only generate dynamics within the industrial districts; they also usually foster industrial actions to support local crafts. This coexistence between productive cultures usually leads to the creation of new scenarios.

It is the new industrial areas (Storper and Scott, 1988) that foster and encourage the creation of new spaces for industrial innovation, such as Silicon Valley was in the 1980s and 90s in the United States. The process of redefinition leads to combining industrial districts with new more flexible production systems centred on very dynamic local communities in which regional development is transformed and creates zones where very specific and very specialised work is carried out.

Regional innovation systems encourage interaction between different agents and the emergence of creative environments. In these environments the different agents collectively learn from the successes and failures of courses of action undertaken (Asheim and Isaksen, 2002; Cooke, 2001).

These contributions to the debate raise the importance of “sharing local industrial efforts, experiences and successes and failures with the capacities of societies and local culture� (Maskell and Malmberg, 1999).

The concepts generated from the idea of learning regions (Morgan, 1997) centre the effort and work on searching for models that transform old industrial areas in crisis into new European development and innovation zones. This makes the importance of innovation clear in redefining the very concept of industrial activity.

From another angle, Eric von Hippel (1988) highlights the importance of expanding the classic models of SI and incorporating users, distributors and suppliers as innovative actors and sources of direct innovation.

In summary, in the post-war period, the concept of innovation underwent an important evolutionary process.

What started with a close identification between innovation, technological development and economic progress, experienced successive expansions and redefinitions. These paved the way

for the idea of innovation to become considered as a key factor in the search for social development.

C. Social innovation The incorporation of social factors into the reflection on innovation is part of a process that took place in the academic world. Innovation is gradually being thought of as a process that occurs regardless of competition and market mechanisms, and as the result of cooperation between society as a whole and, in particular, those social groups and collectives that are excluded from the benefits of society due to a lack of opportunities, discrimination or a certain difficulty in exercising the same human rights as other groups have. Accepting that the definition and objectives of innovation must be completed by a series of social characteristics is the fruit of years of work and analysis and not a temporary solution adopted in response to the current crisis.

There is no single definition of SI, but many different contributions that bring us closer to the reality of a model that has more clear objectives than instruments and mechanisms to achieve them.

We could understand SI as “new processes, practices, uses, methods, applications, which develop or strengthen the participation of the community or the beneficiaries and permit or have the potential to reduce the costs, increase

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the coverage and raise the quality level, relevance and effectiveness of the project” (Bernal, 2008: 5).

“In the case of projects with economic objectives, in the areas of income generation and rural/agricultural development, the effect on the level of income and the generation of employment is also taken into account. However, these projects should, in turn, be sustainable and replicable in other places” (Bernal, 2008: 5).

SI thus appears to be defined as a factor of change that leads to new ways of carrying out habitual tasks or new actions, new alternatives for management and functioning, and new forms of organisation that combine the traditional with the modern, and which end up incorporating elements of efficiency from both. This contribution to the definition of the concept of SI leads us to the need for change, for transformation in the manners of social production and the forms of relating social issues with creative and productive processes.

“It is thought that the most innovative models are those that have introduced qualitative or quantitative changes to commonly used practices; those which have a positive impact on the beneficiaries’ quality of life; those that contribute to the creation, expansion or consolidation of the principles of real citizens; those that can be replicated in other populations or countries, and those that are affordable and sustainable” (ECLAC, 2004).

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Another contribution to the definition allows us to understand SI as an endogenous action in areas centred on social development by means of an “original/novel change in the provision of a service or the production of goods which achieves positive results in one or more situations of poverty, marginalisation, discrimination, social exclusion or risk, and which has the potential to be replicable or reproducible” (Hopenhayn, 2005:5).

This endogenous action, or exogenous intervention, which arises from the encounter between the need of the needy and the willingness of those who want to help, generates a development model which, through original and novel changes, alters the role of the actors in the communication mechanisms and generates peaceful coexistence among them on a local and regional level.

Jürgen Howaldt and Michael Schwarz (2010) distinguish between technological innovation and social innovation and define the latter as a “combination of social practices among different actors with the aim of achieving clear satisfaction of citizens’ needs and problems”.

SI, on the other hand, could also be interpreted as a “process of collective creation in which the participants create new rules and norms in a game of collaboration in which the characteristics and rules of this social agreement are determined jointly and through realistic consensus” (Crozier and Friedberg, 1977).

Currently “social innovators are taking on an importance and increasingly significant role in processes of social improvement. These are necessary, essential elements for transforming and modifying the current means of social relations” (Giddens, 1999).

From the field of sociology, the need is proposed for social scientists to join the process surrounding the definition of the actions and methods of SI, which even “call for the return of the role of the sociologist” (Pérez Yruela, 2007). In this framework, some trends in sociology analyse the vision of SI as a “process in which an idea transforms into a new policy or public service, an institution or a new social process that responds to citizens’ needs and improves the effectiveness of government action at any level”.

For other sociologists, SI varies and affects social relations of governance (with clear criteria of citizen evaluation) and the resolution of problems that these reveal: innovation in processes of expressing needs, in forms of cooperation, in communication and in appropriate governance to facilitate these processes (Zurbano, 2008).

The discussion about information and communication technologies (ICT) was also transformed into a fertile ground for thinking about SI. It is known that, quite possibly, the next frontier between the first world and the developing world will be marked by the capacity to access these new technologies. To

mitigate this threat, the participation of civil society and NGOs through actions designed to put an end to the ever more obvious digital exclusion could be vital if they incorporate SI objectives.

It is important, however, to include specific SI objectives. The poverty in some communities in Latin America cannot be remedied by the mere existence of the Internet or computers if they continue to lack basic essential services such as access to education and healthcare.2 Until now we have seen the evolution of the concept of SI. But the origin of SI as a practice is not something new.

Human beings have always transformed their situations throughout history. The difference is that nowadays we could redefine and adopt new content for this term which will help to generate transformations and changes in the social sphere, having a positive effect on citizens’ lives and relationships. It is precisely citizens who have demanded the adoption of a new concept that enables their wishes and ideas to be combined with those of the rest of society.

SI theorists have been given the task of turning this concept into a reality and ensuring that SI is a scenario for combining the different efforts and

2 See the Telmex action programme in communities in extreme poverty in collaboration with SEDESOLMexico, Microregiones programme. http://www.microrregiones.gob.mx

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wills in ever more complex societies, in which minority groups demand a role in the society that has marginalised them.

These people will, in the end, transform into actors in their own development

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and will adopt a sense of citizenship and social empowerment. SI also faces the challenge of including those who the system has excluded for various reasons.

2. Latin America: the relevance of social innovation

Introduction The present situation in Latin America generally presents a favourable setting for obtaining a level of development that enables us to talk about social cohesion as a possible achievement. The reflection on SI as well as the systematisation of experiences of SI is valuable for all of today’s Latin American societies, as it will allow them not only to appreciate its importance, but also to come into contact with a series of experiences, principles and actions that could be successfully applied there.

A. Latin America’s economic, social and political outlook Different multilateral institutions have indicated in their studies and reports that Latin America is standing up reasonably well to the current serious global crisis, the consequences of which are particularly visible in some developed countries.

Figures from the region encourage optimism. They reflect policy trends and designs focused on developing society as a whole, which seek to tackle core issues in processes of stability and growth.

This figure today seems like an illusion in other zones of the world that were previously under the aura of sustained development and without any visible crisis.

Focusing on an initial realistic assessment of the Latin American analysis, based on three different parameters, we can observe some situations common to all Latin American countries. / Firstly, it is reasonable to establish the degree of difficulty that Latin American companies face when doing business, acting on a daily basis and carrying out their work in all aspects of the business process, paying particular attention to their relationships with the public sector; / Secondly, it is important to analyse the new prospects on efficiency, change and transformation public institutions face, at all levels, in their necessary processes of re-adaptation and adjustment to the models and the present times and realities; / Finally, it is necessary to know the level of participation, empathy, and acceptance of the rules and system by civil society in the implementation of economic, social and political dynamics in the field of social innovation.

According to data from the report Latin American Economic Outlook 2012, drafted by the OECD/ECLAC, the region has maintained sustained growth at around 5% in recent years (average), with a singular reduction of the public deficit.

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B. Latin America and the private sector: businesses and social development

four sections: 1) the ease of managing a business; 2) procedures and facilities for obtaining credit; 3) protecting investments, and 4) degree of trading across borders.

The latest joint report from the World Bank and the International Finance Corporation (2012) posed ten specific questions about the real situation of businesses in Latin America, which are becoming more and more inter-related.

The report analyses the regulations that affect local businesses in 183 countries (32 in Latin America), and classifies the economies in 10 areas of business regulation, such as opening a business, resolving insolvency and trading across borders, and reaches optimistic conclusions regarding the degree and speed of the transformations being carried out.

The regions that lead all of these parameters are: Asia, Europe and North America (minus Mexico), with Latin America slightly behind. If we limit ourselves to the geographic area of the region, the report states that Chile, Peru, Colombia and Mexico lead, for example, the parameter of improvements to business regulations.

The report ranks the countries from best to worst for each of the questions that were asked (125 of the 183 economies analysed adopted 245 reforms to facilitate business activity; furthermore, it highlights that, in the past six years, 163 economies have made their regulatory framework more favourable towards business activity).

With regard to the central theme of our study, it should be mentioned that none of the questions the report was based on have a direct relationship with local or regional economic development. However, the questions asked could be useful for specific aspects of administration and local action. This is particularly true in

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Moreover, 17 of the 32 economies in Latin America and the Caribbean implemented reforms during the past year to favour and improve the capacity of local entrepreneurs to do business, and new technologies played a key role in improving transparency and access to information throughout the region.

According to the report, Chile is the country in the region where it is easiest to set up and run a business, and it is also one of the top 50 on a global level.

Chile also stands out due to its support for new technologies, by adopting electronic systems for exchanging commercial data.

The strengthening of investments and the implementation of new tax and legal security systems to protect these investments has turned Peru into an attractive country for foreign investment.

Colombia improved its business capacity and methods, making it easier to open

businesses and resolve legal disputes.

Mexico stands out, above all, for its improved access to business credit and its fight for transparency.

Colombia, Mexico and Peru are among the top 40 economies (of the 183 covered in the report) that have improved most in the regulatory aspect of doing business in the past six years (World Bank and International Finance Corporation, 2012).

Also worth mentioning are the declarations by Augusto López-Claros, Director of the Global Indicators and Analysis Department of the World Bank, in a press release on 20 October 2011: “The governments of Latin America and the Caribbean continue to adopt new technologies in order to facilitate the day-to-day work of entrepreneurs and local businesses, facilitating the payment of taxes, obtaining credit, trading across borders and registering properties”.

Facilitating the payment of taxes and fees, access to better credit information systems and the use of new online platforms to exchange data and reports that enable common business projects is a reality in countries such as Belize, Colombia, Costa Rica, Nicaragua, Peru, Paraguay and Uruguay, which have even gone as far as to provide online access to credit. We are also starting to see certain improvements in cross-border trading networks, as occurs in Chile and Honduras (World Bank and International Finance Corporation, 2012).

As Sylvia Solf, author of the report Doing Business 2012, maintains in her press release of 20 October 2011: “Economic activity is reinforced by the adoption of rules that increase efficiency and transparency and that are accessible to all”.

New data shows that numerous governments all over the world are turning to new technologies to improve accessibility to relevant information with the aim of increasing the transparency of business regulations. In Latin America, 25 economies provided access to information on the documentary requirements for international trade activities online or through public announcements. On a global level, international trade processes are twice as flexible in those economies whose documentary requirements are easy to access.

C. Latin America: challenges and problems of effectively implementing public policies Taking the document drafted by the OECD and ECLAC (2011) as the basis for our analysis, we find some new and noteworthy considerations. Firstly, in the framework of the current crisis, Latin America shows solid growth, which has allowed it to carry out some important and ambitious public reforms simultaneously, as well as making surprising cuts in its public debt.

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The creation of new scenarios of fiscal policy has boosted the fight against poverty and inequality (44% poverty rate in 2003 and 33% in 2008). The continuation of these efforts calls for new specific courses of public action on this issue. It is also necessary to continue the process of transforming the model of central government action.

Finally, a tax system is needed that will provide economic funds for the system.

In this scenario, therefore, the economic, political and social situation offers us the chance to create and articulate a new model of state, far removed from the guidelines that have characterised the region in the recent past.

The basis for change should focus on new fiscal policies, increasing tax collection which is extremely low today due to the informal sector, tax agencies’ poor ability to act and a lack of social awareness of the need to fulfil tax obligations. In return, a new social contract must be signed between the State and citizens: a more efficient, transparent and democratic State with greater public spending agreed with the population, less inequality, more information, less corruption, better and more efficient services, new regulations governing investment and businesses and beneficiaries’ social responsibility.

These could lay the foundations for applying the new social pact, and SI appears as the key element for bringing together the necessary will to achieve it.

It seems reasonable that constructing the transformation process for the

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new model of State in and for Latin America would be more feasible from a local level, where the pressure for the model to succeed is more real.

The transformation of the State must arise from a new strategy of local transformation, in which progress is made towards restructuring the objectives and functions of local and regional public institutions. These reforms must respect a series of red lines that must not be crossed: the need for effective bureaucratic management, having guaranteed public services, certain freedoms and transparent and solid regulation. In addition, the transformation also requires a stable fiscal policy, a fight against corruption and a body of professional and qualified civil servants who do not generate distrust.

According to the cycle of reform process in the public sector (Dayton-Johnson, LondoĂąo and Nieto Parra, 2011), it is necessary to plan the process of change coherently; it should be the result of dialogue between the actors; it should adopt the suitable mechanisms for generating the necessary security and stability to ensure the solidity of these processes; it should implement the agreements adopted and maintain a stable environment.

