Tag Archives: Demography

CUBA: ENVEJECIMIENTO DEMOGRÁFICO Y DESARROLLO HUMANO; CUBA: DEMOGRAPHIC AGEING AND HUMAN DEVELOPMENT

Economía y Desarrollo

Econ. y Desarrollo, vol.164 no.2 La Habana Jul.-dic. 2020  Epub 31-Jul-2020

Juan Carlos Albizu-Campos Espiñeira,  Centro de Estudios de la Economía Cubana (CEEC), Universidad de La Habana, Cuba.

Artículo Original: Cuba: envejecimiento demográfico y desarrollo humano

An excellent demographic analysis of Cuba’s aging population and its socio-economic impacts, also using a range of novel graphics to summarize demographic phenomena\ and data.

RESUMEN

El artículo analiza el estado del proceso de envejecimiento demográfico en Cuba y su impacto en la estructura de edades de la población, así como el efecto que ha producido sobre la disponibilidad de recursos laborales el bono demográfico y el bono de género e igualmente aborda las causas que llevaron a la extinción de ese primer bono demográfico. El texto finaliza con una propuesta de política integral de población enfocada hacia el alcance de objetivos explícitos de desarrollo humano.

Palabras clave: bono de género; bono demográfico; envejecimiento demográfico; recursos laborales

ABSTRACT

The article analyses the state of the demographic ageing process in Cuba and its impact on the age structure of the population, as well as the effect it has had on the availability of labour resources the demographic bonus and the gender bonus, and also addresses the causes that led to the extinction of this first demographic bonus. The text ends with a proposal for a comprehensive population policy focused on achieving explicit human development objectives.

Keywords: gender bonus; demographic bonus; demographic ageing; labour resources

INTRODUCCIÓN

La comprensión de la dinámica demográfica cubana actual pasa necesariamente por la explicación de cada uno de sus componentes, en estrecha interrelación con la población y el desarrollo. El debate en torno a la fecundidad y su evolución, a la variabilidad de las migraciones o a la convergencia de perfiles epidemiológicos que inciden sobre los niveles de mortalidad determina hoy posicionamientos también desde la política. Es una excelente oportunidad de diálogo ciencia-política, de forma tal que la primera aporte insumos y recomendaciones al modo en que se trazan e implementan acciones y a su vez a las posibilidades de monitoreo sistemático a los procesos.

El contexto social, económico y político actual abre una oportunidad al binomio ciencia-política en esta y en otras ramas del conocimiento. En el campo de la demografía de lo que se trata es entonces de contribuir a posicionar las características de su dinámica y desde el contexto de lo que expone la política hoy proponer ajustes e inclusiones en su concepción.

Artículo Original: Cuba: envejecimiento demográfico y desarrollo humano

CONCLUSIONES

Lo hasta aquí expuesto muestra que no existe escasez alguna de fuerza de trabajo en el país y que la solución no sería en ningún caso el facilismo de la visión simplista del pronatalismo. Es decisivo que se abandone la percepción de que el desarrollo humano es solo el mejoramiento de la extensión de la esperanza de vida al nacer y de las condiciones educacionales de la población. Es inexorable la adopción de una visión en la que el mejoramiento de las condiciones de vida y de la calidad de la supervivencia ocupen un lugar central, en el que el mejoramiento de los salarios, en particular, y de los ingresos, en general, de la población, ocupen ese lugar central que necesitan entre los objetivos de la política.

En todo caso, y como se muestra en la Tabla 2, el país lograría un puntaje en el índice global de 0,844, algo superior a la cota máxima, 0,823, alcanzada en 2007 cuando se ocupó el puesto 57. Cuba se situaría entonces en el lugar 44 del ranking de países que conforman la franja de muy alto desarrollo humano, junto a Chile, que ocupa hoy ese puesto, Argentina (47), Uruguay (56) y Barbados (58) que son, en la región, los que lo han logrado y se han consolidado en esa franja. Nótese además que lo que se propone es retornar a valores de los índices en las distintas dimensiones de desarrollo humano que fueran conseguidos por nuestro país en el pasado reciente y ahora serían las metas que, en un lapso de 12 años, hacia 2030, se proponen como objetivos de política bajo este enfoque; y para ello el crecimiento económico es imperioso. No más una posibilidad ni un lujo intelectual. Sin los recursos que aporta el crecimiento sostenido de la economía, es poco probable evitar que se siga retrocediendo en materia de desarrollo humano.

