EXPLORING THE COMPENSATION AND EQUIVALENCE MECHANISM AS A CATALYST FOR DEVELOPMENT:

THE CASE OF THE ECUADORIAN REGION OF CHIMBORAZO

Abstract

One of the characteristics of developing countries is the income poverty of farmers who sell their products and services at low prices. Poverty-related problems can be eliminated by applying a clearing and matching mechanism, such as the compensation and equivalence mechanism (CEM). The objective of this paper is to propose a mechanism based on CEM complemented by fair trade linked to P2C (producer to consumer) through the Internet (e-commerce) and solidarity (social networks) to improve the living conditions of the Ecuadorian peasantry. After interviewing 390 farmers, an analytical, descriptive, non-experimental, and applied qualitative methodology is used, together with a phenomenological observation of the object of study. The results show 1) there is a variable seasonality in the sale of agricultural products in the Chimborazo region in Ecuador; 2) poverty can be reduced through the application of CEM in agricultural and livestock cooperatives, and 3) there is a strong collaboration characterized by solidarity among the rural population living in Chimborazo. The main limitation of this study is that only the Ecuadorian region of Chimborazo has been studied. Future research will analyze this strategy in other regions and underdeveloped countries.