Any reform and transformation of the public sector should be the result of this process, which guarantees the suitability of the reform, and of the participation of all the local social actors in its definition.

D. Civil society in Latin America.

Its relationship with the State Among Latin America’s scientific and political community there is a consensus on the great strength, drive and level of participation of the region’s civil society.

Historically, through both NGOs and institutionalised or non-institutionalised social movements, citizens have had a considerably greater power of action and participation than can be seen in some European or ‘developed’ countries.

However, we find a dual phenomenon in Latin American civil society. On the one hand, many of the groups that form part of it fall outside the system itself.

They neither want to be part of it nor do they accept roles of responsibility. On the other hand, when active members of these groups move on to work in the system’s institutions they end up becoming important obstacles to SI processes (an example of this is the incorporation of leaders of social movements into the governments of some states).

To create positive feedback dynamics between civil society and SI, it is necessary to tackle these negative patterns. In this regard, it is a case of trying to find a model in which civil society groups and movements are committed from the start to the process to be carried out.

Talking about citizen participation and at the same time about the ‘co-optation’

of some of the leaders of social movements or other institutionalised forms of participation by members of civil society involves talking about democracy. Perhaps we could turn to the concept of ‘post-democracy’ which is being developed today. This could be defined as “the situation in which a previous and presumably better quality (even perfect, seen from the perspective of loss, according to Colin Crouch and Daniel Bell) democracy has been lost.

It could be understood as ‘counterdemocracy’ or ‘unpolitical democracy’ which leads to disaffection (Pierre Rosanvallon); it could be seen as the impossibility of democracy due to the state of permanent exception originated in the capitalist model and which has generated ‘oligarchic condensations’ (Walter Benjamin, Giorgio Agamben) or as the impossibility of democracy colonised by liquid modernity, which does not permit political subjects to solidify or reach a power that is equally defined as ‘liquid’ (Zygmunt Bauman)” (Monedero, 2012: 13-14).

For Colin Crouch, post-democracy can be understood in this way: “(…) the collapse of deference to the government, in particular in the treatment of politics by the mass media; the insistence on total openness by government; and the reduction of politicians to something more resembling shopkeepers than rulers, anxiously seeking to discover what their ‘customers’ want in order to stay in business” (Crouch, 2004:36-37).

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Democracy has to ally itself with politics.

And the essence of politics is the likelihood of obedience, the assumption that there is always conflict because there is always a movement caused by the imitative longing for equality. There will be conflict as long as there are human beings who feel that they deserve something that they do not have.

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A politicised society is an ‘aware’ society that participates, gives its opinions and demands transparency. Greater politicisation involves, therefore, a chance to move forward. To de-politicise is to individualise, to stop thinking about the collective implications of an issue (Schmitt, 1987; Marchart, 2009).

3. Social innovation and its spaces in Latin America

Introduction The acceptance of SI as a central theme in new processes towards development and social cohesion presents us with scenarios and challenges for Latin America. Thus, it is necessary to find and articulate participation channels through which citizens can take an active role in generating new perspectives, methods and tools that provide solutions together with public and private institutions, entrepreneurs and creators of business networks and non-governmental organisations, as active members of civil society SI is at the centre of the debate about regenerating spaces for development, where the search for public consensus in the design of the measures to adopt is of particular importance for systematising the strengths and weaknesses of the situation.

If the current crisis situation in Europe has shown us anything clearly, it is the separation and distance that exists between the demands and wishes of citizens and the adoption of solutions.

In this field, Latin America already has a history that cannot be deleted or forgotten. New scenarios for innovation in the region must be created in a space that encourages the population to express its opinions, and new channels must therefore be generated to allow this participation.

The new scenarios and challenges of the global development model imposed by the

crisis call for an extraordinary effort by public administrations on a territorial scale to respond to unsatisfactory situations in various areas of social life. Latin American society, which demanded a more just way of life in the past but was more focused on the fight for survival and did not have peaceful participation mechanisms that were not repressed, today demands to live better and to participate in making decisions that lead to this progress by peaceful and democratic means.

In this area, SI emerges as a key factor for providing novel solutions that help to renew ways of doing things and forms of organising social action and government action on a local scale, and, therefore, appears to be a key element in the (re)construction of new models for the positive integration of the social universe.

SI arises and is implemented as a response to the ever present need –and even more so in times of crisis– to improve individual and collective quality of life, to expand the enjoyment of rights and freedoms and to achieve greater social cohesion.

Viewed from the perspective of local public policy, SI promotes decisionmaking models that favour coordination and joint work between businesses, citizens and social groups. Therefore, it is the local administration that must create the link between all the actors involved in order to boost the achievements sought by the different SI initiatives; it is the bridge that spans the flow of traditional formulas (although basic and necessary) of technological and productive innovation to other broader formulas that encompass

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objectives explicitly or implicitly linked to the pursuit of greater cohesion and, therefore, the search for a better quality of individual and collective life at the local level.

Here we find the definition of SI and the challenges it poses, particularly for Latin America. One thing is certain: speaking in the terms expressed, seeking agreements, consensus, dialogue, joint work between social, public and private sectors in the search for a model of social cohesion is a new language for the region, which was until fairly recently used to being the subject of debates about mechanisms for overcoming poverty as a fundamental goal and in the midst of political settings lacking freedom.

We associate SI with the idea of being the hub that is needed between individuals, organisations and institutions. In the framework of SI there are a variety of forms and models that lead to different modes of connecting actors and resources.

In these processes, the figure of the intermediary coordinating efforts is fundamental. The intermediary also works to reduce the existing gaps between sectors, disciplines and fields of work and development, on a local level. The intermediary has several profiles. It either detects processes of innovation and sees their possible application to the local sphere, or it creates models and ideas that unite projects that are already being

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applied in other spaces, or it acts as a social entrepreneur that works within the structures of companies and organisations and from there promotes the creation and application of SI policies. The intermediary role of creating and detecting processes of SI and spaces for innovation is not limited to the public sector, but in fact extends to the private sector. In addition to the intermediary, another fundamental figure for the success of SI processes is the entrepreneur.

However, the role of the central government in SI processes is also crucial. It has the obligation of (re-)constructing a system of public institutions that are capable of generating SI spaces. To do this, it is necessary to create public innovation agencies and to incorporate (in the local and regional sphere) innovation offices and departments, just like the economic and commercial promotion offices that exist today.

The actors involved in SI processes (from individuals to businesses and public institutions) need to join forces, channel processes and create positive synergies. Thus, it is important to ensure the circulation of accurate and real information about what is going on.

SI is a process that could flourish in Latin America, as the region offers it a prosperous and favourable setting, if a determined line of action is maintained. It is not only desirable but possible to have a simultaneous series

of social innovation processes working throughout the entire subcontinent.

In the framework of this document, the concept of SI aims to open up a debate designed to formulate strategies and lines of action for local public policies, focused in Latin America. Likewise, this study seeks to shed some light on the issue so that local administrations can renew the traditional model of territorial innovation and move towards a more integrated model of SI. In other words, first of all, the aim is to move towards a renovation that includes, as spaces suitable for innovation, other relevant areas of social life and not only the technological and productive – as is usually the case when talking about innovation. Secondly, we seek to define and strengthen the vision of a SI which, as the fruit of years of debate, encompasses a wide range of actions and has been able to clearly define its basic objective: social cohesion.

This study attempts to show general experiences that define the fields of action in SI. In this regard, it highlights that SI must have prior information about the problems it is going to come across.

Diagnosing the problem or problems is essential for generating ideas and suitable and sustainable proposals that result from the solutions that SI can provide. The next step is to implement the solution that was devised. This should aim to generate new ways

of thinking about and designing the economic, political and social situation on a local level. The desired structural change must filter through to social and business groups, development models, laws and regulations. Once we know what the impact of the adopted solution has been, the suitable mechanisms should be created to disseminate its possible use in other spaces and places (this is why the intermediaries’ support spaces are so important).

Furthermore, this study presents models adopted in the field of public action, private management and the social economy that have enabled social gaps to be closed by creating employment and development, improving management in the local administration, increasing citizens’ spaces for democratic participation and transparency and clarity. The examples have allowed us to give the processes a name and serve as an instrument of analysis and debate about their success.

The final part of this study offers some preliminary conclusions, which are no more than an invitation to join the debate and dialogue between the leaders of local and regional governments, private entities and local civil society, to take advantage of strengths and identify weaknesses to be later eliminated or, if applicable, minimised.

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A. About social innovation, its spaces and agents SI generally requires a varied group of dynamics implemented by a wide range of actors seeking an essential goal, which is a common denominator that goes beyond the specific sectoral scope of each intervention: generating the right environments for the adoption of models and practices that improve social and citizens’ relations. If an economic growth scenario is completed with the adoption of a series of goals and clear actions in favour of social cohesion, there will be no room for doubt, or for not implementing the planned actions.

This is a goal which, ultimately, always directly links development processes (economic, social, political, institutional, cultural) with social cohesion, encompassing a range of individual actions, of group decision making and of the search (explicitly or implicitly) for consensus among the different stakeholders in society, whether public or private. This core that unites the processes and articulates the actions is the search for a situation of equity in Latin American society, an issue that calls for effort and imagination.

SI is not produced by chance, but through actions undertaken with an explicit and determined aim within the framework of public freedom.

Freedom, the enjoyment of the series of individual and collective rights

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and freedoms in Latin America, is the baseline condition for achieving SI, as it is part of the definition of the term itself, and as it is a clear reality in Latin American countries today.

SI arises and is implemented by actors who basically seek to improve individual and collective quality of life through actions that also lead to the enjoyment of rights and freedoms, the promotion of cohesion dynamics, the strengthening of democratic governability, territorial politicalinstitutional reforms, transparency and good local government, the optimisation of local economic resources and sustainable development.

SI is projected and applied within a broad sectoral and thematic framework and may come from an equally wide range of agents and actors. It has a clearly practical dimension, close ties with the processes and problems of society, and promotes cooperative interaction, which is almost always novel and fruitful, between governmental and business actors and civil society organisations, community, education, art and cultural groups, producing solutions and opening up options for addressing problems and unsatisfactory situations in local life. Its scope of action is broad and far exceeds the traditional concept of innovation, which is usually limited to generating and disseminating technological improvements applied to the productive process, without considering social relations and forms of organisation and

governance. SI does include the actual technological change, but this does not end its scope for action, which includes social capital and the densification and development of the institutional order of society. More specifically, technological development should be a basic instrument in the appearance and creation of SI spaces. This means establishing that the ultimate aim of technological evolution is the constant improvement of citizens’ services. The aim of putting SI into service must always be focused on achieving the common good and social cohesion. It is feasible for businesses to obtain the financial benefits that technological innovation and its market offers them by adding this progress to these advances in SI dynamics.

Nevertheless, the perception persists that innovation is a process that is mainly linked to scientifictechnological, economic and productive measures (for example, the EU Framework Programme for Research and Innovation 2020).

This is why the debate on territorial innovation continues mainly to refer to creating and developing industrial districts and, particularly, to setting up productive clusters (in both cases, with the aim of fostering new ways of ‘leading businesses’ –with financial and technological capacities– and the traditional local productive sectors to work alongside each other and to interact). Thus, it must be reiterated that, both conceptually and in practice, SI should be applied in an open and

multidimensional space where forces and factors that affect practically all areas of a particular territory’s productive, political, institutional, civic, cultural and social life play out and interact.

The evolution of the term SI since the definition of innovation itself allows us to continue adding relevant aspects to the concept which ensure that the interaction between actors and models occurs in the same terrain. Furthermore, this action is carried out much more effectively, in the terms of this definition, in the local sphere.

It is evident that SI is not a process that can be sustained solely by local factors and resources or, in an even more extreme way, by individual ones.

Its development would not be possible without the multivariate local-level intervention of entrepreneurs, civil society organisations, technicaleducational institutions and all levels of local government. SI processes are supported by individual and group initiatives and leadership that are dedicated to change and, also very often, in order to be viable, are open to cooperative work. In the territorial or local basis of social organisation, the drive behind this leadership should be totally compatible with government institutions that favour citizen participation and promote innovative initiatives. In this regard, SI has the great potential to link local development to the implementation of models that include formulating

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and taking public policy decisions.

This means schemes that by design and definition involve social groups, businesses and citizens. All this requires a complex social process within the framework of which social actors generate initiatives and open up options, carrying new individual and collective ways of ‘doing things’ to optimise the use of productive resources, improve the quality of democratic life and increase spaces for citizen participation, the range of freedoms and effective rights and their enforceability.

As to the question of whether this series of actions could be carried out from the central administration, through a vision of the national State, the answer must be the same as the one we have given in other debates. Adopting new policies of social innovation has a design and implementation scope which, although not exclusively local, certainly is in the essential elements. It would be difficult to defend models, and even more so in the current economic and social climate, based on a national scenario, however small the territory is. It is a case of taking advantage of Latin America’s positive economic situation and designing a new model predestined to succeed and not to fail.

With regard to public policies, SI involves promoting new options which, almost inevitably, have important evaluation implications in terms of the effectiveness and efficiency of governmental action in contributing

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towards the progress of the local society and its potential sustainability. One important reason for this evaluation is the need for citizens to see that the mechanisms to design and implement public policies are effectively able to resolve a wide range of issues: security, mobility, the provision and ownership of public spaces, the allocation of fiscal and financial resources, educational and health opportunities, equity in the delivery and enjoyment of basic services, and, in this specific case, the need to ‘do better’ with innovative resources.

