Social and solidarity economy models as catalysts for local development

Modelos de economía social y solidaria como catalizadores de desarrollo local

Byron Oviedo-Bayas^*

Juliana Liceth Murillo Vélez^*

ABSTRACT

This article explores the role of Social and Solidarity Economy (SSE) models as agents of transformation in territorial development processes. Using a qualitative approach and comparative analysis of experiences in India, Brazil, Europe, Senegal, and Latin America, it examines how these initiatives strengthen economic resilience, promote productive equity, and drive financial inclusion. Credit cooperatives, social enterprises, agricultural networks, and solidarity finance are presented as effective tools for addressing economic crises, guaranteeing basic services, and generating decent employment in vulnerable contexts. Their capacity to reconfigure value chains through practices that redistribute power and increase local income is also analyzed. However, the study also identifies structural challenges, such as dependence on existing social capital, the risks of co-optation by neoliberal actors, and the urgent need for regulatory frameworks that support their autonomy. Through a critical and situated lens, it argues that the SSE is not a single or universal solution, but it does represent a viable and ethical way to rethink local development from a people- and territory-centered perspective. This work contributes to the academic debate by linking local experiences with macroeconomic dynamics, proposing institutional and community conditions that allow these models to scale up without losing their transformative essence.

Keywords: Territorial development, economic resilience, productive equity, inclusive finance, community autonomy.

RESUMEN

Este artículo explora el papel de los modelos de Economía Social y Solidaria (ESS) como agentes de transformación en procesos de desarrollo territorial. A partir de un enfoque cualitativo y el análisis comparativo de experiencias en India, Brasil, Europa, Senegal y América Latina, se examina cómo estas iniciativas fortalecen la resiliencia económica, promueven la equidad productiva e impulsan la inclusión financiera. Las cooperativas de crédito, las empresas sociales, las redes agrícolas y las finanzas solidarias se presentan como herramientas eficaces para enfrentar crisis económicas, garantizar servicios básicos y generar empleo digno en contextos vulnerables. Asimismo, se analiza su capacidad para reconfigurar cadenas de valor mediante prácticas que redistribuyen poder y aumentan los ingresos locales. Sin embargo, el estudio también identifica desafíos estructurales, como la dependencia del capital social existente, los riesgos de cooptación por actores neoliberales y la necesidad urgente de marcos normativos que respalden su autonomía. A través de una mirada crítica y situada, se argumenta que la ESS no constituye una solución única ni universal, pero sí representa una vía viable y ética para repensar el desarrollo local desde una perspectiva centrada en las personas y el territorio. Este trabajo contribuye al debate académico al vincular experiencias locales con dinámicas macroeconómicas, proponiendo condiciones institucionales y comunitarias que permitan escalar estos modelos sin perder su esencia transformadora.

Palabras clave: Desarrollo territorial, resiliencia económica, equidad productiva, finanzas inclusivas, autonomía comunitaria.

INTRODUCTION

In recent decades, the Social and Solidarity Economy (SSE) has emerged as a robust alternative to the limitations of the conventional economic model, especially with regard to territorial development and social inclusion in vulnerable contexts. Its rise responds to a structural need to reconfigure the links between economy, society, and the environment, prioritizing collective well-being over individual profit. This perspective has been supported by a growing body of academic literature that points to the capacity of the SSE to remedy market failures, generate decent employment, strengthen social cohesion, and build resilience to global crises (Mendell & Neamtan, 2010; Scott, 2015).

The organizations that make up this model, such as cooperatives, mutual societies, social enterprises, and fair trade networks, have proven to be key actors in the socioeconomic transformation of multiple territories. Beyond their organizational diversity, these entities share fundamental principles such as democratic management, the primacy of people over capital, and a commitment to the environment. In different parts of the world, the SSE has been recognized for its ability to respond to emergency situations, keep basic services running, and coordinate economic responses at the local level (Calvo et al., 2017; Coraggio, 2011).

During the COVID-19 pandemic, the strategic role of the SSE in contexts of uncertainty was clearly demonstrated. Case studies such as those by Milana and Ashta (2020) documented how credit cooperatives in India and Brazil managed to cushion mass unemployment through solidarity-based financing and microcredit schemes. At the same time, Defourny, Hulgård, and Pestoff (2014) highlighted the role of social enterprises in Europe, especially in the decentralized provision of health and care services to vulnerable populations. In Africa, agricultural cooperatives in Senegal managed to keep their supply chains operational in the face of disruptions to international trade (Jha et al., 2023). These experiences reveal that the SSE can act as a structural buffer, capable of sustaining local economies in times of high global tension.

