Author Archives: Vidal Alejandro Pavel


Pavel Vidal Professor, Pontificia Universidad Javeriana Cali

CUBA STUDY GROUP, February 2018

Complete Article, English:  Pavel_Is Cuba’s Economy Ready English

Complete Article, Spanish:  Pavel En qué condicion llega la economia cubana a la transicion generacional


Cuba has changed considerably in these last ten years of economic reforms, though not enough. Family income, tourist services, food production, restaurants, and transportation depend less on the state and much more on private initiative. The real estate market, sales of diverse consumer goods and services, and the supply of inputs for the private sector have all expanded, in formal and informal markets. Foreign investment stands out as a fundamental factor in Cuba’s development. The country has achieved important advances in the renegotiation of its external debts.

Nevertheless, many other announced changes were defeated by internal resistance, half-heartedly implemented, or put in place in ways that replicated mistakes of the past. The bureaucratic and inefficient state enterprise sector, tied down by low salaries and a strict central plan, impedes economic progress. Cuba’s advantages in education and human capital continue to be underexploited. Neither has the international environment provided much help. The U.S. trade embargo remains in place, the Trump administration has returned to the old and failed rhetoric of past U.S. policies, and Cuba continues to depend on a Venezuelan economy that does not yet seem to have hit rock bottom.

As a consequence, the growth of GDP and productivity has been disappointing, agricultural reform has produced few positive results, and Cuba is once again drowning in a financial crisis. The reforms implemented to date did not create sufficient quality jobs, and, all told, half a million formal positions were eliminated from the labor market.

The second half of 2017 proved especially challenging due to the impacts of Hurricane Irma and new restrictive measures announced by the U.S. government. To these difficulties one must add the decision of the Cuban government to freeze (temporarily) the issuance of licenses to the private sector.

Even so, the National Office of Statistics and Information (ONEI) reported that the economy has not fallen into recession. There are reasons to doubt these statistics, however. Such doubts only multiply when we take into consideration the decision to delay, or altogether avoid, the publication of reports on individual sectors of the economy and the state of the national accounts. For 2018, the government has proposed a rather optimistic economic growth plan (2% increase in GDP) that once again does not appear to appropriately evaluate the complexity of Cuba’s macro-financial environment.

Three highly significant events are anticipated this year: the generational transition within the government, new norms for the private sector, and the beginning of the currency reform process. These three issues have raised expectations on the island, but each may be tackled in a disappointing fashion.



Two Other Changes that Could Disappoint A generational transition in the Cuban government will take place on April 19, 2018. Beyond indications that Miguel Díaz-Canel will be the future president, there are no signals as to who will be vice president or who will direct principal ministries such as the Ministry of the Economy or the Ministry of Foreign Relations. Nor do we know where politicians of the “historic generation” will end up.

The new government will want to demonstrate continuity with the former in order to assure its position with various spheres of political power. It appears that the new government will not have its own economic agenda. We can expect that documents approved by recent Congresses of the Cuban Communist Party—which define the limits of reform, the desired development strategy, and the social and economic model to which Cuba aspires—will continue to serve as economic policy guides.

Whatever the composition of the incoming government, in the short term, Cuba’s new leaders will need to convince other state actors that they have the authority and will to, first, achieve the objectives laid out in the “Guidelines for Economic and Social Policy” (Lineamientos), and then deepen the process of reform, overcoming internal forces resistant to change. The new government will thus have to carefully assess the political costs and benefits of implementing reforms to different degrees and at varying speeds, but it will start with low initial political capital due to less popular recognition and a lack of historic legitimacy. Cuba’s new leaders, moreover, must confront these challenges at a time of renewed conflict with the U.S. government. The task is by no means easy, and we will have to wait to see how they handle it.

Another change we can expect this year is the publication of new rules governing the operations of the private sector, and thus unfreezing the issuance of licenses. A greater degree of control over tax payments, as well as efforts to more strongly “bank” the sector, appear to be two basic objectives of the forthcoming rules.

It is very important that the private sector contribute to the Treasury in proportion to its earnings. This is impossible to guarantee if private sector operations are not registered in banks. An effective and progressive tax system provides net dividends to all. The state budget would benefit, exorbitant gaps in income distribution could be avoided, and the societal image of the private sector would be improved. It will be much easier to defeat political and ideological resistance to expansion of the private sector when its income also serves to finance expenses in education and healthcare, and when individual contributions are in line with variable levels of income.

