Urban Indigenous Peoples and Indigenous Cities

How Otavalo became an Indigenous city – Luis Eduardo Maldonado R. explores how Indigenous communities in Ecuador are reclaiming and reshaping urban spaces.

In Latin America, the roots of urban exclusion of indigenous peoples stretch deep into colonial times. Two areas were established and characterised for the territorial organisation of the colonial regime. The city was framed as a “civilised” space, the seat of colonial power and exclusive settlement of the ruling white or European. In contrast, the rural spaces were designated the habitat of the “Indians” (a term imposed by the colonial authorities to refer to the native population in general), whose status as the dominated was stigmatised as inferior, savage, and idolatrous.

Nevertheless, through their arts and craftsindigenous peoples were always present in the city. They constructed houses, built streets, temples, roads, worked in domestic services, in public works, and sustained the private economy of the encomenderos and the state. Yet,  they were never recognised as urban residents and citizens.

Independence and the Continuation of Exclusion

When Ecuador became an independent republic in 1830, the majority of the indigenous population was excluded from the new state. They were regarded as an “abject and miserable race”; the so-called “venerable parish priests” were appointed as their “natural guardians”. Thus, the responsibility for the protection and care of the indigenous peoples was delegated to private individuals. This laid the foundation for a racialised, Eurocentric, and exclusionary relationship between the state and indigenous peoples. In one way or another, those dynamics still persist today.

Despite these systems of domination, indigenous communities have also resisted, adapted, and reshaped them.. One emblematic case is the city of Otavalo, located in the province of Imbabura in the Republic of Ecuador. Over roughly fifty years, it transformed itself into an indigenous city.

Trade, Tradition, and Economic Power

This transformation is thanks in large part to the Kichwa Otavalo, whose success stems from a long tradition of trade. Known as Midalae (specialists in local and regional trade), they build a network of economic and social relationships and gain a broad understanding of the local and national reality. Their active and successful participation in the market, as producers and traders of various agricultural and textile products, has deep historical roots. The textile trade passed down from pre-Hispanic times and was further developed through royal workshops of the Spanish crown. This has enabled them to control trade and form alliances that ensure the sustainability of their activity.

By the 1960s, Kichwa Otavalo’s artisans were producing and selling on an international scale. The economic boom that followed enabled them to invest in homes, craft workshops, textile factories, and commercial stores and thus effectively allowing them to “buy the city” and gradually redefine its identity. This process turned the city of Otavalo into the largest handicraft market in the Andean region.

This economic and social transformation was also driven by demographic growth in indigenous communities and limited access to land. As a result, land was increasingly subdivided into small plots that were used to build homes. This led to a trend of urbanisation of Indigenous communities, while agriculture was gradually abandoned and migration increased.

According to the last population census (2022), Indigenous people make up 57,24 per cent of Otavalo´s population. In the last two decades, the Kichwa Otavalo have diversified economic activities to include tourism, transportation, financial services, and a range of professional services such as medicine, teaching, architecture, engineering, law and communication. Politically, they have also gained ground, winning local elections and governing the municipality of Otavalo for the last 20 years, with a model of participatory and intercultural democracy. Today, more than 80 per cent of the capital raised by financial institutions based in the city belongs to the Otavalo indigenous people, demonstrating their economic success

Redefining Indigenous Identity in the Urban Context

What we see in Otavalo is not simply the story of a prosperous Indigenous city. It is a story that challenges entrenched stereotypes, especially the idea that indigenous peoples are exclusively farmers. National census data reflects this shift, with nearly 30 per cent of Ecuador’s Indigenous population now living in cities — an indication that this transformation is not only significant but possibly irreversible.

Indigenous presence is central: economically, socially, culturally, and politically. Otavalo is not alone. Across Andean cities in Ecuador, similar patterns are emerging. Indigenous presence in urban areas is no longer marginal but central in economic, social, cultural, and political spheres.

Resilience and Cultural Continuity

This urban Indigenous transformation defies earlier assumptions. In the 1970s and 1980s, some progressive academic and political currents predicted that the integration of the indigenous population into the market and national culture would result in the extinction of indigenous cultures. Yet the opposite has actually occurred.  In Otavalo, cultural identity has been strengthened, precisely because the commercialisation of its products remains closely tied to cultural practices. Economic growth has enhanced the prestige of Otavalo’s culture and reinforced a strong sense of identity.

At the same time, this process has brought new challenges. Urban Indigenous development is also marked by complex social and cultural conflicts, such as the increase in exploitative relationships, social inequalities, individualism, consumerism, and accelerated processes of alienation, that had not been experienced before and that must be overcome.

The Path Forward: Building Inclusive and Intercultural Futures

These realities must be taken into account in public policies, international cooperation initiatives, and social and economic studies conducted by academic research. To respond effectively to the challenges Indigenous peoples face today, we need a deeper understanding of the complex dynamics at play. Only then can we develop meaningful and viable solutions within the broader goal of building an intercultural society and a truly plurinational state.