Despite these contributions, important questions remain about the scalability and sustainability of these models. The literature points out that many SSE initiatives operate under adverse conditions, facing challenges such as lack of access to finance, inadequate legal frameworks, and pressures to align with market dynamics that may contradict their ethical principles (Keskinen, 2020; Ojong, 2023). The current academic discussion therefore focuses on how these models can transcend their status as marginal alternatives and become integral components of long-term development strategies.

One relevant line of research focuses on the capacity of the SSE to transform value chains by incorporating criteria of equity, sustainability, and power redistribution. Mugarra Elorriaga (2021), for example, documents how industrial cooperatives in the Basque Country, framed within the Mondragón model, have significantly reduced hierarchical asymmetries in the manufacturing sector. In Latin America, fair trade networks have driven a process of re-signification of rural production circuits, raising the incomes of small producers and recognizing their role as active economic agents (Rosés, 2015). These initiatives exemplify what Gibson-Graham (2008) conceptualized as "diverse economies," in which traditional patterns of capitalist accumulation are broken down to make way for more inclusive and collaborative configurations.

However, this transformative potential is not without tensions. Ojong (2023) warns of the risk of co-optation of SSE initiatives by neoliberal logics, especially when they depend on external financing or are associated with corporate actors that may impose agendas that are alien to the principles of solidarity and democracy. The quest for financial sustainability can lead some organizations to adopt practices that compromise their autonomy, thereby weakening their identity and social legitimacy. This dilemma poses a critical challenge for SSE managers and public policy makers: how to scale up and institutionalize these models without distorting them?

Solidarity finance represents another strategic axis for local development from the perspective of the SSE. These tools range from social currencies to community banks and savings and credit cooperatives, which have shown great potential for fostering endogenous economies and expanding financial inclusion. In France, Duque et al. (2021) report that social currencies have revitalized local exchange circuits, promoting more conscious and territorialized consumption. In Colombia, community banks have closed historical gaps in access to credit in rural areas, facilitating the emergence of new enterprises and improving household incomes (Bernal et al., 2022). Beyond the economic aspects, these experiences strengthen the social fabric and reinforce values of reciprocity and cooperation, which are essential elements of social capital.

The use of methodologies such as Social Network Analysis (SNA) has made it possible to understand how these initiatives weave relationships of trust between local actors, shaping collaborative ecosystems that increase collective responsiveness to structural challenges (Turriaga, 2025). From this perspective, development is not conceived solely as an economic process, but as a social construction involving cultural, institutional, and political factors. This approach contrasts with traditional views focused exclusively on GDP growth and attracting foreign investment.

The political dimension of the SSE is another aspect that deserves attention. Beyond their economic contribution, these experiences represent alternative forms of governance, where decision-making is democratized and collective agency is strengthened. Emblematic cases such as the recovered factories in Argentina or the urban gardens promoted by social movements illustrate how the SSE can become a tool of resistance against neoliberal policies and structural crises (Rosés, 2015; Da Ros, 2007). In these spaces, what Razeto and Rufino (1990) called the "C factor" materializes, where the community is an active protagonist in the construction of its own economic destiny.

However, there are also documented cases where SSE initiatives were instrumentalized by state agendas without achieving a substantive transformation of structural inequalities. Holloway (2022) warns that institutional recognition does not always imply a real redistribution of power or resources. It is therefore essential to maintain a critical and proactive perspective that allows us to distinguish between forms of co-optation and genuinely emancipatory processes.

In this context, this article aims to contribute to three fundamental debates surrounding the SSE. First, it seeks to advance understanding of its multidimensional impact in terms of local development, incorporating economic, social, political, and cultural dimensions. Second, it aims to identify the conditions necessary for these models to scale up and be replicated without losing their transformative character and ethical basis. And third, it raises the need to build bridges between local practices and macroeconomic frameworks so that the SSE ceases to be a peripheral alternative and becomes a structural axis of sustainable development.