Cuando eso suceda, ya se verá que aquello que percibimos hoy como necesidades de la población de Cuba habrá desaparecido en buena medida y habrá sido sustituido a su vez por otras demandas. Pero, eso sí, el envejecimiento demográfico, el decrecimiento del número de habitantes, la fractura ideológica que representa la desvalorización del trabajo (manifestada a través del casi millón y medio de personas con edades entre 15 y 59 años aptas y calificadas que ni siquiera se plantean la búsqueda de un empleo formal y sí la búsqueda de un canal migratorio de salida), el casi un cuarto de la población urbana que tiene ingresos por debajo del valor de la canasta básica (en un contexto en el que el salario medio representa apenas un tercio de la línea de pobreza), así como muchos otros rasgos que hoy causan tanto desasosiego dejarán de ser percibidos como «problemas de población» -que en realidad no son tales- y quién sabe, quizás hasta pueda Cuba convertirse en un espacio de atracción y se detengan los éxodos. Ese es el verdadero reto desde la perspectiva del desarrollo humano. He ahí una verdadera política de población.

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FORO CUBANO: INDICADORES

COMPLETE DOCUMENT: Foro Cubano – Indicadores

Coordinador:  Pavel Vidal Alejandro

 

Foro Cubano – Indicadores

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ASCE (ASSOCIATION FOR THE STUDY OF THE CUBAN ECONOMY), A Selection of Papers from the 2018 Annual Conference

The complete set of papers is here:  ASCE Conference Proceedings for 2018.

A complete set of all the papers from the annual ASCE conferences can be found here:  ASCE Conference Proceedings

Cuba: Los Retos Económicos del Gobierno de Miguel Díaz-Canel Omar Everleny Pérez Villanueva PDF version
Cuba 2018: Entre la Continuidad y la Oportunidad Dagoberto Valdés Hernández PDF version
Cuban Peso Unification: Managed Rate and Monetary Analysis Luis R. Luis PDF version
La Agricultura en Cuba: Transformaciones, Resultados y Retos Armando Nova González PDF version
Principal Elements of Agricultural Reforms in Transition Economies: Implications For Cuba? Mario A. González-Corzo PDF version
Cuba’s Economic Liberalization and The Perils to Security and Legality Vidal Romero PDF version
Growth and Policy-Induced Distortions in The Cuban Economy: an Econometric Approach Ernesto Hernández-Catá PDF version
Comparing The Quality of Education in Pre- and Post-Revolutionary Cuba Using U.S. Labor Market Outcomes Luis Locay and John Devereux PDF version
The Global Economy and Cuba: Stasis and Hard Choices Larry Catá Backer PDF version
Five Keys to Presidential Change in Cuba Arturo López-Levy and Rolf Otto Niederstrasser PDF version
Cuba’s Political and Economic Arteriosclerosis – It Is Not Just The Castros Gary H. Maybarduk PDF version
Cuban Tourism Industry in The Eye of The Storm Emilio Morales PDF version
Experiencias de Cuentapropistas Ted A. Henken PDF version
Cuban Demography and Economic Consequences Humberto Barreto PDF version
     
“The Revenge of The Jealous Bureaucrat”: A Critical Analysis of Cuba’s New Rules For Cuentapropistas Ted A. Henken PDF version

 

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CUBAN DEMOGRAPHY AND ECONOMIC CONSEQUENCES

Humberto Barreto

ASCE Conference Proceedings, 2018

Complete Article: Cuban Demography

INTRODUCTION

Cuba is facing a demographic storm that will stress its economy and society: its large baby boom generation is reaching retirement age and fertility is extremely low. While this is not an original observation (Hollerbach, 1980; Díaz-Briquets, 2015 and 2016), this paper uses single-year age-distribution data to show the seriousness of the situation. Unlike previous work (including that at the Cuban government’s Oficina Nacional de Estadística e Información (ONEI), www.one.cu), which focuses on total population change and other aggregates, this paper presents and analyzes the movement of the entire age-distribution over time. Thus, the data display methods adopted in this paper more dramatically show the demographic challenges facing Cuba.

The economic impact of an aging population is usually presented in terms of resources needed for health care and social services. The old age dependency ratio (the fraction of adults over 65 years old) conveys the idea that society must find a way to pay for care of the elderly. While important, this understates the effect of population aging and misses a mechanism through which it influences the economy. A much more serious challenge for an economy than taking care of the aged revolves around the attitudes and expectations of a society dominated by old people. The old are more pessimistic, conservative, and short-run oriented than the young.

While Keynes (1936, Ch 12:VII) highlighted animal spirits, “a spontaneous urge to action rather than inaction,” as a driver of fluctuations in a market economy, economists have little to say about the effect of expectations on long-run growth. Below are rudimentary thoughts on why a society dominated by the old might languish. The optimism of young people drives their energy and motivation to undertake a whole host of activities, including starting new businesses, trying new products, building new  homes, and moving to new cities. The old, unlike the young, see the end of life and this affects their outlook. For many, the past seems better than the future and they stand pat—personally, socially, and economically.

Risk taking falls as people age and this occurs in every aspect of life. We settle into patterns and stick to what works. In terms of the economy, old people are less likely to buy new products and invest aggressively. They are more concerned with maintaining and conserving what they have than in taking chances with their accumulated wealth.