We still do not know if the new rules for the private sector will focus only on fiscal and banking control, or if new policies will address some of the many complaints that the private sector itself has made—high tax rates, the struggle to obtain inputs, and the difficulty of linking operations to foreign trade, for example. A draft of the rules that has circulated does not contain answers to these problems, but rather suggests a focus primarily on more control and penalization.6 If the rules that are ultimately implemented do not differ much from what appears in this draft, depleted prospects for the private sector will be the first disappointment Cubans face in 2018.

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Cuba Standard Economic Trend Index 2017 Q1

Pavel Vidal Alejandro, Chief Economist; Johannes Werner, Editor

The updated Cuba Standard Economic Trend Index (CSETI) through March 2017 continues to show a negative trend, which suggests a continued worsening of balance-of-payment problems in the Cuban economy.

News surfaced that confirm the government’s intentions about accelerating the opening towards foreign direct investment. Five new projects were approved for the Mariel Zone. The Food Industry and the Tourism Ministry announced upcoming projects with foreign investors. But the reform is still frozen. The government seems to have no new ideas about how to boost agriculture. Consensus seems to be moving towards a very critical assessment of the reforms. The modus “without haste, but without pause” didn’t really work.

Two favorable news in financial terms during the first quarter have been the beginning of operations of a fund equivalent to $300 million to back up the operations of Spanish enterprises in Cuba, and a similar one by Russia. The official announcement by the Central American Bank for Economic Integration (CABEI) to welcome Cuba as a member can also be considered good news. It has symbolical value because it shows the willingness of the Cuban government to join international multilateral financial institutions.

The Cuban financial crisis will continue in 2017, although it is not expected to worsen, given the perspective of higher international prices for oil and Cuban exports, sustained tourism growth, and the increase in foreign investment.

The Cuban authorities have yet to publish national account data for 2016, and there is not a single piece of official information available about the economic situation in 2017. Based on data we can estimate and the results of the two indexes we calculate, we still forecast GDP growth for 2017 within a range between -1.4% and -0.3%. We continue to perceive the net balance as pointing towards recession

Given the recession forecasts for the Venezuelan economy in 2017, a general and significant recovery of trade between the two countries is improbable. Revenues from medical services and oil shipments from Venezuela will continue under great strain, although there could be some moderate increase of both flows in nominal terms.

The final result of the Cuban GDP in 2017 depends in great measure on what happens with the oil price. Even without being an oil country, the Cuba economy has become vulnerable to changes in the international oil price, due to its close relations and special agreements with Venezuela. The oil price drop has led to a drop in medical of professional service exports to Venezuela, because of an indexation mechanism between the latter and the crude oil price. The correlation between total medical and professional service exports (to Venezuela and other countries) and the international oil price is 66% in the 2005-2016 period.

Source: Cuba Standard Economic Trend Report

 The CSETI allows the anticipation of Cuban GDP growth statistics. In total, the index counts with 28 variables taken on a monthly base from January 1998 to the present. It includes information on real exports and imports of the 10 leading trade partners, it retrieves data on nickel, sugar, oil and food prices, and it approximates real external financial flows, as well as the dependency on Venezuela. The Kalman Filter econometric technique used in the index allows estimating a common component of the evolution of the 28 variables. This signal contained in the combination of the 28 variables draws together the state of the economy every month. Values above (below) zero indicate favorable (unfavorable) conditions in balance of payments for GDP growth.


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Por Pável Vidal,  economista cubano y profesor de la Universidad Javeriana en Cali, en Colombia
IPS Inter Press Service, 6 de enero de 2017

CALI, Colombia, 30 dic 2016 (IPS) – Los datos macroeconómicos de cierre del año proporcionados por el gobierno cubano confirman las proyecciones de que Cuba entraría en una recesión como resultado del shock venezolano.

La producción de bienes y servicios en 2016 cayó  0,9 por ciento. Esta es la primera recesión económica desde el año 1993, en que el producto interno bruto (PIB) se hundió  15 por ciento tras la desaparición de la Unión Soviética.