To this end, a qualitative and comparative analysis of emblematic experiences in different territories is carried out, based on recent academic literature and reliable secondary sources. The study's approach captures the richness and complexity of these models, exploring both their achievements and limitations and proposing lines of action for their strengthening. Ultimately, the aim is to contribute to the construction of a more just, solidarity-based, and sustainable economy, in which local communities are protagonists and not mere recipients of policies designed from above ( ).

MATERIALS AND METHODS

This study takes a qualitative, exploratory, and descriptive approach aimed at examining the role of Social and Solidarity Economy (SSE) models in promoting local development. This methodological approach responds to the need to understand complex phenomena from a holistic perspective, considering the multiple economic, social, political, and cultural dimensions involved in the territorial experiences of SSE. By prioritizing deep understanding over statistical generalization, qualitative research allows us to capture contextual nuances, relationships between actors, and processes of community transformation that escape traditional quantitative methods.

The starting point was a rigorous documentary review of secondary sources, selected on the basis of criteria of topicality, relevance, and academic rigor. Research published in the last fifteen years was included, including scientific articles indexed in databases such as Scopus and Web of Science, as well as reports from international organizations, public policy documents, and case studies developed by organizations linked to the SSE. This selection aimed to ensure a comprehensive, balanced, and up-to-date overview of the state of knowledge on the subject.

The methodological strategy adopted was structured around a comparative analysis of emblematic SSE experiences in different regions of the world. The selection of cases responded to the diversity of institutional and socioeconomic contexts, as well as the availability of documented information. These included, among others, the Mondragón cooperative model in the Basque Country, fair trade networks in Latin America, agricultural cooperatives in Senegal, European social enterprises, and solidarity-based microfinance schemes in India and Brazil. This diversity made it possible to identify common patterns, as well as particularities associated with the regulatory frameworks, organizational cultures, and levels of community articulation of each experience.

The information collected was analyzed using content analysis techniques aimed at identifying emerging thematic categories that reflected the main dimensions of the phenomenon under investigation. The categories were defined inductively, based on an analytical reading of the texts, and organized around three central axes: community resilience, value chain transformation, and institutional sustainability. This classification made it possible to group the evidence and facilitate its interpretation within a conceptual framework consistent with the objectives of the study.

In cases where sources included relevant quantitative data, such as employment statistics, income, or service coverage, a descriptive analysis based on frequencies, percentages, and simple averages was used. However, it is important to clarify that the function of this data was not to establish correlations or causal inferences, but rather to complement the qualitative understanding with indicators that offered a broader view of the impact of the initiatives studied. In this sense, the statistical approach was subordinated to the interpretive purpose of the research, avoiding methodological reductionism.

Likewise, the political and institutional context in which the experiences analyzed were developed was taken into consideration. The SSE does not operate in a vacuum, but is shaped by regulatory frameworks, public policies, governance dynamics, and structural conditions that can facilitate or limit its development. Therefore, the analysis included a critical reading of the external factors that influence the viability, autonomy, and scalability of these models, such as state support, pressure from corporate actors, access to financing, and the existence of dense social networks.

The study adopted an interdisciplinary perspective, incorporating theoretical and conceptual approaches from solidarity economy, economic sociology, territorial development, and complex systems theory. This integration enriched the analysis and allowed us to move beyond linear or sectoral views, favoring a cross-cutting understanding of the role of the SSE in the transformation of local economies. Similarly, the dynamic nature of the social processes studied was recognized, avoiding static or deterministic interpretations and considering historical trajectories, internal disputes, and tensions between principles and practices.

The validity of the study was reinforced by triangulating sources, contrasting information from different documents and authors, which made it possible to detect convergences, nuances, and contradictions. This strategy was key to avoiding bias and offering a balanced analysis, avoiding both uncritical idealization of the SSE and a skeptical or reductionist view. Similarly, a reflective stance was adopted regarding the study's own limitations, recognizing that the documentary approach does not allow for direct observation of social processes, but rather depends on interpretations already made by other researchers.

Finally, it should be noted that the research did not involve fieldwork or direct interaction with social actors, so the findings should be understood as a theoretical and analytical contribution to the academic debate. However, the systematic and rigorous nature of the methodological process provides a solid basis for future empirical research, as well as for the design of public policies and strategies to strengthen the SSE in various territories.

RESULTS

Community resilience during economic crises

The results related to the capacity of the SSE to strengthen community resilience in the face of economic crises were obtained by reviewing case studies documented in critical contexts, such as the COVID-19 pandemic. The comparative analysis identified common patterns of action by solidarity organizations that acted as buffers against disruptions in the labor market, supply chains, and essential public services.

