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Otavalo is a must-see. A nice village north of Quito. Traveling from Quito to Otavalo will take around 2 hours. It is probably the best place in the whole country to buy handicrafts and Indian clothes, but you have to bargain hard. You will enjoy a lot visiting the main Andean market of South America. Once you are there there are many local busses that travel to interesting places that you should visit once you are here.
By the way, many Indian Ecuadorians playing music and selling these kind of things are actually from the Otavalo area.
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