It is clear that the management and implementation of SI initiatives do not depend exclusively on public institutions and nor are they determined by them.

However, in contexts of democratic governability, public institutions can and must encourage their appearance and development. For reasons ranging from the legal to the historical, the central administration has a responsibility to create these spaces for local SI. Latin America must accept the need to create, if they do not yet exist, regional and local management institutions, and equally importantly, to provide them with resources and trained staff.

However, the local public administration can also be a generator of SI in all its areas of influence. In a democracy, local governments are natural promoters of SI as two of their basic characteristics, ‘newness’ and ‘change’, are usually very deeply-rooted, for different but equally valid and legitimate reasons, in the wishes and objectives of

those who participate in the political arena. Newness and change are more controllable if taken from a local political sphere which is closer to citizens. In contrast, in broader scenarios, issues of control and transparency are diluted.

Fear of the immediate future is an important element in the life of a society and it takes priority among citizens’ concerns. The countries in Latin America are far from being an exception in this regard. Problems of security are the main cause of anxiety among the population. Insecurity is directly linked to the lack of social cohesion and, therefore, to all the social and economic problems that stem from inequality and the lack of future prospects. Insecurity cannot be fought using only force, a power led by public institutions. Instead, it is a situation in which coercion is possibly one of the instruments that need to be used as part of a series of measures that genuinely combat insecurity. This is something that the citizens of Latin American cities, in which violence is a constant reality, know a great deal about. The cases and examples of mixed prevention actions, the fight against inequality and coercive actions in the ‘favela’ shantytowns of Brazil, particularly in the city of Rio, demonstrate that just bringing public policy actions to promote inclusive development to the table can cut crime, and this battle is much more effective if the populations of the areas in question are not mere observers, but instead participate from

the start in the design and adoption of these actions.

From this perspective, for citizens SI can take the character of an action force for pursuing very specific goals that are linked to social cohesion in their different basic dimensions: inclusion, equity, legitimacy, participation, recognition and belonging.3 To put it another way, SI is an instrument with huge potential for citizens’ initiatives and interventions in favour of building “a socially cohesive community in which [to use the URBAL III Programme Orientation and Coordination Office’s own statement] citizens share a sense of belonging and inclusion, participate actively in public affairs, recognise and tolerate differences, and enjoy relative equity in access to public goods and services and in terms of distribution of wealth. All this, in a framework where institutions generate trust and legitimacy, and citizenship is fully exercised”.

The general and macro-economic and social factors, which from the perspective of public policies broadly depend on decisions and criteria set by national governments, are decisive for pursuing social cohesion. Nevertheless, as we will explore later, in international and Latin American experiences numerous examples can be found of successful dynamics of social cohesion being

3 These are the ‘six basic dimensions’ of social cohesion mentioned in Godínez (2007).

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promoted and introduced in the local sphere of the countries involved.

A general lesson learned from these experiences is that an explicit strategy of linking local public policies on economic development with social cohesion makes it easier to open the door to designing and implementing effective and efficient lines of action to correct, in the territorial basis of society, some of the structural imbalances generated by the system itself, starting with those that cause and reproduce dynamics of exclusion.

In the territorial or local context, SI initiatives very frequently foster novel and fruitful practices in favour of economic development, better use of resources and factors from a productivity and sustainability perspective, the formation and densification of social capital in its most varied forms and manifestations, the redesign of institutional architecture in ways that encourage the creation of broader spaces of democratic governability and citizen participation. In this regard, SI could be considered as an operational concept for analysing the dynamic of local development (taken as a whole, i.e., with effective goals and achievements in social cohesion), its evolution and its transformation.

Thus, ‘local development’ emerges as a fertile ground for SI initiatives, as a prime vector for generating various types of interventions, both private and governmental, aimed at transforming and improving specific aspects that affect the living conditions of individuals and communities in the territorial base of the country.

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The international and Latin American experience of local development in the past two decades also shows that, when SI initiatives become a factor that sparks change and transformation, they usually reflect one or several of the following characteristics and general motivations:4 1/ They are sensitive to the adoption of a new economic model, the changes in which require a long period of time to implement on a global scale, but can be introduced on the local scale in relatively short time frames. Their implementation and the effectiveness and speed of their execution will be easier to achieve if these changes and proposals are the result of consensus with the stakeholders who interact in the local sphere.

2/ They offer creative responses to the challenge of achieving greater articulation and coordination between the local productive sectors and consumers, making the market more efficient. The consumer’s mentality has changed and will continue to do so. Although this change is not as noticeable on a national level, either by producers or the creators of the markets, it is evident on a local level, where changes in consumer habits can be seen clearly. These changes involve purchasing that is less compulsive,

4 It is clear that this list of characteristics and motivations is not exhaustive and does not attempt to establish a ‘conditional order’ for implementing SI on a territorial scale.

more rational and in harmony with principles such as respect for the environment, the consumption of more organic products and similar aspects.

The question is whether this change in consumer dynamics is occurring in Latin America or if it is something that only happens in the developed world.

On this matter, it should be said that the change is certainly occurring in Latin America, although at a slower rhythm than in other parts of the world.

In any case, it would be correct to say that this changing mentality should be encouraged among Latin America’s consumers. Furthermore, this issue clearly belongs more in the area of companies; companies that should pay extremely close attention to how, with what, where, at what price and with what advertising their products are placed on the market.

3/ They contribute towards improving mechanisms of multilevel, intra-sectoral and inter-sectoral coordination of public policies, with the immediate aim of optimising the use of the public administrations’ resources (local, subnational and central) for the benefit of the territory and with the ultimate goal of helping to generate social cohesion through SI actions. These objectives provide a suitable umbrella for proposing novel formulas for coordinating all the actors involved.

4/ They reinforce the role, responsibilities and actions of the public administration in matters of social cohesion. At a time when public management is viewed with

permanent suspicion, public action needs to find a way to make its efforts and presence essential. SI, and specifically its need for coordination between public institutions, provides a new and unique space and a reason for the existence of the public sector.

5/ They create the conditions for making local economic development compatible with imperatives of social and environmental sustainability. Consumers’ changing mentality is manifested more clearly in relation to this growth and environmental awareness. Thus, issues such as separate waste collection for later recycling can only be successful in Latin America if they are designed as part of an exclusively local action, and with citizens as stakeholders.

6/ They strengthen the operative base of micro-businesses and small and medium enterprises to bolster their fundamental contribution to the densification of the local productive fabric and the creation of decent jobs for the territory’s workforce.

The relationship with business owners, if they are local, dispels the idea of coldness in the business dynamic, in which managers, shareholders and supervisors are part of the day-to-day vision of the company.

7/ They contribute to the appearance and development of new business models that enhance the territory’s idiosyncratic characteristics, factors and values. These range from cultural and historical aspects to respecting the traditions and ways of life of minority or ethnic groups. These

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new ideas, that until recently were just part of a ‘past’ that should be forgotten, are today a gateway to a new way of understanding traditions positively. This issue has become a priority in Latin America; it is not possible to understand SI in the region without differences being accepted.

8/ They strengthen the capacities of the local public administration in all its dimensions: management, taxation, design, implementation, accountability, transparency. The reform of the public administration must start locally. In the case of Latin America, we are talking about creating local administrative action mechanisms that did not previously exist but which in other parts of the world have been designed and have been successful.

9/ They expand spaces of liberty, security, democracy and citizen participation in local society. The crisis of democracy is clearly displayed, for example, in the absence of mechanisms of real citizen participation in political life, which distances people from democratic action and, therefore, specifically affects its very essence. Expanding, creating and maintaining these spaces is a much realer task if it is carried out on a local level. This includes fighting against the appearance of political fanaticism, xenophobia and intransigent radicalism among some social groups who are today outside the system for several reasons.

10/ They involve all the public, private and civil society stakeholders in specific practices that benefit the community, individuals

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and daily life. This implies and involves changing the definition of objectives in the execution of SI as something that affects all of the stakeholders. The concept of purely economic benefit must give way to a new concept of benefit linked to the common good as a key factor.

In short, conceptually, and at the same time from an operational point of view, innovation applied to development has an originally technological connotation, whose field of application has been gradually transforming to encompass a wide range of organisational and social dynamics. As such, SI (including its technological dimension) responds in a country’s local and territorial area to specific dynamics of transformation in social relations and governability.

B. Territorial development and social innovation: some clarification regarding a complex relationship in Latin America The link between local and territorial development and SI is certainly complex and its practical implementation is not predetermined. By nature, this link occurs in an open space and responds specifically to each particular situation.

From the perspective of the present document, that of local development in Latin America, a general sense could, however, be attributed to this link: it has a positive impact on the continuous

improvement of citizens living and working conditions, it builds their capacities and strengthens new fields of action and participation, it slows and reverses dynamics of social exclusion and it reinforces democratic governability.

Latin America has all the existing capacities needed to successfully apply this approach. However, it is not a case of promoting actions for a near or distant future. It involves talking about specific solutions for tomorrow. In fact, the application of SI actions in Latin America has given rise to a series of situations which have formed a chain, which leads directly to achieving social cohesion.

SI has a strong contextual content.

This means that on a territorial scale, it strongly depends on the specific development background of the location in question. The preparation, dissemination and adoption of SI initiatives are always in keeping with a particular territorial history, which is the same as saying that they are anchored in modes which, if not unique, are at least specific to organising social and human relations that carry a great cultural and idiosyncratic weight (values, rules, traditions, behaviours, aspirations, cultural identities).

If, as some experts state (see for example Moulaert and Hamdouch, 2006), social and human relations are genuine vectors of integration and learning in the local and territorial area, their importance is central in any attempt to satisfactorily respond to the needs of the

population. However, the efficiency and effectiveness of these attempts depend to a great extent on the ability to organise and channel social relations using institutional forms and systems that can be based on the values of the local or territorial community and at the same time mobilise them. This imperative highlights the relevance and influence of idiosyncratic forms of governance,5 both for identifying needs and for mobilising the resources required to meet those needs. On this point –as we will see below– the role of SI becomes strategic and can turn into an effective mechanism for inclusion.

Development experience conclusively shows that output growth alone does not guarantee an effective reduction of social exclusion in any of its forms.

There are numerous examples of how this growth, even at high rates, can be accompanied by increasing social polarisation and the marginalisation of broad swathes of the population, which has dire consequences for the social fabric and any hopes of equity and development. Zero or suboptimal integration of one part of the population into market mechanisms gives rise to forms of social exclusion. As some research has shown,6 this exclusion

5 In the framework of this document governance is understood as “the action and the effect of governing and being governed”, and by governability the way “in which” one governs, paying attention to political stability. See F. Mayorga and E. Córdova (2007).

6 See F. Moulaert (2008).

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translates into forms of organising supply and demand that not integrate all of the needs of the marginalised population.

Thus, from the local and territorial perspective, there is a prevailing conception of development that is both broader and more inclusive in which innovation –which in this sense is closely linked to the notion of ‘good’ or ‘best’ practices– has to surpass its merely technological dimension to encompass the whole range of social relations. In this context, the notion of need7 takes over because of its capacity to recognise gaps in which the demand cannot be identified by market indicators.

7 The notion of need refers to a state of lacking what is useful for personal development and social integration. A need is manifested when there is a lack or limit of resources for satisfying certain human, material or symbolic, aspirations. A human need is defined as a social need when it is shared by a considerable number of people, which legitimises it in order to demand responses from social and formally established institutions. Thus, these are ‘felt needs’ in a given society. The meaning of social need is linked to human evolution, to the strengthening of our development. Strictly speaking, the distinction between human and social needs does not exist. Limiting oneself to only considering vital urgencies as needs equates to denying the progress of the different social groups, without differentiating their specific characteristics. Not all human beings suffer from the same shortages, and it is precisely their environments that distinguish, in various ways, the challenges to be overcome.

See Rubí and Martínez (1991).

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If, as maintained here, SI really is a factor of development, then it must be due to its ability to help meet the needs of the population with ‘best practices’.

As already mentioned, there are countless needs that cannot be satisfied by the market and addressing these calls for various forms of intervention: from solidarity to institutional responses from governmental bodies, to organised action by private stakeholders and civil society. For many reasons (reciprocity, feelings of identity and belonging, etc.), all these local society stakeholders contribute towards creating a local or territorial capacity to satisfy needs.

Given its ability to be integrated into social relations and its potential for helping to meet specific needs, SI takes on huge importance here.

As the catalogue of experiences cited in the following section of this document illustrates, SI takes on full relevance in development when its interventions, in addition to producing technological progress manage, above all, to promote original initiatives that involve non-commercial (or nonmarket) relationships to first identify and later respond to the specific needs of the local society. The range of these needs is wide (housing, food, employment, problems of gender, education, culture, fundamental rights, citizen participation, etc.). Most of the experiences of SI identified below show that there are varied and new ways in which social dynamics and relations not subject to market logic can contribute towards increasing social inclusion.

It should be stressed that these ways of addressing certain needs have a strong territorial and local flavour. Moreover, the factor that ensures the link between the correct identification of the need and the formulation of a practical response aimed at totally or partially meeting this need is a specific SI intervention.

It is also important to consider that SI is a fundamental component of processes which by their nature usually have a greater impact on a territorial and local scale, such as different ‘alternative’, ‘integrated’, ‘green’ or ‘solidary’ development experiences, or the so-called social economy. Its capacity to embed itself into social relations is, at the same time, the reason for and consequence of the ease with which different SI initiatives generate original and novel modes of interaction that are coherent with idiosyncratic factors (customs, values, rules, culture, traditions). By being part of, and taking into account, development history, SI is a factor that facilitates the promotion of the territory and its potential, both material and symbolic.

which generally involves the interaction of various stakeholders and factors linked to wellbeing and development.