Desde finales de 2014, tras la dramática caída del precio del petróleo y la consecuente crisis de la economía venezolana, la recesión cubana era altamente probable, si además sumamos una respuesta de la política económica cubana insuficiente ante la magnitud del shock que se avecinaba.

Las relaciones con Venezuela están formadas bajo acuerdos muy singulares entre ambos gobiernos, con precios y facilidades financieras que se alejan de las prácticas más habituales en el comercio internacional.

Por tanto, no se trata simplemente de buscar nuevos mercados para el comercio que ya no se puede realizar con Venezuela, sino que hay que hacerlo de una manera diferente e impulsando nuevos sectores económicos, dado que parece bastante improbable alguien más reciba los médicos cubanos y nos venda petróleo bajo las mismas condiciones.

Por eso era tan importante comenzar cuanto antes la diversificación de las relaciones internacionales y la liberalización de las capacidades internas en búsqueda de un incremento de la productividad y mayor eficiencia en la producción nacional. La atracción a gran escala de inversión extranjera, la devaluación de la tasa de cambio oficial y la convergencia monetaria, una reforma más profunda de la empresa estatal y la ampliación de los espacios al sector privado y las cooperativas, eran algunos de los pasos que parecían factibles y coherentes con las reformas ya iniciadas.

¿Por qué no se dieron algunos o todos estos pasos? Pueden esgrimirse múltiples explicaciones.

Porque no hay claridad o convencimiento de hacia dónde dirigir el modelo económico cubano. Porque las fuerzas de resistencia a los cambios han ganado por ahora la partida. Porque las necesidades de tantos cambios sobrepasan la capacidad institucional y técnica para administrarlos todos al mismo tiempo. Porque el embargo estadounidense sigue impidiendo la llegada de inversionistas extranjeros institucionales. Porque de verdad se cree que una reforma muy lenta y haciendo experimentos es la única vía efectiva. Y seguramente se podrían añadir algunas otras explicaciones.

Por la razón que sea, el resultado final es que las reformas han perdido velocidad en vez de apresurarse, y transcurridos 10 años, no hay resultados muy alentadores cuando se examina la productividad, el salario medio o un sector específico como la agricultura.

Los anuncios de nuevas transformaciones son cada vez más dilatados. Cuba parece vivir en una dimensión del tiempo diferente, es como si un año de Cuba equivale a un mes en el resto del planeta.

Sin embargo, el espacio en el que opera la economía no está aislado, compite con otros destinos para los capitales internacionales, se rezaga tecnológicamente, pierde peso relativo en la región, y sufre los ciclos de los mercados internacionales y las crisis de sus principales aliados económicos.

Las perspectivas para 2017 y el rol de los bonos públicos

Para el año 2017 el gobierno planifica una mejoría en la situación de la economía, algo que es contrario a las proyecciones que habíamos efectuados.  El gobierno planifica un aumento de dos por ciento del PIB.

Este aumento del PIB para 2017 está sustentado en dos factores esenciales. Uno, la esperanza que mejore la situación de la economía venezolana tras los últimos aumentos del precio del barril de petróleo; y dos, el gobierno cubano pone en práctica una política fiscal expansiva anticíclica.

En su discurso en la Asamblea Nacional el 27 de diciembre,  el ministro de Economía y Planificación, Ricardo Cabrisas, plantea que: “Las proyecciones de los portadores energéticos para el venidero año permiten respaldar niveles similares a los del 2016…”

Muy probablemente esta perspectiva tiene como punto de partida el incremento que ha presentado el precio del barril de petróleo durante los últimos tres trimestres y algunas proyecciones internacionales que lo sitúan en mayores niveles para el año 2017, lo cual favorece el desempeño de la economía venezolana y abre la posibilidad de que se estabilizarán los envíos de petróleos a la isla y los pagos de los servicios médicos cubanos.

Por otra parte, se proyecta un incremento del gasto público y del déficit fiscal para respaldar el aumento del PIB. Se proyecta un aumento de 11 por ciento en los gastos fiscales, pero que no podrá ser cubierto por los ingresos fiscales, por lo que generará un “hueco fiscal” de 11.500 millones de pesos en el año 2017, lo que representa un valor equivalente a 12 por ciento del PIB.