Young people provide a dynamism to the economy that is fundamental to the success of innovation and technological change. General outlook, attitudes toward risk-taking, and time horizon considerations are all highly correlated and change together as we age. Older people become more negative, careful, and unenthusiastic. These attitudes drag the economy. They have always been there, but they have never been as noticeable and prominent as they are today because of a worldwide revolution in demography.

Countries around the world face aging population distributions that will hamper economic performance. Rich countries, like Japan, are better able to withstand these demographic headwinds. Those that can attract immigrants, like the United States and Germany, can bolster diminishing numbers of younger aged cohorts by welcoming young people from other countries, although this solution  is fraught with challenging political and social effects.

Cuba is in a particularly vulnerable position. Not only are the demographic forces exceptionally strong, but the economy is unusually weak. This paper will focus on the former, examining changes in the population age-distribution since the Revolution and forecasting future outcomes. Even if Cuba somehow manages to reform the economy and incorporate market-based incentives, its population age-distribution presents formidable challenges for an economic take-off. Again, this is not merely an issue of resources devoted to caring for the aged, but requires figuring out how to overcome the stagnation resulting from an economy dominated by old people. Without the energy, optimism, and risk-seeking of the young, the Cuban economy’s long-run future seems bleak.

The next section uses a macro-enabled Excel workbook, PopPyrCuba.xslm, to analyze Cuba’s recent demographic past and current situation. Age-specific fertility and death rates are then used to examine future prospects by iteration.

Continue Reading: Cuban Demography

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CONCLUSION

Although the demographic challenge facing  Cuba and its low fertility have been known for years, the primary contribution of this paper lies in the presentation of the data through the macro-enabled Excel workbook, PopPyrCuba.xlsm, freely available at academic.depauw.edu/~hbarreto/working.  Cuba’s  single-year population pyramid (Figure 1) offers an eyecatching display and, by utilizing simulation to evolve the process, we gain insight into the future prospects facing Cuba. In addition, this paper argues that the implications of an aging population for the economy need to be studied in much more detail.

Discussing teaching and learning at the university level, Marshall (1920, p. 822) said, “The springs of imagination belong to early youth: it is the greatest of all faculties; and in its full development it makes the great soldier, the great artist, the student who extends the boundaries of science, and the great business man.” Indeed, imagination, creativity, and discovery drive technological change and modern economic growth relies on waves of imaginative young people creating wonderful new ways to heal, entertain, and connect us.

It is no coincidence that, during the explosion of development enjoyed by the rich countries of the world in the last two centuries, population and educational attainment have been rising. There has been a constant stream of more educated young people replacing and revitalizing society, sending income per person ever higher. The innovation and technological progress that drives the engine of economic growth is itself dependent on imagination—the springs of which belong to the young. Creativity is less likely to be found in the old because their experiences discourage them from trying all possible solutions to a problem.

Furthermore, parents are willing to undertake heroic and expensive efforts on behalf of their children. Parents deny themselves present consumption to provide a better future for their children. Economies without this kind of forward-looking orientation will invest less and grow more slowly.

Over the next decades, we will get data on how economies function in the presence of smaller cohorts of young people. Japan is a leader in this unfortunate race (see the Japan sheet in PopPyrCuba.xlsm) and the early returns are not promising. Their economy has not fared well after decades of superb post-WWII growth and no standard policy has managed to shake it out of its doldrums. Luckily, Japan is a rich, developed country. Cuba is not and it is facing the same demographic headwinds as Japan.

There do not seem to be any practical policy levers to pull. Mortality is essentially exogenous. We can safely expect small, continued improvement in health and longevity in countries all around the world. Fertility is the key variable here, but we do not understand it well (long-run prediction has been dismal), but there is no reason to expect a Cuban fertility boom. Many countries have tax credits, baby bonuses, parental leaves, and other supports, but these are small relative to the total cost of raising a child and even if they were effective, the Cuban government does not have the resources for ambitious programs to increase fertility. Immigration (the solution, however unwittingly, adopted by the United States) seems highly unlikely to help Cuba withstand the coming demographic storm. Any easing of barriers to movement on the part of Cuba or other countries (especially the United States), would seem to exacerbate   Cuba’s   demographic   challenge   since   more young adults are likely to leave Cuba than enter.