From the perspective of the territory and public policies, SI’s real strength is that it incorporates the fundamentally endogenous and multidimensional nature of local and territorial development, which has far from reached its full potential in the merely quantitative aspects of economic growth.

Thus, taken in this broad sense, innovation is a mechanism for updating social practices and their institutional expressions that has great potential impact –almost always localised, but also significant– on a local and territorial scale.

In this sense, and on this scale, a public policy of SI is designed to develop and support new forms of governance that lead to ad hoc institutional agreements on specific needs, the satisfaction of

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4. Experiences and examples of social innovation on a local and territorial scale

Introduction Based on what is being argued here, the need for and relevance of strengthening all the mechanisms available to local public administrations to reinforce SI dynamics is very clear. Helping to generate and disseminate SI interventions is essential in the search for effective answers to a wide range of local society demands – demands whose nature, scope and specific weight are not predetermined but are defined according to specific and individual situations. Below, some relevant experiences of SI are examined in which the leading role of different actors –governmental, private, civil society– demonstrates the multifaceted character of innovation in the territorial and local development process. Since 2004, an important study by the Economic Commission for Latin America and the Caribbean (ECLAC) has been underway to evaluate and analyse SI projects that have been developed in the region (Rodríguez Herrera and Alvarado Ugarte, 2008), grouped into areas of action, that may serve to show us how they evolve over time. In addition, it may enable work to begin on designing new action models, as SI must be consistent with the historical processes of each time, and in Latin America, just as in much of the rest of the world, society is changing at a dizzying speed. ECLAC, in its work to identify the more than 5,000 experiences of SI on the

subcontinent, hopes to emphasise the importance of SI in achieving the Millennium Development Goals as well as for continuing to improve citizens’ capacities and quality of life, promoting the mass application of these measures and giving them the necessary publicity so that they become common knowledge and are potentially applicable in other places.

ECLAC establishes that, in order for a SI project in Latin America to be successful and effective, it must have the common characteristics of “broad community participation in different stages of the project, from the definition of the needs that gave rise to it, the consideration and selection of alternatives to address the problem, the implementation and monitoring; an important capacity to build alliances with the public sector and national and international civil society organisations. There must be a visualisation of this alliance with the central government, agreements must be made between the different sectors of the community; a synergy between ancestral knowledge and technical or ‘modern’ knowledge; ownership of innovation by the community, including not only its leaders but also all of the beneficiaries and participants in the actions; individual, internal or external leadership of the community that arises to tackle the problems that crop up; and institutional leadership that could either be internal or external to the community” (Rodríguez Herrera and Alvarado Ugarte, 2008).

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A. Social innovation and the public sector

always involve new communication technologies.

From the public sector, SI often runs the risk of appearing marginal compared with other more traditional actions and those conducted on a greater scale. But, as we have argued, SI requires efficiency in public sector action to become a factor for renewed development and the consequent social change. This positions the local public sector as a space for innovation that needs a certain amount of time to be adapted to a new culture of public action.

The public administration must support innovation with diverse incentives, but above all it should not hinder or obstruct it. Spaces must be created for innovation and internal debate.

A relevant example is Atelier 27, a monthly workshop organised by the 26 French regions whose role is to bring together small working groups made up of regional officials, politicians, experts and citizens to discuss new situations affecting the daily life of towns and cities, such as improving schools, local transport, regenerating social spaces, etc. In Latin America, where institutions have to promote the construction of mainly cross-border cooperation spaces, it would be recommendable to replicate models such as Atelier 27 in certain geographical zones and with specific aims. For example, in work and coordination meetings between neighbouring municipalities in Mexico and Guatemala ideas and proposals are already being shared and joint coordination actions being developed.

The public administration plays a basic role as a strategic factor of innovation processes when it supports actions designed to identify needs and detect areas where the greatest social gaps exist which cannot be resolved by market dynamics. The public sector must define and select alternatives for specific SI actions.

The public sector should play a role in promoting and even leading SI processes. To do this, local officials must have the capacity to detect the successes and failures of a public policy and to be in a continuous process of learning and improvement.

Individual leadership from within the institution and collective leadership by the reference public institution. In addition, it should, to a great extent, be the public institution itself that disseminates the actions and their results to other administrations, using countless instruments that almost

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It is also important to dedicate public funds to innovation, for example, a percentage of local revenue, to underwrite risks in small creative projects. Some European towns and cities allocate 1% of their revenue to innovation; However, the financial crisis is causing this model to decline in many of the European municipalities that had previously implemented it.

In Latin America, in turn, to progress along these lines it will be necessary to overcome the problem of corruption in granting these funds through processes of control and transparency.

It is necessary to seek support from the central government, for which local administrations have to compete, leaving the municipalities free to decide how to apply it. This practice, which is widespread in Europe, particularly in the United Kingdom which has very specific and well known success stories, faces three serious obstacles to its application in Latin America. Firstly, the need for new fiscal policies, with derivations in local taxation, which do not exist today. Secondly, the lack of trust in local institutions with important shortcomings in control. Finally, the complicated transfer of the design of the actions to local entities based on a tradition in which strategic lines of action were always defined by the central government.

at risk groups or the unemployed.

The abandonment of certain social sectors is a problem that can only be tackled through public institutional action, even if the financing comes from private initiative. Thus, local tax benefits could be granted to donors, as well as public recognition of their efforts, for example, by naming city squares or streets after them. The way to get donors on board does not only involve tax benefits, but also this important aspect of public recognition.

In some parts of the world this already occurs and it works.

The public sector could also apply specific measures in the area of accountability, with new forms of consultation, participation and budget control, democratic innovation, local taxation, legislation and local regulation.

Another important element is providing financial and salary incentives for public employees in order to foster SI projects. Low salaries in the public sector on a local and regional level could be complemented by incentives for applying SI criteria and based on their later monitoring.

1/ Participatory budgets, a well known and now widely disseminated innovation that originated in Latin America, allows citizens to define and prioritise expenditure, as occurs in, among many other cities, Ontario (Canada), MedellĂ­n (Colombia) and Porto Alegre (Brazil), where this innovative form of citizen participation was invented. Mexico City also plans to implement this system in its 2013 budgets.

It is appropriate for local administration regulatory codes to include social clauses, such as tax benefits for hiring disabled people,

2/ Granting local public subsidies only to projects that citizens choose, such as the “Help a London Park� programme, through which the population decides

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the order of priority in which parks need to be improved. Giving the citizens of Latin American cities the chance to decide where scarce resources are spent is an exercise of full democracy.

3/ Oversight of public finances is successfully being carried out in several parts of Latin America. The case of the state of Maringá, in Brazil, has been the subject of some attention and won the recognition of ECLAC. In 2006, the Social Observatory was set up by various social and institutional sectors as a control tool to prevent the misappropriation of funds. The members of the Observatory accompany the local public institution through all the phases of tender and award. This has raised the population’s awareness that it is possible to control theft and fraud. A partnership was also created, with the participation of the executive, legislative and society authorities, which has managed to improve the perception of paying taxes, public investment and transparency. This success led to the work being extended to the total supervision of expenditure derived from public action, and is today a model of cooperation between the public sector and civil society, in which experts from both circles review tendering specifications, prices, quality, monitoring objectives and working deadlines. The Social Observatory has become consolidated in Latin America as a model of mechanisms to prevent fraud and increase public trust in institutions.

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4/ Deciding municipal budgets by Internet, such as the “Budget Allocator” project in Australia. Although it is true that currently many homes in Latin America do not have Internet access, it is also true that the local council could provide community facilities equipped with new technologies with the support of some private businesses from the sector. In small municipalities these facilities could, in addition, serve as a platform for providing citizens with technology training.

5/ ‘Variable’ local taxes. Reducing taxes on homes whose installations are part of sustainable projects of selective waste collection and recovering them with tax increases on those homes that are not (Municipality of Harlow, United Kingdom).

6/ Extra voluntary taxes, freely accepted by citizens to cover specific actions, as applied by the Mayor’s Office of Bogotá, Antanas Markus, who asked citizens to pay an extra 10% tax.

7/ Paying citizens’ aid in the form of tokens instead of money, which can be used to purchase local products or on local public transport (Curitiba, Brazil).

8/ Creating mixed local companies to promote sustainable energy programmes, such as the one by Woking Borough Council and the London Climate Change Agency (LCCA).

9/ Creating mixed public-private entities to maintain specific local areas, above all schools and infrastructure.

10/ Fostering rural territorial development as an element of productive transformation by local institutions which permits the vicious cycle of rural social exclusion to be ended and the sustainability of these areas to be achieved. Access to decent salaries for agricultural workers in rural areas is one of the pillars of the social transformation process in Latin America, where there are wide gaps between the city and the countryside.

11/ Launching experimental development projects with public money in areas affected by special social and economic issues. In this area, Latin America faces the challenge of diverting public investment to indigenous zones and communities to guarantee rural indigenous progress.

12/ Periodically evaluating and recognising the good work done towards SI by the local public sector, thereby encouraging employees.

13/ Hiring expert innovation promoters who work together with public employees to develop ideas for improving the services they provide (Municipality of Trondheim, Norway).

14/ Accrediting public servants to act as commercial promotion agents, advising and instructing the private sector.

15/ Effectively managing local volunteers to improve deficient public sectors, such as schools or care of the elderly.

16/ Implementing, from the local public sector, social projects that would not otherwise be carried out by the central government. These could be similar, for example, to a project carried out in Costa Rica to assist the immigrants who arrive every year to take up temporary work in the coffee harvest. It was necessary to provide cover for a non-national population that is highly vulnerable in health matters using the public health system in Costa Rica. This is an example of SI linked to protection and caring for vulnerable minorities, raising employers’ awareness, deploying medical teams, translating messages and advice about health and hygiene.

The implementation demonstrated that not only is it possible to cover the needs of these immigrants with dignity, but also that it does not excessively increase costs for the public sector, by reducing the action of the emergency services through preventive measures. Healthcare services improved particularly in the children’s sector, where the lack of schooling and financial resources had become a threat to the health system itself. The initial idea of inviting the workers and their families to attend health centres was not very effective. It was instead necessary to go to their homes and places of work. Thus, small working groups were sent to these areas to offer

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talks on preventing health problems, migrants’ rights, employment and civil rights and first aid. After the talks the medical attention would begin, including anthropometric measures, deparasitation and vaccination, supply of contraceptives, etc. In addition, work was carried out with coffee growers to encourage improvements to the conditions of their workers’ homes, and in particular to healthcare services, both in the homes and on the plantations. This programme has led to the creation of a form of recognition known as Finca Sana (‘Healthy Estate’), which is awarded to those properties that have improved the living conditions of indigenous people.

This programme is run with the support of the International Organisation for Migration and in partnership with the UNFPA in Panama.

B. Social innovation and civil society Civil society has seen its range of action and influence grow in SI dynamics with the presence of a new model of nonprofit social economy. It is one of the most effective sources of local social innovation, through the work and ideas of NGOs, social movements and associations.

The partner role carried out by public institutions and the ‘necessary business partners’ of the private sector is on the rise on a local level, especially due to new income received through direct donations from citizens and the dynamic of offering

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and opening up public spaces for raising philanthropic resources.

Some practical examples of the work of civil society could be: 1/ Making room for retired people, the sector of society that is no longer ‘useful’, by involving older people in cooperation processes with neglected groups, such as children. The project8 led by the Mempo Giardinelli Foundation in El Chaco (Argentina) uses older people as volunteers to encourage children to enjoy reading. The project has broadened intergenerational dialogue and encouraged older people to take a leading role. In terms of SI, the project represents improved quality and understanding and an increase in the number of children reading books. The project brings together volunteers with a vocation and the desire to read stories, it trains them in how to use their voices and gestures and arranges their visits to schools and children’s hospitals.

8 “Abuelas Cuentacuentos” (‘Storytelling Grandmothers’) promotes the tradition of intergenerational reading in early childhood as a cultural practice that transmits estheticeducational values and generates, in the longer term, a greater demand for reading and cultural assets. Children benefit from this affectionate strategy for building capacities that affect their school performance and the volunteers break free of the social isolation common in old age and they feel valued. In eight years, the project has spread to almost the entire country, with 2,000 volunteer grandmothers reading stories to more than 16,000 children in 60 institutions. http://www.cepal.org/dds/innovacionsocial/e/ proyectos/ar/abuelas/resumen.htm

2/ Setting up legal defence centres to serve vulnerable communities9 in Cuzco (Peru). The Instituto de Defensa Legal, a NGO in Peru, with the committed support of the United Nations Children’s Fund (UNICEF) developed and launched a model of community defenders taken from the community itself and trained them to address the problem and support victims in the process of making and following up on complaints. The aim is to tackle and raise awareness of domestic violence from an approach based on rights, citizenship, democracy and gender equality.

3/ The joint work of civil society and institutions can be presented as a guarantee of success. In February 2005, for example, at the initiative of the Goiânia County Juvenile Court (Brazil),10 a

9 This work is carried out using citizen defenders, who are volunteers from the same community, many of them Quechua speakers who are trained to do the work, which clearly facilitates their performance.

10 In Goiânia, just as in the whole region, there is a long list of families waiting to receive a child in adoption. The institutions mentioned decided to unite to implement a programme capable of promoting the active search for families interested in adopting a child or teenager who, for different reasons, had not been adopted through a spontaneous process. The work is carried out by fostering children aged over 5 without a family and who live in State or civil society organisation orphanages in order to give them a chance to form emotional ties that will allow them to have a family life. There is no doubt that family life is indispensable for ensuring healthy emotional and social development, and for building the self-esteem that will help these

programme was launched to adapt judicial procedures to adoptions. In October of the same year, the Goiânia Adoption Support Studies Group was invited to participate in implementing the programme through a technical cooperation agreement. This is a clear demonstration of community work between the public sector and civil society.