En términos porcentuales es el déficit fiscal más alto desde 1993; en valores más que duplica el déficit del año 1993 que fue de 5.000 millones de pesos.

Es propicio que después de años de austeridad fiscal el gobierno decida expandir el gasto público para amortiguar el efecto recesivo de la crisis venezolana. Es válido aplicar una política fiscal expansiva en momentos de caída del PIB.

También es atinado financiar el déficit fiscal con emisión de bonos públicos, lo cuales comprarán los bancos estatales cubanos. Este es un nuevo instrumento que desde hace dos años viene estrenando el Ministerio de Finanzas y Precios con vistas a evitar la monetización (impresión de nuevo dinero) como mecanismo de financiación del déficit fiscal.

Tal mecanismo de financiación fiscal tiende a acercarse a las prácticas internacionales, y tiene como principal ventaja que evita un incremento de la cantidad primaria de dinero, con lo cual reduce las presiones inflacionarias.

¿Dónde están los riesgos de la política fiscal expansiva y la emisión de bonos?

Primero, el déficit fiscal puede crecer en épocas de crisis, pero no debe hacerlo de manera desmesurada ni mantenerse alto indefinidamente. Está bien aplicar una política fiscal anticíclica, pero tener un hueco fiscal de 12 por ciento del PIB en 2017 trae dudas sobre la sostenibilidad financiera de todo el mecanismo de financiación que se está poniendo en práctica. Para tener un punto de comparación, se espera que los países conserven, en promedio de varios años, un déficit fiscal menor de tres por ciento del PIB.

Se debe tomar en cuenta que los propios inversionistas extranjeros, prestamistas y proveedores internacionales, serán los primeros que estarán mirando este indicador de equilibrio fiscal. A nivel internacional este es uno de los principales indicadores que se toman en cuenta para evaluar la prudencia de la política económica y que define el riesgo financiero del país.

Segundo, la emisión de bonos públicos reduce los efectos inflacionarios pero no los elimina del todo. Expandir el gasto fiscal en 11.500 millones de pesos por encima de los ingresos sí puede presionar al aumento de los precios dada la ampliación desproporcionada que está activando en la demanda de bienes y servicios.

Tercero, Cuba no cuenta con una regla fiscal que organice y ponga límites al equilibrio fiscal de largo plazo (como tienen otros países en la región), sino que depende de la discrecionalidad del gobierno cada año. Es decir, no sabemos qué va a suceder con los déficits fiscales en el futuro. No tenemos seguridad de que los bonos que se están emitiendo y los próximos que se emitirán serán manejados adecuadamente con el fin de garantizar la sostenibilidad de todo el mecanismo.

Se debe tomar en cuenta que los bancos están empleando los ahorros de las familias para comprar los bonos públicos, por tanto, el gobierno tiene la responsabilidad de obtener ingresos fiscales futuros y equilibrar las cuentas públicas para cumplir sus compromisos con los bancos y, en última instancia, con los ahorradores.

Para tener una idea de la magnitud del déficit y de la emisión resultante de bonos públicos, observemos que en el año 2015 el ahorro de las familias en los bancos sumaba 23.680 millones de pesos cubanos.

Por ende, el déficit fiscal presupuestado para el año 2017 equivale a 48 por ciento del valor de las cuentas de ahorros de las familias. Los bancos, ciertamente tienen también depósitos de las empresas y su propio capital. Aun así, esta proporción de 48 por ciento llama la atención sobre el poco espacio de financiación que a futuro tendría el MFP para soportar elevados déficits fiscales.

En resumen, el crecimiento proyectado de dos por ciento para el año 2017 en la economía cubana depende de una situación que sigue siendo incierta para la economía venezolana, a pesar del aumento del precio del petróleo. Además, viene acompañado de una política fiscal expansiva que de ser bien empleada puede ayudar a manejar la crisis, pero en caso contrario, tendría consecuencias desastrosas para la estabilidad monetaria y financiera del país.

La activación de una política fiscal anticíclica y la emisión de bonos públicos es acertada, pero parece exagerado un déficit fiscal que equivale a 12 por ciento del PIB y a 48 por ciento del ahorro de las familias en los bancos.

