Author Archives: Torres Ricardo

Cuba: Getting Serious about Reform?

Posted on August 21, 2020 by Arch Ritter

Cuba: Getting Serious about Reform?

By Ricardo Torres*

AULA Blog, August 17, 2020; Original Article: https://aulablog.net/

Cuban President, Miguel Díaz-Canel Bermúdez/ Cubadebate/

The economic reform proposals that the Cuban government announced on July 16 sound promising, but they feel very similar to past efforts, and authorities have yet to demonstrate commitment to implement them in a manner that matches today’s serious global and national conditions. The measures come at a time that Cuba is experiencing its worst economic crisis in 30 years. According to the Economic Commission for Latin America and the Caribbean (CEPAL), the country’s imports fell 41 percent in the first five months of 2020 – more than any other country in the region except Venezuela. The commission predicts the island’s gross domestic product will decline 8 percent this year – a conservative estimate in view of its dependence on tourism, remittances (almost all from the United States), and distant trading partners.

  • The announced measures are too general to permit a detailed analysis of their potential impact, but a substantial number of them represent a more flexible interpretation of policies agreed upon during the Seventh Party Congress in 2016. They feature a 180-degree shift of focus on the private sector and cooperatives, which just two years ago the government was taking steps to severely limit. The greater use of the U.S. dollar – an inevitable consequence of the severe balance-of-payments crisis – is also noteworthy.

The political and economic moment calls for measures that are bold enough to change expectations – reduced because of past non-performance – and produce real results. After years of false starts, the government’s willingness to make the reforms a reality remains in question. The biggest doubts deal with how far the authorities will go toward restructuring state enterprises – an unavoidable step for any true transformation. The government faces five immediate challenges to managing the current crisis and ensuring a positive impact from the package of reforms.

  • Convincing domestic and foreign public opinion that this time reform is for real and will be sufficient and permanent. Decisions over the past four years have been erratic, undermining the conceptualización that then-President Raúl Castro announced in 2016 as an “updating” of “the theoretical bases and essential characteristics of the economic and social model.”
  • Creating and consolidating new, agile, and effective mechanisms for decision-making. The country lacks a system for guaranteeing that the best ideas for transformation reach the highest levels of government, are examined, and are adopted in a timely fashion. Ensuring that bureaucrats do not distort the policies is also essential.
  • Avoiding the hidden traps of some measures that have already been tried, which will remind Cubans of the worst moments of the Special Period in the 1990s. The dollarization scheme implemented back then, for example, was complicated by rule changes the government made midstream. Authorities also rejected the necessary restructuring of the enterprise system and public sector. Cuba survived – collapse was avoided – but emerged without a sustainable economic model. Genuine development was not achievable.
  • Achieving a critical mass of changes that become self-reinforcing and overcome trenchant ideological resistance and create enough momentum to refloat the economy. In the 1990s, Cuba benefited from a world economy that was growing – radically different from today. The current situation requires much greater internal efforts.
  • Adding social justice as a priority in the reform package. Although a central talking point in official discourse, it is either totally missing from the new strategy or implemented in ways that are not relevant to the new social structure of the island. Cuba needs a debate about modern social policies to address its multidimensional inequalities.

So far, the big winners in this new scenario are the private sector and cooperatives as well as people who have access to U.S. dollars. But the entrepreneurs face obstacles, such as the requirement that they use government-controlled enterprises in all foreign trade. The idea that the state intends to create its own micro, small, and medium enterprises also detracts from the reform message.

  • Expanded dollarization will further segment the productive sectors, but this time it probably will allow producers to purchase capital goods – an essential step in any process of stimulating production over the long term. The potential impact will be greater if combined with the promised, but often delayed, move toward a sustainable monetary and exchange scheme. The big question remains, however, if the government is serious about making it happen this time.

August 17, 2020

*Ricardo Torres is a Professor at the Centro de Estudios de la Economía Cubana at the University of Havana and a former CLALS Research Fellow.

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Policy Options for Cuba’s Development: Preparing for the Post-Embargo Era

Posted on May 31, 2013 by Arch Ritter

Below are hyperlinks to presentations at a conference in Havana in April 25-26 on policy possibilities for the Cuban economy and potential insights from the experiences of other countries including Sweden, Brazil, Vietnam and China. The original links are at the web site of NUPI, the , here: Policy Options for Cuba.

Policy Options for Cuba’s Development: Preparing for the Post-Embargo Era

This project aims at supporting the work of Cuban economists and social scientists – those living in Cuba and abroad – who have argued for substantial economic reform and new socio-development strategies.

Deltakere

Fulvio Castellacci1
Morten Skumsrud Andersen2
Vegard Bye3
4

Claes Brundenius, Professor, Lund University

The final conference of phase 2 of this project took place in Havana on April 25th and 26th 2013. All presentations from this conference can be downloaded below.