Table 1. Impact of the SSE on community resilience during global crises.

Case study	Country/Region	SSE initiative	Key results
Credit cooperatives	India, Brazil	Solidarity-based microfinance	Unemployment reduced by 15-20% compared to areas without SSE (Milana & Ashta, 2020).
Social enterprises	Europe	Decentralized public services	Coverage of 30% of basic needs in rural areas (Defourny et al., 2014).
Agricultural cooperatives	Senegal	Local supply chains	80% of production maintained despite disruptions (Jha et al., 2023).

Analysis of this data shows that SSE organizations were able to implement efficient, adaptable responses focused on the needs of the territory. Credit unions provided rapid access to finance, which was critical in preventing massive job losses. In Europe, social enterprises complemented state systems, filling critical gaps in access to basic services. In Senegal, agricultural networks prevented the collapse of production through self-sufficient local systems, demonstrating remarkable autonomy in the face of disruptions to international trade.

These results are consistent with the findings of Mendell and Neamtan (2010), who argue that the SSE strengthens the structural capacity of territories to withstand systemic crises. Similarly, Scott (2015) emphasizes that these organizations not only mitigate the effects of crises, but also prevent them from deepening through economic approaches centered on solidarity. However, as Keskinen (2020) warns, the effectiveness observed may be conditioned by the existence of a prior social fabric, which implies that replicating these models in other contexts requires adapted and sustained public policies.

Transformation of value chains under principles of equity

To understand how the SSE contributes to the transformation of local value chains, relevant experiences in the industrial and agricultural sectors were analyzed, where ethical principles aimed at equity, redistribution of power, and improvement of the socioeconomic conditions of the most vulnerable actors were applied. The selected cases offer a clear perspective on how these organizations can structurally intervene in the configuration of productive systems.

Table 2. Contribution of the SSE to equitable value chains

Case study	Country/Region	SSE model	Key results
Industrial cooperatives	Basque Country	Mondragón model	40% reduction in power asymmetries (Mugarra, 2021).
Fair trade networks	Latin America	Ethical certifications	25% increase in farmers' income (Rosés, 2015).

The data show that, in the case of the Basque Country, the Mondragón cooperatives not only distribute profits more equitably, but also promote democratic decision-making, reducing the hierarchical gaps typical of the conventional business system. In Latin America, fair trade networks have enabled small producers to enter global markets under fairer conditions, thanks to certifications that value traceability, sustainable production, and respect for labor rights.

From an analytical perspective, it can be argued that these initiatives are altering the extractive logic of traditional capitalism, giving way to more symmetrical economic relations. The incorporation of ethical trade practices, community control of the means of production, and social reinvestment of surpluses is a clear expression of what Gibson-Graham (2008) conceptualized as "diverse economies." These economies do not necessarily eliminate the market, but rather reconfigure it based on collective, solidarity-based, and non-speculative logics.

The literature supports these findings. Mugarra (2021) points out that Mondragón represents a consolidated form of cooperative governance with a real impact on the redistribution of economic power. Rosés (2015) highlights how fair trade networks contribute to the dignification of peasant work, expanding their bargaining power vis-à-vis intermediaries and large buyers. However, as Ojong (2023) warns, exposure to global markets can entail risks of dependence and loss of autonomy if there are no regulatory mechanisms or institutional support. Therefore, although powerful, these models require h r regulatory environments that guarantee their viability and consistency with the ethical principles that underpin them.

Solidarity finance and endogenous territorial development

The impact of solidarity finance on strengthening local economies was assessed based on an analysis of case studies documenting experiences with social currencies and community banks in rural and urban contexts. These financial tools have been designed to expand financial inclusion, promote the circulation of wealth within the territory, and consolidate networks of trust among local economic actors.

Table 3. Impact of solidarity finance on local development

Case study	Country/Region	Financial instrument	Key results
Social currencies	France	Local economic circuits	35% increase in internal transactions (Duque et al., 2021).
Community banks	Colombia	Cooperative loans	50% increase in rural financial inclusion (Bernal et al., 2022).

The results reveal that, in France, social currencies have encouraged local consumption by limiting the use of money to businesses and producers within the same territory, reducing capital flight and strengthening the circular economy. In Colombia, community banks facilitated access to credit in areas historically excluded from the formal financial system, favoring the emergence of new ventures and strengthening community-based productive activities.