4/ Combating the high rates of drop outs and poor schooling of children in rural areas. In the Peruvian highlands,

children to build a healthy and successful life. From the start of the programme the community was mobilised to voluntarily participate in the lives of children living in orphanages as sponsors they could build affective ties with. There are three types of sponsors. The affective type, who establishes a bond with the child and takes on the responsibility of raising the child before the Judicial Authority. This sponsor (individual or couple) is evaluated by a team of professionals from the Juvenile Court and by volunteers from GEAAGO, through interviews and home visits. Sponsors that fulfil the conditions attend a preparation and guidance workshop that helps them to understand how and why children end up in orphanages, how to get close to the children and the programme’s rules, which include signing a letter of commitment. The key to success in permanent adoptions of children over the age of 5 lies in the gradual and supported accompaniment process that the families, committed volunteers and affective sponsors receive, which helps to build affective bonds. There is no doubt that this is a problem that all countries in the region face and that it is possible to replicate this idea there. http://www.cepal.org/dds/ innovacionsocial/e/proyectos/br/anjo/

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the “Familias Andinas Educadoras” (‘Andean Educating Families’) project,11

11 This arose in a participatory diagnosis, led by the Mayor, with the support of the Andahuayalas Educational Management Unit and the NGO Solaris, in which community leaders and residents participated. It was found that children’s absenteeism is linked to: the agricultural activities that children are responsible for and which coincide with school hours; domestic chores given to girls; the undervaluation of education, and the marginalisation that girls live under.

Furthermore, the school’s actions also affect attendance: unfriendly and unwelcoming teachers, above all with older students, and unfair treatment of girls. Armed with these results, a programme was designed to tackle both fronts. Parents’ awareness was raised regarding the importance of education for building a better life and escaping poverty and the negative effects that absenteeism has on performance, repeating courses and even drop outs. Particular attention was paid to fighting discrimination against girls. At the school and teacher level, more efficient institutional and pedagogical management was promoted, in addition to good treatment of the students, without discrimination on grounds of age or gender. Strategies were formulated and put into practice to enable the school to adjust its curriculum and implement it in agreement with teachers, parents and students. To support actions with families, a community watch system was introduced to detect children that miss school or are not enrolled, and the member of the community that has identified the child then speaks to the parents to raise their awareness even more about how important it is for their children to attend school. In addition, radio communication strategies were developed to broadcast messages from members of the community encouraging education. Given that a very significant percentage of absenteeism is due to children being needed to help the family with agricultural work, the ancestral practice

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launched in 2006, aims to increase school attendance in rural communities in Huallhuayoc, Cotabamba, Illahuasi and Puyhualla, in the highlands of the Andarapa District.

C. Social innovation and the business sector It should go without saying that in a democratic and cohesive community collaboration between the public and private sector is indispensable. The market, the public sector and the social sector are united in the same aims of local level SI. Social industries, social interest in the market and corporate social responsibility are born. Many businesses view SI as an outstanding field for a new business model, new opportunities, especially on a local level, and stimulating social commitment.

There has been a rise in the number of social businesses –companies that make money but invest it in local social issues– whose challenge is to maintain the market, the commercial

of ‘ayni’ was reintroduced, in which people in the community jointly support the family that needs extra labourers on condition that they send their children to school and provide their help when others need it. The results achieved are very important. Absenteeism has been cut by more than 90%, the number of children repeating years has fallen from 8% to 2%, and graduation has already reached 100% just like the enrolment rate. (http://www.cepal.org/dds/innovacionsocial/e/ docs/Resumen.FamiliasAndinas.Peru.pdf)

model, but with a series of new values, creating networks with each other. Some measures in the field of SI and private businesses could be as follows: 1/ For-profit companies but with special support for marginalised and disadvantaged social groups.

2/ Business projects under the principles of corporate social responsibility.

3/ Socially responsible investment or ethical investment in local projects.

4/ Philanthropic contributions for the development of new technologies, using this capital to set up a fund for local social investments.

5/ Support for local and regional R&D projects (for example: Mondragón Group, Spain).

6/ Constitution of local ethical banks (for example: Triodos Bank in Spain, RSF in the USA, GLS in Germany, Banca Etica in Italy, etc.).

7/ Creation of local financial structures (LFS), which provide alternative financial services for populations without access to credit. One successful case is the Fondo Ecuatoriano Popolorum Progressio (FEPP). In 2004, the “Fortalecimiento de las Finanzas Populares”12 (‘Strengthening Popular

12 “Its aim was to consolidate the popular finance offering in order to contribute towards local

Finances’) programme was launched in a context of an immigrant population and the presence of cooperative savings and credit organisations.

development, with its main source being funds from remittances and those generated in the towns themselves, i.e., community and beneficiaries’ resources. In the project, a model was created in which small sectors excluded from obtaining credit organised themselves to save on investing. Through a self-financing system, the communities involved were trained and made aware of the need to create mechanisms of trust based on community organisations, which incorporated and prioritised women’s involvement in the processes. The project was run in the southern highlands of Ecuador, in a poor rural area, with scant development and a family subsistence economy based on agriculture, livestock and craft activities. The population is mainly of mixed and indigenous descent, and does not have access to financial services given that, as is widely known, they are not considered ‘creditworthy’ by the formal financial system. The project involved setting up 21 structures that have grown to include 30,000 members, 55% of whom are women, and they have specialised in financial products and services for rural and urban marginal communities. Savings are promoted from local capital and remittances. They have obtained the direct transfer of remittances, with the subsequent reduction of costs; interest on loans is returned to the community and finances the running of the project”. (ECLAC, 2011) This is an example of launching an alternative and innovative management project in which the seriousness and rigour of the commitment enable spaces to be opened up to other new members and partners. Most of the loans are for productive activities. The FEPP popular finance strategy articulates more than 270 LFS in the country and another 9 regional networks (this year the National Popular Finance Network (RENAFIP) was created by the founding organisations with the support of the FEPP).

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8/ Support for the creation of local credit cooperatives, which following the successful model promoted by ECLAC in Ecuador allow diverse forms of this model to be launched. The problem arises when we consider that part of the financing for the project in Ecuador came from cooperation by developed countries. In the current climate of crisis, this funding is at risk, which means that new lenders must be found in order to create these cooperatives.

13/ Support the creation of time banks.

Give your working time in exchange for other services.

9/ Provide capacity-building for agents and managers of new socially responsible businesses.

16/ Reclaim cities for safe use and trade.

For example, the “Noche de la mujer” (‘Women’s Night’) programme in Bogotá.

10/ Design social, alternative markets for local agriculture.

17/ Provide public spaces to be better used by promoting production and exchange. For example, use school land to plant products that may help the students in the future.

11/ Informal systems of local trade.

12/ Payment with labour exchange services such as ‘Your effort for my effort’.

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14/ Local systems of commercial exchange, local currency payment.

15/ Detection of citizens’ problems (including those who are ‘on the streets’ or who ‘live on the street’) and search for solutions: provide business responses to what ‘the street’ teaches us.

18/ Neighbourhood websites, exchange of local and business information.

5. Conclusions and proposals for the discussion about social innovation

This chapter presents some conceptual ideas and proposals with a view to complementing the measures already detailed in the previous chapters.

From the moment that SI becomes a public policy, it will have the following characteristics: 1/ SI is an essentially contextual process; therefore, it has a strong idiosyncratic element and is very much determined by the characteristics of the development path taken by the town/ city and the territory.

2/ As such, SI is linked to projects, programmes and actions whose aims and concerns go beyond the market dynamics and focus on including excluded groups and individuals, either materially or symbolically, in diverse spheres of the local and territorial society.

3/ By nature, SI forms part of processes of change in social and power relationships.

4/ Given its explicit orientation towards social inclusion, SI has a natural vocation to counter the inertia of the status quo. It has, almost by definition, strong social justice connotations in a broad sense.

5/ In contrast to the traditional notion of innovation in a technical or technological sense, SI is multidimensional and its interventions are designed to increase not only the territory and town’s economic capital,

but also its social, human, ecological, cultural, civic, institutional and participative capital.

6/ SI sits outside, but not against, market logic, and seeks, sometimes explicitly and others implicitly, to pave the way for the ‘imaginative’ potential and possibilities that can address specific unmet needs in the territory and of its inhabitants.

7/ SI is based on the idea that needs and capacities should be conceptualised differently to market reasoning and its restrictions, and it places them in a field of multiple feasibility depending on the possibilities, aspirations and circumstances of the local population.

8/ Experiences of SI open up new dimensions in the debate about territorial governance. Given its close ties with the material, social and institutional conditions in which it arises and is implemented, a series of questions appears regarding how these conditions on the one hand facilitate and on the other restrict SI initiatives and their capacity to contribute to improving the wellbeing of the population and the entire territory. What aspects of the local society and what forms of innovation are the priorities in each situation? How are the different SI initiatives developed and led? How does one set up participative and democratic processes that legitimise and provide the required ‘authority’ to proceed with innovation strategies and initiatives in the territory?

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9/ SI involves needs and possibilities –which should be made explicit and discussed openly–, coordinating the different scales on which it could be implemented: local, sub-national, national, regional and international.

13/ SI is an extremely valuable instrument for integrating civil society groups that currently fall outside its scope of influence but who could offer an undoubted wealth of proposals and ideas.

10/ SI is developed within the framework of three large dimensions, which must be recognised in order to make innovative initiatives and interventions possible: the identification and fulfilment of human and social needs, change and innovation in social relations and empowerment of the population in the resulting changes generated by SI in the territory.

14/ The democracy of the 21st century in Latin America takes pride in creating spaces to meet the demands of young people. Social movements, activism in the settlement of disputes, ecologists and groups with diverse ideologies need to have a space to legitimately exercise political and social action.

11/ SI materialises in action and lasting change. It has no particular form and is produced both tangibly and intangibly.

On the one hand, in practices, services, ways of doing things, ways of organising social action, legislation, rules and codes of conduct. On the other hand, in production technologies, devices and products. SI is always a novel solution or one outside the established rules in a specific context that is part of a process of change and improving the development of individuals, of their territorial environment and their working environment. On these three planes, SI, in order to be SI, must produce better results than existing or traditional practices, but in addition, these changes must also be lasting and sustainable.

12/ SI represents a new optimistic scenario for obtaining achievements in social, economic and political areas that were previously unlikely to be accomplished.

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15/ The economic crisis has left many young people unemployed and with limited prospects for personal development. SI must contribute to providing young people with new improvement mechanisms.

16/ SI should give a voice to minority groups living in the smaller territories so that they can not only demand their rights, but also so that the law takes these demands into account, which are undoubtedly minority in nature in a framework of greater demands.

17/ Rural development must be one of the foundations on which new scenarios of local development in spaces where SI is applied can be designed.

18/ The current classic stakeholders in Latin American civil society and politics should transform their attitudes to accommodate these new action groups within their number.

19/ Private businesses must accept the challenge of becoming genuine instruments of action for the dynamics of social responsibility.

20/ Private businesses must work alongside public administrations to advance the implementation of SI actions.

21/ Latin America has the opportunity

to progress towards achieving social cohesion and equity in the short term if it applies experiences and actions already carried out in other parts of the world under the auspices of SI. 22/ All the measures underlying SI must have a broad framework of responsibility.

This cannot be an unfulfilled promise or a failed action, like other past definitions and actions for Latin America.

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Appendix I. Social innovation in Latin America: a methodological framework for assessing its economic and social impact

Introduction Thanks to national and international cooperation initiatives, the dissemination of SI has taken off in recent years and the most successful projects are starting to be replicated on an international scale. The aim of this chapter is to contribute towards spreading this phenomenon through a formal and objective discussion about the methods for assessing its social and economic impact which may be useful for the Latin American experience.

The methodology chosen to evaluate social projects is a fundamental aspect for their successful large-scale implementation, and even more so given the forecasts on the growing future demand for these types of projects. In this regard, we feel it is necessary to stress that the timing of the start and boom in the increase of SI is not just a coincidence and it is currently going through a consolidation phase. This journey –start, boom and consolidation– can be explained by two elements. Firstly, most Latin American countries have experienced a period of strong economic growth in which the middle class has gradually gained ground. This has led to improvements in the living standards of many people, although levels of poverty and social marginalisation continue to be alarmingly high.13

13 Different international organisations have confirmed the growth of the middle class

Secondly, this economic growth has been unequal. Not only are there countries that have grown much more than others, but also the distribution of benefits has not been uniform for all the socioeconomic groups within each country. It is widely known that growth is a necessary condition but not sufficient to reduce poverty levels – an issue that dominated in the 1990s when the debate centred on the search for pro-poor growth (Ravaillon, 2004).

Today, economists and designers of public policies recognise that, to ensure that the most disadvantaged groups see an improvement in their living conditions, this economic growth must be accompanied by social policies that support and encourage the creation of conditions that enable improvements to the living standards of the most disadvantaged groups (Kenworthy, 2010).

There is also an immediate incentive that makes SI relevant in the very short term. Firstly, because the emerging Latin American social class is still at risk of suffering a sudden regression towards living standards closer to poverty. One of the characteristics of this socioeconomic group is, in fact, its vulnerability to macroeconomic events (Castellani and Parent, 2011). Secondly, because there is a considerable risk of the current negative situation in the global economy

compared to the total population. See, for example, Castellani and Parent (2011) and Birdsall (2012).