No habría posibilidades de repetir la expansión fiscal en el año 2018, más bien será indispensable realizar un ajuste fiscal que disminuya significativamente el déficit en los próximos años.

Por tanto, el gobierno solo está ganando un año de tiempo, en el cual deberá aplicar algunas de las reformas estructurales pendientes y necesarias para sacar en firme a la economía de la recesión.

Pavel Vidal

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Pavel Vidal Alejandro

 Journal of Economic Policy Reform, 2015  

Original Essay here:  Vidal Cuba’s reform and economic growth


Cuban reform process lags behind the GDP growth reached by the Vietnamese. When comparing the evolution of the different sectors and demand components of GDP, Vietnam has had higher growth rates in all cases, highlighting exports first and investment second. Once the Balance of Payments Constrained Growth model has been estimated, the significant effect of the foreign exchange constraints on growth for both countries is confirmed. However, the Vietnam growth can be explained not only by its export success. International openness, which included the end of the US embargo, and institutional factors also explains the differential of results.


Pavel Vidal

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Pavel Vidal, Chief Economist and Johannes Werner, Editor

Original here: Economic Report 2015


•The year 2015 has begun with hopes for economic improvement, based on the speeches by Presidents Barack Obama and Raúl Castro on Dec. 17. Given the new tone in bilateral relations and the measures announced by the U.S. government, favorable impacts are expected on tourism, on the private sector, and on the overall functioning of the Cuban economy. We estimate that the way in which Cuba’s GDP growth will be most favored by the new measures is through investment. The new optimism awakened among businesspeople could propel foreign investment on the island.

•In this first quarter of 2015, we are presenting the Cuba Standard Business Confidence Survey, the first poll of this kind used in Cuba. Half of respondents (50.5%) said that their company has increased its intentions to invest in Cuba. Sixty-one percent of respondents believe that economic conditions on the island will improve in the coming 12 months.

•Survey takers were asked to mark the five biggest obstacles to developing and expanding their business in Cuba. The three factors that were selected by most respondents were government bureaucracy (62.2%), excess of regulations (49.5%), and guarantees and legal procedures (43.4%). None of the three factors refers to clear economic problems, but rather to the quality of institutions in the Cuban system.

•Despite the opening of new opportunities in global markets, we foresee slow reaction speed by the Cuban authorities to the new scenarios and institutional weaknesses that will delay Cuba’s international insertion.

•The Cuban authorities have made evident their optimism regarding the macro economy and the main sectors in their perspectives for 2015. The government is planning an acceleration of GDP growth from 1.3% in 2014 to 4% in 2015. Again, the GDP growth plan is based on a “spectacular” acceleration of investments; this year, the government expects an expansion of investments by 27%.

•We also predict an acceleration of GDP growth in 2015, albeit somewhat less optimistic than the government. Our forecast of 3.4% is based mainly on the possible rebound of investments (even if they don’t match the plan), improved access to external financing (thanks to foreign debt renegotiation agreements the government is pursuing), and the benefits of a relaxation of import and fiscal spending controls

•The Cuba Standard Economic Trend Index (CSETI) indicates that the favorable effects of the new international scenario have not impacted yet the Cuban economy. The February 2015 estimate is -0.14, which suggests that balance-of-payment conditions continue to be unfavorable for GDP growth. Even so, they are less negative that those of the first half of 2014.



Executive Summary

I. Structural and institutional reforms

Entering the eighth year of Raúl Castro’s reforms

Cuba Standard Business Confidence Survey

“Rational optimism” towards the Obama administration’s new policy

New procedures for investments

II. Real sector

Official projections for 2015

Business climate and balance-of-payment conditions in the first quarter of 2015

Uncertainty about future GDP growth

III. Economic policies

Monetary reform continues to be delayed, and new ‘noises’ are heard

Salary expansion and doubts about inflation data

IV. Key macroeconomic indicators

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The Right Step for Improving the Lives of Cuba’s Citizens;   Un paso importante para mejorar la vida de los ciudadanos de Cuba

By Pavel Vidal and Scott Brown;      for The Atlantic Council

English Version Here: Pavel Vidal & Scott BrownCuba_ and the IFIs, English.