From a scientific perspective, these initiatives represent more than simple financial instruments: they are institutional devices that reconfigure economic relations based on values of cooperation, reciprocity, and territorial belonging. Unlike traditional banking systems, solidarity finance seeks to democratize access to capital, decoupling it from exclusively profit-driven criteria and strengthening the active role of communities in economic management.

This approach is consistent with the proposal of Turriaga (2025), who argues that solidarity finance acts as a catalyst for social capital, facilitating collective organization and mutual trust. Similarly, Razeto and Rufino (1990) highlighted the "C factor" of community as a structuring component of the solidarity economy, alluding to its capacity to redefine economic practices through collective action.

However, the scope of these results needs to be qualified. Although Duque et al. (2021) and Bernal et al. (2022) show positive impacts in terms of financial inclusion and economic revitalization, Holloway (2022) warns that these tools alone are not sufficient to alter the deepest structures of inequality. Their effectiveness depends largely on their coordination with redistributive public policies and their links with social movements that support the political dimension of economic change.

CONCLUSIONS

The findings of this research confirm that Social and Solidarity Economy (SSE) models are a significant alternative for promoting local development, especially in contexts marked by structural exclusion, economic volatility, and deterioration of the social fabric. Far from being marginal or utopian proposals, the experiences analyzed show that SSE can generate concrete impacts in terms of resilience, productive equity, and financial inclusion. However, the analysis also reveals that its consolidation depends on contextual, institutional, and community factors that must be carefully considered.

First, it was found that the SSE plays a crucial role in building community resilience to economic and social crises. Credit cooperatives in India and Brazil, European social enterprises, and Senegalese agricultural networks demonstrated a remarkable capacity to sustain employment, ensure access to essential goods and services, and keep local value chains operational. These results support the arguments of Mendell and Neamtan (2010) and Scott (2015), who argue that the SSE corrects market failures and acts as a structural buffer. However, as Keskinen (2020) points out, the effectiveness of these responses depends largely on the existence of pre-existing social networks and strong social capital, which limits their scalability without the support of adequate public policies.

Secondly, it was evident that the SSE has the potential to transform value chains based on principles of equity. The Mondragón model in the Basque Country and fair trade networks in Latin America are concrete examples of how decision-making power can be redistributed, small producers' incomes raised, and fairer economic circuits created. These initiatives, aligned with Gibson-Graham's (2008) concept of diverse economies, challenge extractive logics while promoting more horizontal and participatory structures. However, as Ojong (2023) warns, the integration of these networks into global markets is not without risks, particularly when the SSE is forced to adopt conventional capitalist practices in order to survive. It is therefore imperative to have regulatory frameworks in place that safeguard the founding principles of these organizations and prevent their co-optation.

Likewise, solidarity finance emerged as an essential component of endogenous territorial development. Social currencies in France and community banks in Colombia exemplify how access to credit can be democratized, the local economy strengthened, and community ties reinforced. Beyond their economic utility, these tools have a political dimension by empowering territories and allowing them to exercise financial sovereignty. This vision coincides with Razeto and Rufino's (1990) proposal of the "C factor," where the community stands as the articulating axis of economic practices. However, as Holloway (2022) points out, these mechanisms need to be accompanied by broader organizational processes and redistributive public policies that ensure their sustainability and structural reach.

Overall, the results of this study suggest that the SSE offers a viable, ethical, and contextualized way to rethink development from below, that is, from the organizational, cultural, and productive capacities of the territories themselves. But its success cannot be understood as automatic or replicable without adjustments. For these models to scale up without sacrificing their transformative identity, a triad of fundamental conditions is required: institutional frameworks that recognize and support their autonomy; participatory governance that balances efficiency and democracy; and the strengthening of social capital as a basis for long-term sustainability.

Finally, future research should focus on developing multidimensional impact indicators and designing mixed methodologies that combine quantitative and qualitative approaches. It is also essential to explore the mechanisms for linking local SSE practices and macroeconomic systems in order to move towards a more inclusive, sustainable, and people-centered economy.

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* Systems and Computer Engineer

Quevedo State Technical University

boviedo@uteq.edu.ec

* Master's Degree in Language Pedagogy

Quevedo State Technical University

pguevarat@uteq.edu.ec