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continuing for some time. This is due to the financial crisis in many developed countries which seems to be spreading to other countries. With the Chinese economy slowing down and the more than likely reduction of income in many Latin American countries due to falling prices for raw materials, the region’s principal export product, the macroeconomic situation will be less favourable (see for example the UN’s report on the state and outlook for 2012). Social innovation thus plays an important role in Latin American economic development, in addition to building a useful tool for today’s economic situation.

Finally, the priority for public policies to generate programmes designed to eradicate poverty and reduce inequality –an issue ignored for so long in public and academic debates– is regaining strength for different reasons. The best known of these is linked to the Millennium Development Goals, but there are others that are worth mentioning. A principal reason is connected with the advances made in the academic literature and the generation of information on variables related to the distribution of income. The most recent research on inequality also takes new parameters into account to identify the most relevant indicators for measuring levels. The perception of (relative) wellbeing is one of the new focuses for recognising that the fight against all aspects of inequality must be a

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priority in public policies. 14 It is not, therefore, a case of the old paradigm on maximising the increase in income per inhabitant, but is instead linked to improving the values of other variables related to social cohesion and the fulfilment of certain ‘basic capacities’, such as social mobilisation and equal opportunities when joining the labour market. 15 SI, which by definition incorporates the participation and involvement of the direct beneficiaries, is part of these efforts to improve the actual perception of wellbeing of the most socially and economically disadvantaged.

Therefore, to understand the scope of SI and respond to basic questions about how to make efficient use of the resources available or what design to use in the public policies that promote SI, what is needed is a widely accepted evaluation matrix that provides the basis for identifying the initiatives with the greatest potential in the future. This document attempts to contribute to the general debate

14 On this aspect, see the Oxfam blog: http://www. oxfamblogs.org/fp2p/?p=11372. Accessed 21 August 2012.

15 Regarding social cohesion in Latin America, see Godínez (2007). The author differentiates his conceptualisation of the term from that used in European Union countries, and links it to its functionality for designing public policies. The author emphasises the importance of considering a series of variables applied to all individuals in order to analyse their social dynamic and sense of belonging.

about the criteria which, from our perspective, should form the basis for building this matrix.

We have divided our work into two parts. Firstly, we discuss the relevance and difficulty of finding a suitable metric for evaluating social projects.

We propose certain aspects related to the evaluation objectives, the identity of the evaluators and the qualities of the necessary indicators. In the second part, we present the different options and discuss the various existing methods in the literature which could be relevant in the case of Latin America. In this section we make a recommendation about the fundamental characteristics that a matrix for assessing the impact of SI projects should take into account.

A. The difficulties of assessing the economic and social impact of social innovation In this section we address the initial aspects that public policymakers should include in their decision regarding the type of evaluation required and the different planning stages. We basically list and describe four stages linked to the evaluation objective, the identity of the evaluators and the selection of information and the indicators to build.

Next, we present a series of proposals for the Latin American case.

a) Relevance and general difficulty of evaluating a social project Latin America has pioneered several social initiatives on a local and regional scale, some of which have been so successful that they have spread throughout the countries they were developed in as well as to other countries (Rey de Marulanda and Tancredi, 2010). The added value of these initiatives has been, in some cases, their complementarity with public policy and the existence of social programmes already implemented by national and local governments. In other cases, SI has intervened where neither governments nor the market had been able to meet the needs of specific socioeconomic groups.16 However, its success and expansion depends on a series of conditions that could foster these initiatives. Although, on the one hand, an essential condition corresponds precisely to the immediate unmet needs of social groups (adverse conditions), there are other conditions that foster and nourish SI (favourable conditions). One of the main favourable conditions concerns the existence of identification mechanisms to support the programmes that have worked best and that have the potential to be replicated in other social groups, after being adapted to the specific environment in each case. Efforts towards achieving this

16 In the case that concerns us, the projects related to SI come from rural areas and often with mainly indigenous populations. See RodrĂ­guez, Bernal and Cuervo (2011).

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goal in Latin America have centred to a great extent on communicating and disseminating successful experiences by organising forums and spaces for debate and the exchange of ideas.17 Another equally relevant aspect –and one which has been absent during precisely the brief time that SI has begun to take on importance– is the evaluation method or methods of these programmes.

This is not a trivial point and is the next stage for consolidating many programmes that have already completed the first phases of ‘experimentation’. Defining standard evaluation parameters would provide guidelines for a series of facilities to be able to continue and foster SI, whether through the impact on the design of public policies or to channel available funding to the projects that give the best results.

This, however, is no easy task. Firstly, because the evaluation metric chosen will always have advantages and disadvantages and, therefore, must deal with some tough dilemmas. Secondly, because an evaluation method must take into account complementary indicators to identify problems in projects whose results are not satisfactory in a final impact assessment, but that do, however, have the potential to succeed with the right modifications.

The Open Book of Social Innovation (Murray, Caulier-Grice and Mulgan, 2010)

17 On this aspect, see the work of Rodríguez Herrera and Alvarado Ugarte (2008).

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indicates that in contrast to commercial or industrial innovation, in which impact assessment is well defined according to financial and commercial variables, SI does not have a direct evaluation method.18 Social innovation challenges traditional economic theory in many ways (principally the neoclassical and institutional). Let us not forget that one of its definitions as a public asset is that the social benefit of its provision exceeds the private benefit (Mankiw, 2011).19 It is, therefore, a space in which the democratic State can and must act, even in its own interest (under the median voter theorem). Public assets also face the tragedy of common resources, in which the private benefits of overexploitation do not correspond to the shared costs. SI offers precisely the right incentives for sharing the benefits through the cooperation of all the agents that benefit from it.

18 This statement is, however, at best imprecise.

The impact of industrial innovation has more far-reaching effects than those linked only to business: for example, on a social and macroeconomic level. The most emblematic effect is the evaluation, for example, of the introduction of railways related to economic growth in Latin America. See, for example, Herranz (2011).

19 In the case of the neo-institutional economic school, Douglass North argues that the definition of property rights in the case of industrial inventions was the key to European economic development (North and Thomas, 1991).

Another way of putting it is to consider market failures, whose existence gives rise to the provision of goods and services by the State. See Murray, Caulier-Grice and Mulgan (2010) and Datta-Chaudhuri (1990) for its relationship with development theory.

SI is one of the many initiatives that go beyond market logic and at the same time fall outside the governmental sphere. History shows us many cases of SI –aid for the poor in England in the 19th century is perhaps the most illustrative– in which the State takes on new functions, or complements these types of initiatives.20 Therefore, it is an almost predetermined task that public policymakers will tend to assume.21 One positive element could stem from the interaction and synergies that may involve not only the direct beneficiaries, but also the private sector, which could directly or indirectly benefit from projects related to SI. It should also be emphasised that SI is a gradual process and precisely the result of the participation of various actors. However, Rodríguez, Bernal and Cuervo (2011) observe that in the case of Latin America, local governments have not had a strong presence in many of these initiatives. This is partly due to the centralised system in each country, but also to the different priorities that may exist in each government.

Nevertheless, given that the aim of SI is also to replicate and adopt projects that have already gone through an experimental

20 Lindert (2004).

21 In fact, one of the conclusions from the Latin American experience highlights that the successful cases analysed ended up receiving government support, even though local governments did not participate in the development of the projects at the beginning. See Rodríguez, Bernal and Cuervo, 2011.

phase, a window of opportunity is opened for local governments to join these initiatives. Thus, the definition of territorial development strategies and the use of limited funds (public or private) calls for a defined methodology for assessing the economic and social impact on the regions involved.

To summarise, in order to successfully promote SI it is necessary to search for indicators and methods for assessing the impact of social projects –mainly from the perspective of public policymakers–, but also and more generally from the perspective of the agents involved in planning the implementation of a programme to support SI. We have used the definition of evaluation that identifies it as a systematic investigation of the merit, worth or significance of an object (Scriven, M., 1991, taken up again in Zarinpousch, 2006) and we distinguish each phase of planning the evaluation to address the most relevant issues related to each one. b) Who should conduct the evaluation and why?

One of the first questions to ask when approaching the issue of evaluation is who should do the evaluation and with what aim. From a local government perspective, a fundamental task for developing SI is to identify which projects are worth supporting, bearing in mind the local government’s own development strategies, the immediate and medium-term priorities, and the availability of funds. There is also a

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series of elements to consider when preparing the evaluation, ranging from selecting the evaluators, preparing the budget, defining the objectives, choosing the indicators and the method for measuring the impact.

Among the recommended characteristics of the design of a social project impact assessment, we would highlight three in particular. Firstly, we consider it necessary to allow for eventual modifications or adaptations to be made to the initial design of the project to address unforeseen changes. This flexibility depends on the type of instruments used, as we shall see later, but it also relies on an implicit agreement between the evaluators regarding the goals that were set at the start of the evaluation. This flexibility is also a useful quality when attempting to harmonise the interests of those involved in the project. For example, in cases in which the projects involve publicprivate partnerships, the evaluation may depend to a great extent on the source of financing and, therefore, each party will need to be involved in the decision to support it and in the prior definition of the evaluation method, as well as during the execution of the project. Moreover, given that the type of financing could take different forms (direct government aid, funds from public institutions, grants organised by public or private organisms), the type of evaluation chosen should also offer the required results.

Secondly, it would also seem advisable to adopt the perspective of the public policymaker and when considering the

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mode of financing and support, to carry out a process evaluation (or stage evaluation).22 One of the reasons for this is linked to supervising the project, which helps minimise the chances of failure. In this case it would also be necessary to take into account the risks (mainly financial) involved in implementing the project. In the case of financing and support being provided through grant mechanisms, for example, the participants assume all the risks (Murray, Caulier-Grice and Mulgan, 2010). In the case of public aid, this risk is completely shifted to the government. In addition, the same authors contribute additional elements for which it would be necessary to share the risk more fairly. Thus, these authors suggest that there should be a policy of incentives in which projects are divided according to the stage they are in and the risk to be assumed increases with each stage. In this dynamic, the objectives of each type of evaluation are different: while the intermediate evaluation helps support the successful outcome of each project, the final impact assessment is designed to provide future support for similar projects.

Finally, we must mention that a process evaluation of the project also provides information about the modifications that the design of the same type of projects could introduce in the future to obtain better results.

Some additional points that must be included as the basis for conducting an

22 More detail on this point is provided in the following section.

impact assessment are the following: Firstly, in order to legitimise and validate the assessment it is advisable to include all the stakeholders that may be affected by the project and, in particular, those who are directly benefited.

Secondly, communication with these stakeholders is fundamental for defining the indicators to be used in the evaluation.

Finally, it is also necessary to define and establish the right collaboration mechanism to gather the information required. We address each of these matters below. c) Defining the objectives and planning the impact assessment Finding the right indicators for evaluating a project is not an easy task. Until now, studies of the impact of SI projects in Latin America have been limited to those related to income generation. This case is the least problematic from an economic perspective, as the existing commercial and financial methods (such as the internal rate of return) can be imported directly. However, impact studies conducted by ECLAC have opted for other more descriptive and qualitative methods.

We speculate that the main reason concerns the type of objective being sought, i.e., focusing on the different effects of the participating projects corresponding to the selection criteria for the ‘Experiences in Social Innovation’ competition. The competition recognised projects that were social, genuine, original, current, consolidated, expansive and transformational (Rodríguez Herrera

and Alvarado Ugarte, 2008). Other subsequent studies on the evaluation of these projects also took into account those that were socially innovative and sustainable, that were cost-efficient, that had the potential to be replicated and that ensured the genuine participation of the community and beneficiaries.

In the study by Rodríguez, Bernal and Cuervo (2011), the impact assessment of these projects also concentrated on studying those linked to income generation and which they had the necessary information about in order to conduct a standard evaluation.

In addition, the authors used a theoretical framework that they related to territorial development theory and within which they emphasised aspects such as supply chains and connecting with external markets.

Among the results obtained, the authors highlighted aspects linked to scale, as the number of individuals benefited by the projects was important, which means that the effect was greater and relevant for mechanisms such as supply chains. However, one of the outstanding questions concerns the expansion of the area analysed, with a perspective of the evaluation that takes integrated models of SI into account and which goes beyond the traditional territorial model (Esguevillas Ruiz, 2012).

Despite the advances contributed by these types of studies, we still have a long way to go in the field of evaluating the impact of SI. In the case of the ECLAC initiative, we know less about the impact of the other winning projects and those that are

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linked to issues not connected with income generation.

Another interesting exercise would be to conduct a systematic analysis of all the participating projects, even those that did not win the competition. This aspect is further justified because, as the authors of these studies themselves indicate, the study sample is biased because the projects analysed were chosen based on their success and, therefore, they had been established for many years in many cases. Although this allows us to draw conclusions regarding the common elements in all of these projects, it overlooks other elements that could also be present in less successful cases. Furthermore, there are no formal and explicit criteria for success, or any comparative element to define why these projects were ‘more successful’ than others.

More specifically, for its ‘Experiences in Social Innovation’ competition ECLAC used a classification in three thematic groups.

This classification was chosen based on the principal aim of the competition: the already mentioned income generation, youth at risk and affirmation of rights. This evaluation selected the winning projects based on those that were the easiest to replicate. However, if we focus on the perspective of local public policymakers, the capacity to be replicated would tend to be a secondary objective if there is no immediate need for coordinated and joint action with other regions. Therefore, the metric used to evaluate the final impact of these projects must take other criteria into account that better suit the individual needs of each region.

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Thus, to create a strategic evaluation matrix it is necessary to have defined the objectives from the start, and for evaluators to have the elements that enable them to know whether these objectives were achieved. One option is to define the objectives based on an explicit theoretical framework, a predefined development strategy or some specific parameter that determines the questions the evaluation matrix will need to answer.