Presentations:

Conference programme5

1. Welcome Remarks (eng) – Castellacci6

2. The updating of the Cuban Economic Model (spa) – Pérez Villanueva7

3. Economic Development in Cuba (eng) – Torres Pérez8

4. Reforms in Cuba in light of experiences from China and Vietnam (spa) – De Miranda Parrondo9

5. Entrepreneurship, Innovation and SMEs: Can the Cuban Reform Process Learn from Vietnam? (eng) – Brundenius10

6. Innovation and Entrepreneurship: The Case of University Start Up Companies in China (eng) – Li11

7. Innovation, Absorptive Capacity and Growth Heterogeneity: Cuba in a Latin American Perspective (1970–2010) (eng) – Castellacci and Natera12

8. Institutions and innovation in the process of economic change (eng) – Alonso13

9. Challenges for an Efficient Cuban Economy in Times of Increasing Heterogeneity and Uncertainties (eng) – Fernández Estrada14

10. Towards a new taxation in Cuba (spa) – Pons Pérez15

11. The key to inclusive economic groth in Cuba (spa) – Sagebien16

12. The politics of Science, Technology and Innovation in Cuba (spa) – Núñez Jover17

13. Main problems for innovation in Cuban enterprises18

14. Innovation and Entrepreneurship: Challenges for Local Development in the university centers of Santiago de Cuba (eng) – Sayous and Soler19

15. Structural change in Brazil – A Latin American Experience (spa) – Vasconcelos20

16. The Swedish Innovation System: The Role of Government and its Support to SMEs (eng) – Schwaag Serger21

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Ricardo Torres: “Cuba Needs to Be Bold and Creative”

Posted on October 11, 2012 by Arch Ritter

Patricia Grogg’s interview with Ricardo Torres.  The original article, from IPS, the Inter Press Service news agency,  is located here:  “Cuba Needs to Be Bold and Creative”

HAVANA, Oct 11 2012 (IPS) – Cuba has been steeped in a profound economic crisis over the last 20 years, and no short-term solution to the accumulated problems can be expected, says Cuban professor and researcher Ricardo Torres.

Whoever expects overnight success from the “Economic and Social Policy Guidelines” of the country’s ruling Communist Party, the document that serves as a virtual road map for the reformsthat are being implemented by President Raúl Castro, “knows nothing about the social sciences, and is sending the wrong message,” Torres says in this interview with IPS.

Prof. Ricardo Torres, Centro de Estudios sobre la Economia Cubana

Q: Is the pace of reform slow solely due to a government decision, or is it also because of other internal and external factors?

A: I do not totally agree with the opinion that the pace of change is slow. It depends on how you look at the process.

If we understand that everything stemming from the Party “Guidelines” is a process of social change, then we have to remember that the guidelines are less than two years old, which is not a long time in these cases.

If we are judging from the standpoint of the needs and aspirations of the great majority of Cubans, I would even say of the government, then yes, it might be slow. There are elements of the internal process that are delaying the changes enormously, and the first of these is inexperience in dealing with unprecedented changes.

Q: What internal factors are hindering these changes?

A: This is something that has been referred to many times, but it doesn’t hurt to mention it again. People’s minds are the hardest thing to change, and if they have done something a certain way for 50 years, it is not easy for them to agree to do it differently in a short amount of time. In fact, in some cases, that learning process will be impossible.

There is also the question of interests. The changes are affecting certain groups and segments of the population, which, therefore, are going to oppose them, using whatever resources they have within their reach to prevent or at least hinder their progress. It is a natural reaction by people to protect themselves against whatever may affect them.

Q: Is the external context also a factor? How?

A: From an international standpoint, there are many aspects that are holding back change in Cuba. The first is U.S. foreign policy, which is not helping the Cuban people, because it is based on the false assumption that the only good and positive thing for this country is regime change as they (the U.S. authorities) understand it.

That is an assumption that is valid for Washington but not for the lives of the Cuban people. This country needs to change everything that should change, but it will do so to serve its own interest and to benefit society, not because a foreign government thinks it is important for us to do this or that.

The way that U.S. policy is currently designed, it does nothing to favour this process of transformations that the island is going through, and it is creating resistance among certain groups in the government and in the population. Moreover, it is hindering economic and social development, because it puts Cuba at a disadvantage for competing in the international market.

A: I’m an economist, not a politician, and what I can say responsibly is that the U.S. blockade is having an adverse effect on Cuba’s economy and society, which is impossible to ignore.

Every year, it is costing the Cuban people money and quality of life.

What we cannot say is that all of Cuba’s problems are because of the U.S. blockade. And the blockade is not responsible for all of the bad decisions that we have made in the last 50 years in certain areas.

Q: The situation is difficult for the Cuban population. Many say they are pessimistic, and don’t see the light at the end of the tunnel. How can a consensus be maintained under these types of circumstances?

A: I see a way out, and this is a very personal opinion. For us, the key is to be bold and creative. It could be the case that we see ourselves locked into a vicious circle that requires an unexpected, radical decision, which may seem to break the consensus. If it is in the country’s long-term interest, it will have to be done and explained.

I am thinking about our relationship with the United States, our attitude toward private enterprise, effective and real decentralisation of decision-making, and the way that national or international economic relations are sometimes coordinated or governed in general. All of this requires a major change in mentality.

Q: Do you think that Cuba has the conditions needed for development?

A: Yes, of course, for growing and developing. What is needed is strategy, a vision for the future, and a break with many dogmas that are ever-present in most cases.

Q: Would you say political will exists for that?

A: Yes, I think it does, and there is also the legitimate aspiration of the entire Cuban people. Proof of that political will is that we are seeing a new, more pragmatic vision today, one that is more in keeping with reality and more flexible in decision-making and that takes the island’s real conditions more into account.

In addition, academia is playing a more important role in decision-making. I think this is a felicitous initiative of this process of change. Of course, we are not always satisfied with the level of participation that we have, and we want more.

Given that we devote ourselves full-time to investigating certain issues that are important to Cuba, we want that knowledge to be used, because in the end, our interest as economists — as I see it, the majority of us — is for our country to progress and for all of its inhabitants to have more comfortable, fuller lives.

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