Spanish Version Here: Pavel Vidal & Scott Brown, Cuba and the IFIs, Spanish


3    Executive Summary

5    Reforms Are Here… and More Are Coming

6    Why Join the IFIs?

An Economy with Promise but Needing Help

How the IFIs Can Assist

A Helping Hand in Tackling Pending Reforms

Challenges for the Cuban Government

How Can Cuba Gain Membership?

11    Global Experiences

Albania’s Entry into the Global Financial System

Sidebar: The Vietnamese Experience

16 Why Should the United States Support Cuba’s Reintegration?

What Is the Best Way to Help the Cuban People?

18    Recommendations for Cuba, the United States, and the International Financial Institutions

20    Endnotes

21    About the Authors


The new US policy toward Cuba comes at a critical moment, with its impact reaching far beyond the Florida Straits. Since President Obama’s historic announcement in December 2014, Havana has welcomed the Presidents of France and Turkey, the Foreign Ministers of Japan and the Netherlands, the Director of Diplomacy for the European Union, the Governor of New York, and a host of other policymakers and entrepreneurs from the United States. Pope Francis is scheduled to visit in September.

Engagement will be critical to buttressing the government’s appetite for reform. After twenty-five years of post-Soviet adjustment and patchy results from limited reforms, a consensus exists that the economic system and old institutions require a fundamental overhaul. The Cuban gov­ernment is cognizant of the imperative to allow the “nonstate,” or private sector, to grow. It is the only way to slim down the public sector without massive unemployment.

Now that Cuba has caught the eye of foreign investors and the international community, it is a good time to reignite discussion on Cuba’s reinte­gration into the global economy. As with so many other countries before, the critical first step will be to regain access to the international financial institutions (IFIs), with a particular focus on the International Monetary Fund (IMF), the World Bank, and the Inter-American Development Bank (IDB).

Accession would serve the interests of Cuba and its citizens, the United States, and the inter­national community. In Cuba, the process of economic reform is at a pivotal moment, and more progress is needed to lift the economy on to a new growth trajectory before President Raúl Castro is to step down in 2018. Accession will require adjustments: improving data and transparency, aggressively working to unify the two currencies, and shifting official attitudes. But in the context of the new relationship with the United States, these should not be difficult.

The experiences of other former communist countries can provide lessons for Cuba. Albania, which joined the IMF in October 1991, has some interesting parallels. Albania’s first loan from the Fund, under a stand-by arrangement, was approved in August 1992, and its reengagement with the global financial system and policy reforms produced significant improvements in the standard of living. Vietnam offers another posi­tive example, with access to IFI support coming after a period of initial reform. In both countries everything from GDP to life expectancy improved. These universal benefits are compelling factors for Cuba.

For the international community, Cuba’s accession is long overdue. Still, in the United States, agreement to Cuban accession could face objections. However, those objections rest on discredited assumptions that sanctions can bring political change and that international support will help only the government and not the people of Cuba. US backing of Cuban membership in the IFIs would be consistent with the new policy of helping to support economic reform. This is a unique opportunity to stimulate further transfor­mations in Cuba.

Three possible approaches exist for Cuba to join the IFIs. The first would involve a gradual process of confidence-building between the IFIs and the Cuban authorities, with no initial commitment or date for membership. The second would be a more direct and immediate path, beginning with a Cuban decision to apply for membership. The third would be for President Obama to take the initiative by making a public statement of sup­port for Cuba’s accession to the IFIs, claiming his constitutional prerogative to define the direction of US foreign policy—much like the leadership by President George H. W. Bush in advocating for Russian engagement and membership in the IMF in 1991-1992.

This report argues that a series of steps can be taken now—by Cuba, the United States, and the international community—to pave the way for Cuba to be welcomed back as a full and active member of the international financial institutions.