So, for example, Rodríguez, Bernal and Cuervo (2011) took the forecasts relating to local development theory as a reference, although other aspects were obtained from their study, such as social inclusion and other effects related to capacity-building and the culture of the beneficiaries (something anticipated from the conception of the project, but which goes beyond local development theory). The study also gathered information regarding the fulfilment of the needs that gave rise to the project, the unmet needs and the changes (unexpected) resulting from the project, although due to the nature of the study these matters were not reported. The empirical evidence used (field visits, responses to questionnaires) provides clues about many important aspects for a medium and long-term impact assessment, although it would be necessary to have systematic information that was comparable against other similar projects.

Finally, the appropriate instruments for the evaluation must be defined.

An evaluation tool is defined as any instrument that helps to gather the necessary information. 23 Tools can be formal (such as interviews or questionnaires) or informal (such as informal conversations or field visits).

In this example, the project impact assessment combined both as it was based on interviews, questionnaires and field visits.

Generally speaking, the prior planning of an evaluation should also take other elements into account, such as the material that needs to be gathered (documentation), the evaluating team (from a logistical angle) and establishing the budget to use. With these basic elements, there will be enough information to interpret the results without any setbacks. d) What is a good indicator?

Murray, Caulier-Grice and Mulgan (2010) state that there are more than 150 indicators used by the non-profit sector.

To know which indicator is best suited to SI in Latin America, it is important to have a clear objective for the evaluation. As we have already mentioned, one objective could specifically relate to the interests of those commissioning the evaluation, who may be those designing public policies, those providing funds or those involved in these types of initiatives. In fact, Murray

23 The definition comes from Zarinpousch (2006).

The subsection related to the definition of indicators is based to a great extent on this work.

Caulier-Grice and Mulgan (2010) list a total of 22 indicators that could be used to evaluate SI. There are two additional aspects to consider when selecting indicators.

On the one hand, we have the choice of the metric to use. This must be multidimensional and in some way quantify the most qualitative social aspects. The idea is to have an element of comparison between the type of projects and the results. On the other hand, this choice must also be consistent with the previously set objectives. Therefore, and given the nature of the projects developed in Latin America, the impact indicators should summarise the most important results of each project and at the same time include all of its dimensions.

One way to classify the existing indicators would be by considering the stage the project is in and the type of measurement used. We could identify three such indicators. Firstly, quantitativeintermediate indicators, which describe the evolution of the project; secondly, qualitative indicators and, finally, quantitative indicators related to the final results (and which are tangible) If our impact study includes a very wide range of indicators, it is necessary to prioritise those which yield the most important information for the evaluators (for example, those financing the project) and that take into account the budget restrictions and the relative difficulty of obtaining the necessary information.

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Both quantitative indicators (intermediate and final) and qualitative indicators form the basis for processing and interpreting the results and comparing them against the initial objectives of the project. Quantitative indicators can be expressed in absolute or in relative terms (frequency, percentages, etc.). Qualitative indicators are more descriptive in nature about the project, but can also be used in a quantitative interpretation analysis.

As we have mentioned, qualitative indicators have mainly been used to evaluate the impact of ECLAC projects.

In the study by Rodríguez, Bernal and Cuervo (2011), these correspond to the evaluation objectives, which aimed to identifying innovative projects that solved common problems and which were sustainable and replicable (p. 14).

The mechanisms emphasised, around which the questionnaires were created as evaluation instruments, were the existence of supply chains, fostering productive enterprises and capacity-building, publicprivate cooperation, the encouraging role played by local governments, group strategic planning processes, social participation and the institutionalisation of the process.

Interpreting these indicators provides the final link for accomplishing the evaluation objectives. In the study by Rodríguez, Bernal and Cuervo (2011), this interpretation adopted the form of general reports in which they observed the parallels and common elements in the projects evaluated, always within

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the scope of development theory.

These reports detailed the origin and chronology of the projects, their economic and financial management, and their relation to economic and local development. The impacts indicated centred on the creation of opportunities, the dissemination of knowledge and know-how, the generation of wellbeing and leadership.

From our perspective, a complete and robust interpretation of the information and data acquired using the instruments designed for the evaluation is one which applies quantitative and qualitative interpretation methods. In the simplest case of the impact of a project, the question generally asked in quantitative interpretations is the following: α = Y1i - Y0i Where α represents the impact of the programme on agent i. Y0i is the potential state that individual i would find himself/herself in in the absence of the project, while Y1i is the potential resulting state the individual would be in with the presence of the project. In the literature on evaluating projects, this is the basic equation used in statistics and econometrics to study the behaviour of the beneficiary units.24 The strategies for estimating this equation can be more or less technical, but the initial difficulties stem from the comparison with a genuine

24 See, for example, Smith (2004) and for a Latin American case, Government of Chile (2005).

control group. In other words, the impact equation presents the so-called ‘fundamental problem of identification’, given that in practice it is impossible to observe the same individual in two states (one in the presence of the project and the other in its absence). Thus, the evaluation strategy must find control or comparison groups (such as overall averages in the same population to later distinguish between the beneficiaries and the rest).

Other statistical questions to bear in mind are the convenience of handling random samples to avoid bias in the results and the inclusion of heterogeneity in the programme impact, i.e., the impact of the programme is dependent on initial conditions and therefore different for each sub-group within the same sample (for example, between men and women or between one sector and another).

The qualitative analysis is complementary because it provides information about the mechanisms through which the project affects the beneficiaries (and possibly other agents too). The study on impact assessment methodology by the Government of Chile’s Division of Management Control also adds that other advantages include information about the social processes that affect the implementation of a project and which takes into account the users’ priorities and perceptions (Government of Chile, 2005:17).

B. Proposals for a good evaluation In this section we describe some of the general aspects that we consider most important when choosing evaluation instruments and the subsequent indicators that are needed for the impact assessment matrix. In addition, we present a model assessment matrix in which we summarise some of the most important characteristics of each type of social project. a) General aspects A local government has certain expectations from the public policies it will use to promote economic and social development in the region.25 It is, therefore, important to have defined the priority of certain types of projects as well as the target population.

This could be defined in terms of the dominant sectors in a community or for strategic reasons it could be linked to strengthening those sectors whose future conditions may contribute towards the development of the rest of the region.

In the case of ECLAC’s ‘Experiences in Social Innovation’ competition,

25 These development strategies could also have been created by national governments. We focus on the local authority as opposed to macroeconomic politics, which are those led exclusively by national governments. However, and although we refer to local governments, the reasoning followed could equally be applied to national governments (or state, departmental or provincial governments) with regional functions.

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preference was given to projects that were likely to have a large-scale impact in which the affected population was as large as possible. Although this is a criterion that could coincide with a local government’s own objectives, it is not always necessarily the case. As we explain below, both the costs and the priorities predefined in the development strategy could mean that the projects the local government chooses to back follow other criteria.

Another relevant aspect to take into account is the unit to be analysed (individuals, families, businesses) and the definition of the target population. This distinction is necessary for the collection of data and information about the impact of the project. The definition of the target population enables local authorities to assess the benefit of each project for the stakeholders involved and to distinguish it from other effects that may affect other stakeholders (positively or negatively).

Smith (2004) suggests, for example, a form of subsidy to support one type of business to the detriment of its competitors. Alternatively, other elements to bear in mind include the spillover effects that have been considered in geographical economy and development economy studies. Spillover effects refer mainly to the positive and negative externalities of certain activities.

For example, capacity-building courses can increase the human capital of the individual beneficiaries. These courses can also have positive effects on the productivity of individuals that were not

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beneficiaries (through supply chains) or on crime rates in the region.26 In addition to the economies of scale and scope that a social project may trigger, other effects we could mention are agglomeration (where economies of scale, vertical integration and transport costs are analysed in the same model),27 and also economies of flow and of penetration.

It is also necessary to make a distinction in the scale of the end result. In studies on the quantification of poverty, for example, a distinction is made between ‘absolute poverty’ and ‘relative poverty’.

To evaluate a project, its benefits can also be measured in absolute terms, to later compare the results over time, or the ‘relative’ benefits can be measured against the theoretical benefits expected.

In either case, the next step involves identifying the reasons why a project did not achieve the potential it was designed to achieve (initial planning problem, lack of resources or implementation problems). If there was an operational problem, correcting this could lead to an ‘innovation’ that increases the chance of this project being successful (remember that innovation is a social learning process, Engel, 1997. Cited in Rodríguez Herrera and Alvarado Ugarte, 2008, p. 30). However, if the problem was

26 On theories of social performance in education, see Moretti (2004).

27 These aspects are analysed in what is known as the ‘New Geographical Economy’. On this matter, see Head and Mayer (2004).

due to the design, the indicator or final evaluation report must be able to provide information about this limitation. The projects selected by ECLAC for its SI competition (2008, p. 42) were those likely to affect the largest number of people. Once again, this does not necessarily coincide with local government criteria.

Another aspect to take into consideration is the consequences of the evaluation results on SI incentives.

In fact, the evaluation results adopted should avoid creating the secondary effect of discouraging SI. Here we feel it is pertinent to incorporate the conclusions of the literature on the legislation governing business failure and the bankruptcy codes, which protect both the interests of the companies and those of their lenders. The provision of legal mechanisms that encourage the creation on the one hand and the orderly liquidation of bankrupt companies on the other could have a positive impact on innovation and economic development.28 In the case of SI, it is a case of not penalising innovators (hence the risk partition between agents) and, therefore, it is necessary to create the right conditions

28 For the case of long-term development and bankruptcy codes, see Sgard (2006). Regarding a more contemporary period (after the Asian crisis in 1997), Stiglitz (2001). Recently, The Economist (“Les misérables”, 28 July 2012) emphasised the importance of this type of legislation for the creation of technology companies.

so that even agents whose projects have had ‘low’ impact can continue contributing as social innovators. On the other hand, however, there is also a risk of diluting the added value of the most successful projects if too many initiatives are kept active (Murray, Caulier-Grice and Mulgan, 2010).

Thus, it is necessary to define the strategy and adapt it to the human and financial resources in each region. b) Characteristics of the evaluation One of the main issues a public policymaker must take into account is the financial cost of evaluating a project.

Smith (2004) proposes, for example, that before going ahead with the evaluation it is necessary to have created the appropriate mechanisms to ensure that the money is used efficiently, that those benefited by the project (and financed) are in fact the eligible agents and that it is possible to verify their behaviour compared with other eligible agents who did not participate in the project.

In this prior stage, it is also important to ensure that the projects do not have different goals to those officially planned and do not include any political elements that may benefit a particular privileged group.

Another fundamental point is knowledge of the information that will be required for the evaluation and its cost, as well as verifying that it fits into the assigned budget. It is, however, indispensable that the information and data gathered are of the necessary quality to obtain a

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reliable evaluation. In fact, one of the challenges in Latin America, above all in the more microeconomic and social aspect, continues to be improving and systematising data. For this reason, the project evaluation must allow for the possibility of the evaluator assuming this task, particularly when it involves comparing the initial and final conditions of the study units.29 In order to have a systematic and reliable evaluation mechanism, it is important to have (or produce) the relevant information in order to evaluate and compare social projects. Until now, the evidence used has been anecdotal, and has mainly been generated in meetings held to share experiences. Nevertheless, these forums can be useful as a basis for ensuring that the methods for evaluating projects and producing and transmitting information are equally replicated in regions with SI projects.

The costs of evaluation, in addition to being adjusted to fit the budget, must be profitable in terms of the foreseen benefits. The aim of the evaluation is to improve and increase the efficiency of the type of projects being supported and, therefore, the cost must be kept within a reasonable margin. In this regard, it is important to distinguish the evaluation

29 It is important to indicate that there have been significant advances in geographical and microeconomic information in many countries in Latin America. See, for example, the recent versions of the INEGI State and Municipal System Databases in Mexico or the new IBGE cartographic database in Brazil.

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timescale, whether it is carried out in the short, medium or long term. This is an important aspect for public policymakers, given that the type of data analysis is specific to each case. Moreover, the maturity time a project needs does not necessarily coincide with the point at which the evaluation is conducted.

Finally, on this point it is necessary to consider the alternatives for using resources –the famous opportunity cost– which, in the case of public funding, can have unexpected effects on the type of public expenditure taxpayers (who have other priorities) want. In the case of private funding, the cost-benefit analysis should consider issues of profitability and investment opportunities, so that the private stakeholders remain interested in financing social projects.

The final general characteristic of an impact assessment is linked to the decision regarding who will participate in it. We consider that involving the directly benefited agents in the evaluation process offers a series of advantages in terms of logistics and the relevance of the results. On the one hand, it seems important for them to participate in defining the objectives of the project, as they will be able to contribute the necessary elements to check whether these goals are achieved. In certain types of projects, whether these objectives are met will decide the relevance of continuing the project or not. Their involvement also provides the advantage of making the beneficiaries jointly responsible and

gives them an incentive to redesign projects whose aim is to improve their living conditions. Several studies have stressed this aspect, including those on international cooperation. This point also includes ECLAC recommendations (Rodríguez Herrera and Alvarado Ugarte, 2008, p. 30) regarding the fact that the most successful innovations involve the convergence of different actors and social stakeholders. In the case of projects to address youth at risk, Rodríguez Herrera and Alvarado Ugarte (2008: 84) even proposed that whole communities should play a fundamental role in the design, implementation and evaluation of projects. As these same authors remind us, the innovation process involves many stakeholders and passes through phases of success as well as mistakes and failures (Rodríguez Herrera and Alvarado Ugarte, 2008: 35).

Thus, a common interest in the success of a project should not only correspond to a common criterion for evaluating the objectives achieved, it should also contribute elements of learning to redesign projects in the future. c) Which indicators to use?

