||Systemic reform of Latin America's `social sectors', such as higher education, has progressed at a much slower rate than economic reform. The reason is that such reform efforts are derivative or `finance-driven', and have been undertaken only as a reflection of economic reform policies. This outcome is explainable using the observations on Latin American reform formulated 40 years ago by Albert Hirschman. The experience of Ecuador with higher education reform provides the empirical basis for this case. All recent reform programs have followed Hirschman's `Route C', which suggests they will not have support necessary for enactment and if enacted will have minor impact. There are other experiences of more effective, Route B, reforms in higher education. This study concludes that only if a new understanding of the role of higher education in development is brought to maturity will systemic reform occur, guided by the implications of this new conceptualization. It must also be guided by new conceptualizations of how the social sectors, and higher education in particular, can help realize this new understanding. .