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Mauricio A. Font y Mario González-Corzo, Editores, Con la asistencia de Rosalina López

New York: Bildner Center for Western Hemisphere Studies, The Graduate Center, The City University of New York, 2015

Documento Completo: Reformando el Modelo Economico Cubano

 New Picture (12)


Introducción, Mario González-Corzo

Del ajuste externo a una nueva concepción del socialism Cubano, Juan Triana Cordoví

La estructura de las exportaciones de bienes en Cuba 29, Ricardo Torres

Relanzamiento del cuentapropismo en medio del ajuste structural, Pavel Vidal Alejandro y Omar Everleny Pérez Villanueva

Las cooperativas en Cuba, Camila Piñeiro Harnecker

La apertura a las microfinanzas en Cuba, Pavel Vidal Alejandro

Hacia una nueva fiscalidad en Cuba, Saira Pons


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Book Review: ¿Quo vadis, Cuba? La incierta senda de las reformas


By Archibald Ritter

¿Quo vadis, Cuba? La incierta senda de las reformas . Edited by Pavel Vidal and José Antonio Alonso.  Notre Dame, IN: University of Notre Dame Press, 2011. Pp. xvii + 453. $48.00 paper. ISBN: 9780268029830.

Quo Vadis, Cuba? edited by Pavel Vidal and Jose Antonio Alonso, is a co-production of the Center for the Study of the Cuban Economy of the Universidad de la Habana (CEEC), and the Institute for International Studies at the Complutense University of Madrid  (Instituto Complutense de Estudios Internacionales of the Universidad Complutense de Madrid).[1] The project was financed by the Spanish Agency for International Cooperation.  

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The volume does not attempt to make a comprehensive overview analysis of the functioning of the economy or a complete set of prescriptions for economic reform. Instead, the objective of the volume is “…to make a modest contribution to the search for useful paths for a “renovated” Cuba,” (Vidal and Antonio Alonso p.24.) and in this it succeeds. The Cuban-Spanish team has produced an outstanding set of analyses of a number of the central economic conundrums facing the Cuban economy.  

The analysts at CEEC have been focusing on Cuba’s economic situation now for some twenty years. They have steadily pushed the envelope, arguing forcefully and courageously from within Cuba regarding the need and possible shapes for reforms. They have also “stayed in the game” – in contrast to the dissident analysts such as Miriam Celaya, Dimas Castellanos and the late Oscar Chepe,  among others who work outside the system. While the CEEC analysts have perhaps had only a limited direct role in decision-making, they have been instrumental in moving the discussion forward and supporting the changing climate of opinion regarding economic institutions and policy.

The first chapter by Juan Triana Cordoví and José Antonio Alfonso, focusing on the foundations of economic growth, begins with some discussion of growth theorizing and possible insights from international experience for Cuba. It then analyzes Cuba’s growth performance, and discusses strategic options. The policy recommendations that it arrives at are fairly standard – namely promoting exports and solving the problem of the dual exchange rate and monetary system.  The third recommendation, which calls for the actualización of policy regarding the promotion of direct foreign investment (to complement domestic savings levels and stimulate technological transfer), is perhaps a bit surprising in view of Cuba’s three decades of policy hostility and then another two decades of policy reticence.[2]  

Ricardo Torres and Isabel Álvarez present a strong analysis of technical innovation, including a quick review of some theorizing, some comparative international experience and an analysis of structural changes in industry, trade and employment and the technological dimension thereof during the Special Period. They attribute the technological lag to low savings and investment levels, weak infrastructure, limited access to technology from abroad, and “the inertia and ‘immovilismo’ of Cuba’s managerial systems…” (Torres and Álvarez p.129.)  Among their policy suggestions are higher levels of savings and investment to permit accelerated incorporation of new technologies and structural change and a broadening of the self-employment sector to permit professional activities that would utilize Cuba’s well-educated labor force more effectively.

This volume also includes outstanding chapters analyzing tax reform and enterprise by Omar Everleny Perez, Saira Pons and Carlos Garcimartin; on Cuba’s social challenges and policy targeting by Anicia Garcia, Susanne Gratius and Luisa Íñiguez Rojas, and a chapter on the decentralization of state programs by Santiago Díaz de Sarralde and Julio César Guanche.             The concluding chapter by the editors entitled “Rules, Incentives and Institutions” outlines the “required institutional transformation” that Cuba needs to undergo, namely “the readjustment of the rules, norms, values and organizations inherited from the past:” The precise form of that readjustment is unstated, but “[t]he framework of economic and social incentives within which Cubans functioned in the past is called upon to transform itself and must be progressively replaced by another that will be coherent with the objectives of the reform” (p. 257).