Before reviewing the type of indicators required for evaluating social projects, we would stress that every type of project has its own peculiarities and specific needs. In fact, not all projects can be evaluated in the same way.

Therefore, the type of instrument, analysis and evaluation will be different.

The first step for an evaluator is,

therefore, to classify each project according to the type of dimensions it covers. ECLAC created a classification according to the theme of the projects, although other classifications can also be created which contain the differences and similarities between groups of projects. Next, it is important to make a distinction regarding which methods are best suited to each type of project.

In Latin America, although there have been many different projects related to providing social services, other types of initiative linked to the use of space, creating infrastructure and improving the environment have been analysed less.

Given the social nature of many of the projects already analysed for the ‘Experiences in Social Innovation’ competition (in contrast to projects related to income generation), we could lean towards qualitative indicators designed to study changes in the beneficiaries’ perception (for example, in projects related to the affirmation of rights). However, as we have already mentioned, these indicators can be used to make quantitative interpretations and even relate them to directly measurable variables.30

30 The most emblematic case in this area is that of social impact bonds developed in the UK, in which investors’ dividends depend on the rate of reoffending by prisoners after attending capacitybuilding programmes financed by this project.

Similar initiatives are being run in the United States. In Latin America these initiatives have not been introduced; however, this quantification of social objectives could also be used to attract private financing with social aims. See The Economist,

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Qualitative indicators also offer the advantage of being able to measure the fulfilment of non-monetary goals (Rodríguez Herrera and Alvarado Ugarte, 2008:33) and ensure that these types of incentives are taken into account when designing projects. Therefore, it is important for the beneficiaries to also form part of the evaluation.

Table 1 summarises the elements which, in our opinion, are best suited to the needs of each type of project in Latin America. It is not exhaustive, but it does outline some general principles that the evaluation of each project could be based on.

We have regrouped the ECLAC experiences linked to youth at risk and the affirmation of rights under the heading of ‘social services’, which could encompass other projects that have similar aims. Finally, we have also included the type of projects connected to urban and environmental development, which also fall within SI. In the first column we have listed the type project by theme and objective.

The types of projects presented in table 1 focus mainly on those whose themes have already been analysed in ECLAC studies. However, our evaluation matrix generalises the classification and takes into account other SI projects that could be associated, for example,

‘Being Good Pays’, 18 August 2012, and Murray, Caulier-Grice and Mulgan (2010).

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on urban issues, use of the territory and creating social and technological innovation agencies, among others.

There are fewer studies on SI in Latin America, although it is a recurring theme in other regions of the world.

In these cases, the evaluation requires other types of competencies from the evaluators related with environmental impact.31 This matrix also has a column detailing the evaluation period. Given that the matrix is designed to help with shortterm evaluation, we have only included criteria for this type of assessment (which are those generally used). A longterm evaluation must include additional elements, such as forecasts of the behaviour of certain variables, a greater focus on the secondary effects of the project and a definition of the parameters for estimating the present value of future benefits.32 Long-term evaluations could be more relevant for programmes relating to training human capital or building infrastructure, as suggested by Smith (2004).

In the third column we have listed the type of instruments that could be useful

31 The FAO (2011) carried out a study on the general alignments to follow for evaluating projects of this type. The ECLAC methodology for socioeconomic and environmental impact focused on natural disasters (Dosi, 2001).

32 In the case of income generating projects, some questions include the choice of a social discount rate to quantify future benefits. On this matter, see Liu (2003).

for evaluating each type of project.

In cases where the perception of the individuals benefited by the projects is relevant, questionnaires are the basic instrument at the start and end of the project. For projects to generate income, the instruments need to gather the necessary accounting information to calculate the rates of return and their financial sustainability.

the compensation or the amount of money to be paid for goods or services, and revealed preferences, in which the market provides information about this evaluation such as, for example, the difference in price between two similar houses, one with a park nearby and the other without this service.33 This ‘price premium’ is considered the social value of a specific service.

In the last column we have included the type of analysis that corresponds to the standard final objectives for evaluating each type of project.

Thus, for example, in the case of projects designed to generate income, it is possible to directly transfer the methodology used in financial and commercial income (cash flow) analyses to intertemporal analysis.

However, in order to take into account social aspects that may be affected by the project, it is necessary to include other measures, such as social rates of return, in which values are assigned to issues such as capacity-building of the individuals benefited, the drop in unemployment and any kind of effect (positive or negative) that may have an impact on the region. The techniques for making these types of social assessments are varied, but basically include questionnaires and evaluations of a society’s opinion of a certain type of goods and services.

The evaluation instruments and the indicators that stem from them therefore help to analyse the final impact.

Intermediate indicators also account for the physical results during the process and can be supervised at any point by the evaluator (for example, number of workshops organised or attendance on capacity-building courses). At the end, the final goal of the project can be compared against the intermediate (and final) indicators and it will be possible to check that the operation of the project corresponded to its design.

The two most commonly used techniques are the contingency evaluation, in which questionnaires are used to gather information about

Another way of obtaining a metric of social impact is through a costbenefit analysis. In this case, it is not only necessary to analyse the physical costs (the investment) of the project, but also to take into account the opportunity costs (the alternative use of funds) and the cost of not carrying out the project (very important in the case of environmental projects). The

33 On evaluating projects based on the social rate of return, see Nicholls, Lawlor, Neitzert and Goodspeed (2009).

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benefits also include the income that may be generated by the project and

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the positive effects on the region as a whole.

Table 1. Impact assessment matrix for SI projects in Latin America

Type of project 1) Generation of income

Project evaluation period (1) Distinction between the time of investment and the moment of income generation

Instruments - Evaluations (capacity-building) - Field visits - Balance sheets - Cash flow

Types of information contained in the indicators - Indicators on the previous state of the beneficiary group - Indicators on agents eligible for but not benefited by the programme - Intermediate quantitative indicators regarding the means used to obtain the final results

2) Social services

On completion of the project

- Surveys - Focus group - Evaluations - Record of activities - General observation notes - Documentation - Anecdotal evidence

2a) Youth at risk

2b) Affirmation of rights

1-2 years after completion of the project

On completion of the project

- Interviews - Anecdotal evidence

- Evaluation forms - Surveys - Anecdotal evidence

Analysis - Internal social rate of return - Standard investment methods - Cost-benefit analysis - Comparative metric - Evaluation of capacity-building and learning

- In addition to income generation indicators, the evaluations should be focused on the perception, learning and satisfaction of the beneficiaries and the agents directly or indirectly involved

- Added value measures

- Evaluation of the perception of the young participants in the projects

- Evaluation of capacity-building and learning

- Quantitative on the perception of the beneficiaries

- Evaluation of capacity-building and learning

- Intermediate for courses and workshops

- Measurement of social impact

- Measurement of social impact (contingent valuation) - Comparative metric - Evaluation of capacity-building and learning

- Measurement of social impact

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3) Urban / environmental

After the first year, on completion of the construction or installation of infrastructure

- Surveys -Documentation: compilation of technical socioenvironmental information - Balance sheets

Source: Created by the author Notes: (1): For short-term evaluation purposes.

We can also gauge the impact of the project on more specific socioeconomic groups. In projects linked to youth at risk and the affirmation of rights, we could be directly interested in evaluating the effect on the beneficiaries of the projects. The instruments designed should be able to provide information on the results of the courses or events organised with the aim of making an impact on the perception of the beneficiaries (and on many occasions on society as a whole). Ideally, the indicators in the fourth column of table 1 should provide the necessary reference for comparing this change in perception before and after the project, and also relative to other individuals in similar conditions but who were not benefited by the project. The necessary instruments are surveys and even some type of evaluation before the start of the project. This is the case in both projects linked to youth at risk and the affirmation of rights (2a and 2b in table 1), where the objective is precisely a change in perception (regarding their

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-The same as for income generation and indicators of environmental impact.

- Internal social rate of return

- Revealed preference methods

- Cost-benefit analysis.

- Comparative and operational metric

self-confidence in the first case and their social and legal rights in the second).

We could also make one final observation regarding the advantages of combining qualitative interpretations (final reports and description) and at the same time introducing quantitative interpretations into qualitative indicators. On the one hand, final reports and descriptions of the projects help to identify the problems and strengths in the way the projects were run. On the other hand, certain statistical elements allow us to corroborate, confirm and quantify some of the consequences of the problems that the project could have tackled. Although it is not always necessary (and if the data is not reliable, it is not recommendable either) to conduct more technical analyses, it is possible in some cases to apply statistical inference (Smith, 2004:51).

In the case of affirmation of rights projects, for example, it is possible to directly quantify the impact of the programme on the benefited population.

For example, in the ‘Trébol de Cuatro Hojas’ (‘Four leaf clover’) project in Sorrel (Clara, Brazil), the main aim was to promote a new culture of maternal and infant health. The introduction

of a ‘social mother’ figure contributed towards the effective reduction in morbidity and mortality in this area (Rodríguez Herrera and Alvarado Ugarte, 2008). In the case of youth at risk projects, other indicators may include evaluating the number of school drop outs and the evolution of rates of delinquency and drug addiction.

Conclusions regarding methodological aspects One of the keys to the success of SI in Latin America is the State’s participation, as was demonstrated in the different studies carried out by ECLAC. An effective way of promoting this participation is to provide evaluation methods that are accepted by all the stakeholders involved and the results of which can be used to promote SI and use resources efficiently.

Another of the keys to success, and which this document has corroborated from a conceptual and theoretical perspective, is the need to define the evaluation method together with all the stakeholders involved. Social projects have clearly defined objectives, and evaluation provides the necessary elements to know whether these objectives have been achieved. To be able to modify and redesign these projects –which is the basis of SI– it is necessary to obtain a common consensus which identifies the shortcomings

and opportunities for improving these projects. The participation of everybody is, therefore, fundamental for bringing each project to a successful conclusion.

There are many ways of evaluating social projects. The choice of a specific method will always have advantages and disadvantages, but it is vital that the indicators selected can gather the most important information that the evaluator requires. To do this, the objectives must be well defined, and it is these objectives that will determine the type of tools and indicators to be used in the evaluation.

Although there are criteria of logistics, cost and time to consider, it is highly recommendable to use all the available information. An evaluation does not only need to provide a final metric, it should also contribute elements to encourage SI. We believe that it is important to distinguish between a SI project and a SI policy and the potential sustainability that these may have. A project must be backed by a local public policy (LPP) in order to be effective and sustainable.

Thinking from a public policy approach means considering public policies that generate social and territorial cohesion, strengthen sub-national governments in their relations with regional and national governments and are capable of being replicated. To achieve this, they must be sustainable over time, so that their responses to the existing problems turn into long-term solutions.

Sustainability is the capacity of a

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programme, project or policy to “last over time, reformulating and adapting to the special regional conditions, generating synergies through strategic alliances and involving new actors in local, regional and national dynamics so that the lessons learnt continue to be applied and generate benefits over time” (Bustamante, 2012).

Thinking about the sustainability of local public policies means, according to the URB-AL III Programme Orientation and Coordination Office’s (OCO) document on the sustainability of LPPs on social cohesion, evaluating them in five areas: / Financial sustainability, understood as the capacity to guarantee stable and sufficient resources in the long term, and to assign them in a timely and appropriate manner (Emerson, L. et al., 2006). The LPPs needs resources in the subsequent stage to finance the project in order to cover the expenses of its operational structure and so that the project activities continue and become entrenched in public policy. / Technical sustainability, which implies improving the technical and management capacities needed to maintain the activities or assets generated by the project in the LPP, also including a high level of staff awareness and participation. / Institutional sustainability, which is closely linked to the previous point because it involves a commitment from

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the local government to help maintain the individual leadership learning acquired through its commitment to the project’s human team once the external aid runs out. / The participation of the beneficiaries; social cohesion, according to the URBAL III Programme definition, requires the broad involvement of citizens in public affairs (which in this approach are not only governmental affairs).

The lack of incentives and causes for citizen participation is usually seen as a threat to social cohesion. Generating participation spaces is vital for the sustainability of these LPPs. There is broad consensus today that the local level provides an excellent space for ensuring effective participation, because at this level it is possible to bring together citizens with their representatives and the needs of the population with the decisions of the authority. It is important to place particular emphasis on this element, given that local level participation can also contribute towards generating capacities in citizens and in organisations so that they discuss and participate in decision-making, which results in strengthening citizenship and extending the exercise of citizens’ rights. Participation appears as an aim in itself, linked to the deepening of democracy, when referring to the quality of the social bond. This approach centres on valuing the public domain as the space where citizens interact with the State, rescuing the dimension of social integration offered by participation

and the necessary relation between this and citizens’ rights. “(…) given some basic conditions, people are willing to get involved in participative processes and see in these bodies an effective possibility of resolving certain problems. It is fundamental to consider participation as a key resource for achieving common development goals.

Participation is a factor that legitimises the process, generates a commitment between people, enables the action to

be maintained over time and guarantees a better outcome in terms of solving a problem” (Serrano, 1998: 25). / Multilevel articulation, by institutionalising articulation mechanisms between the local government and other stakeholders to improve the public policies that contribute towards social cohesion on a territorial level.

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Collection of Studies into Local and Regional Public Policies on Social Cohesion

URB-AL III is a regional decentralised cooperation programme run by the European Commission, the aim of which is to contribute towards increasing the level of social cohesion in sub-national and regional groups in Latin America.

Led by Diputació de Barcelona, the URB-AL III Programme Orientation and Coordination Office’s mission is to facilitate the implementation of the programme by providing technical assistance and support in the different projects in order to help achieve the programme’s objectives.

OICS

ALCALDÍA MAYOR DE BOGOTÁ D.C.