This challenging chapter discusses the place of institutions in the development process, institutional quality and the process of institutional change in Cuban agriculture, the non-agricultural self-employment and micro-enterprise sector, the cooperative sector, and the direct foreign investment area. It emphasizes the pre-requisites for the functioning of markets (secure property rights, security of contracts, effective competition) and also market failure. It also includes brief analyses of the opposition to current institutional reform (inertia and opposition to change, potential loss of position by vested interests and the social hierarchy, and impacts on income distribution.)  The authors conclude that while reformist gradualism has certain advantages, an activist prioritization of reforms is desirable, such that the first reforms generate clear benefits for broad sectors of the population thereby building support for further reforms. All in all, this book makes valuable contributions to the understanding of the reformist challenges facing Cuba as it resolves some of its most pressing economic problems and moves towards a mixed but more market-oriented economy with major roles for the small enterprise and cooperative sectors.

[1] Six of the seven Cuban authors were from CEEC and five of the Spanish authors are from the Universidad Complutense. The editor on the Cuban side, Pavel Vidal, was at CEEC but is currently at the Pontifica Universidad Javeriana at Cali Colombia.

[2] The authors contrast the highly successful nickel sector, which has had a major role for foreign investment (in the form of Sherritt International) with the autarkic and disastrous sugar sector.

Pavel Vidal.pngAAAPavel Vidal Alejandro

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Proyecciones macroeconómicas de una Cuba sin Venezuela

Pavel Vidal Alejandro

from the  Cuba Study Group, Desde la Isla; original source:  full article

Análisis de Pavel Vidal acerca del impacto a la economía cubana en el supuesto caso de una reducción importante en la cooperación económica con Venezuela.

New PictureDesde inicios de la década pasada la economía cubana ha venido incrementando sistemáticamente sus relaciones con Venezuela. Actualmente el comercio de bienes representa el 40% del intercambio total de la isla, muy por encima del segundo lugar ocupado por China con 12,5%. En este porcentaje pesa sobre todo la importación de petróleo venezolano; en 2011 la factura llegó a US$2.759 millones. La importación del crudo venezolano cubre el 60% de la demanda nacional y además permite la reexportación de una parte del mismo. Solo el 50% del pago de las importaciones de crudo venezolan se efectúa dentro de los primeros 90 días, el restante 50% se acumula en una deuda a pagarse en 25 años con un tipo de interés del 1% anual.

 Continue reading: Vidal,  Cuba sin Venezuela

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La reforma monetaria en Cuba hasta el 2016: entre gradualidad y “big bang”

New Picture (4)

Ensayo original: Monetary Reform Cuba 2016

Dr. Pavel Vidal Alejandro, Universidad Javeriana Cali y Dr. Omar Everleny Pérez Villanueva, Centro de Estudios de la Economía Cubana, Universidad de la Habana

 In La Reforma Monetaria en Cuba Hasta el 2016: Entre Gradualidad y “Big Bang (Monetary Reform in Cuba Until 2016: Between Gradualism and the “Big Bang”), Pavel Vidal Alejandro and Omar Everleny Pérez Villanueva analyze the benefits and costs of the eventual devaluation of the official exchange rate for the Cuban peso, the main measure the Cuban government will employ to achieve the goal of monetary unification in 2016. Possible policy responses and alternatives regarding devaluation of the exchange rate are evaluated. The authors conclude that, as far as is possible, the best strategy for the Cuban currency reform is a gradual devaluation and not the application of a “big bang” approach. However, given the huge gap between the multiple exchange rates, sharp depreciation in the value of the Cuban peso will be required at times.

 Este ensayo fue preparado para ser presentado en una serie de talleres de expertos sobre el cambio económico Cubano visto desde una perspectiva comparativa, organizado por la Iniciativa Latinoamérica en el programa de Políticas del Exterior de la Institución Brookings, y el Centro de Estudios de la Economía Cubana y el Centro de Investigaciones de la Economía Internacional en la Universidad de la Habana. Fue presentado inicialmente en un seminario de expertos en Havana, Cuba el 26 de septiembre del 2013 y fue revisado posteriormente. Los ensayos preparados por esta serie serán recopilados y publicados por Brookings en el 2014. Este ensayo refleja solamente las opiniones de los autores.


Pavel Vidal y Omar Everleny Pérez



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