Viewing the number of children as a choice variable that responds to incentives leads to the realization that family planning is an outstanding example of an externality—a cost or benefit not taken into account by the decision-maker. The usual examples in economics involve pollution and education—the former a negative and the latter a positive externality. Standard economic theory says that because negative externalities result in too much of a good or service, we should tax them; but we subsidize positive externalities because they lead too few resources allocated in a given area. The optimal tax or subsidy would close the gap between private and social costs and benefits. This framework was developed by Pigou (1920). He supported taxing sellers of alcoholic drinks, zoning laws, and other government interventions as necessary measures to correct what would come to be known as market failures—misallocation of resources in the presence of a market imperfection such as monopoly or externalities. 1

Since parents do not capture the societal benefits of children,  which  are  a  function  of  the  population’s age-distribution, they do not include these benefits in deciding how many children to have. Countries with inverted population pyramids are in a situation in which too few children are being produced and there is no effective way to signal the need for an increased quantity to individual decision-makers. The externality, in which the full benefit (to society) of having a child cannot be captured by its parents, prevents the system from self-correcting.

Absent a sea change in attitudes toward children, a reduction in the economic penalties  women  must pay to have children, or a technological revolution in how we produce human beings, we should expect that relatively low fertility rates will persist in Cuba and many other countries. The adjustment as population pyramids invert worldwide will not be easy. Cuba, with a weak economy and an especially large elderly cohort, seems to be in a dire position as it becomes the island of the old.

Continue Reading: Cuban Demography

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CUBA WANTS MORE BABIES, SO IT’S GIVING PARENTAL LEAVE TO GRANDPARENTS, TOO

By Nick Miroff February 10, Washington Post
Original Article: Grandparents and Fertility Rates!

MEXICO CITY — Cuba is giving parental leave to the grandparents of newborns, the country’s latest attempt to reverse its sagging birthrate and defuse a demographic time bomb.

The island already has one of the most generous parental leave policies in the Americas, allowing mothers and fathers to take more than a year off from work at partial pay. The new decree extends those benefits to maternal and paternal grandparents.

But so far, such attempts haven’t brought any sort of Cuban baby boom.  The island of 11 million has one of the lowest fertility rates in the Western Hemisphere, with 1.7 births per woman. There are several factors that explain this figure, but they mostly come down to a combination of effective socialist medical care and a dysfunctional state-run economy.

Cuba’s health-care system makes contraceptives widely available, and abortions are available on demand. At the same time, Cuban women are a growing portion of the country’s professional workforce, and many choose to delay motherhood until their late 30s, often because they don’t have the financial means to care for children.

It’s hardly the only demographic problem Cuba faces: Some  60,000 to 80,000 Cubans emigrate each year, many of them young people looking for better opportunities in the United States, Europe and Latin America.

The Cubans who stay behind are going gray. Nearly one-fifth of the island’s population is 60 or older, and they depend on a shrinking pool of Cuban workers to keep the state-run economy afloat. Cuba’s life expectancy is 78, on par with the United States, so there’s a larger and larger pool of dependents.

According to the Communist Party newspaper Granma, the decision to extend parental leave to grandparents was necessary “to deal with the high degree of aging among the population, and to encourage fertility in the short term.”  “The challenge of raising the birthrate in Cuba is a challenge that cannot be put off,” Granma said.

The decrees also reduce day-care costs for Cuban parents with multiple children, and provide tax breaks for women who work in the country’s small but growing private sector.

Offering partial salary to Cuban parents on leave is not the kind of burden for the government — which employs about 70 percent of the workforce — that it would be in more prosperous nations.

The average official state salary hovers around $20 a month. Paying parents and grandparents a fraction of that to care for children is costly in a country where economic growth is stagnant, but nothing like the expenditure it would be elsewhere.

The United Kingdom has adopted a leave policy for grandparents who still work, and while a similar law has been proposed in Argentina, Cuba appears to be the first Latin American country to offer the benefits to grandparents.

 

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Infant Mortality in Cuba: Myth and Reality

 Roberto M. Gonzalez, Department of Economics, UNC, Chapel Hill

An interesting paper on Cuba’s Infant Mortality Rate (IMR) was presented at the 2013 meetings of the Association for the Study of the Cuban Economy by Roberto M. Gonzalez, a graduate student in Economics at the University of North Carolina. The paper is especially interesting as it focuses on one important indicator of the quality of the health system, human development and socio-economic development which ostensibly has been a major achievement for Cuba. Cuba’s exceedingly low Infant Mortality Rate has been a major “logro” of the Revolution and a source o pride since the early 1960s.

Gonzalez presents information and analysis that casts some doubt on the official IMR figures. His complete argument can be seen in the Power Point presentation that he made at the ASCE meetings here: Infant Mortality in Cuba

The essence of his argument is that Late Fetal Deaths (LFDs) or deaths of fetuses weighing at least 500 grams are abnormally high in Cuba compared to other countries while Early Neonatal Deaths (ENDs) or deaths occurring in the first week of life are abnormally low. In the chart below, Cuba’s high LFD in orange and its low END in green can quickly be seen as outliers for the countries of Europe.

New Picture (12)What’s going on here? Perhaps it is reflects an erroneous mis-classification system, or purposeful mis-reporting or possibly late term and mislabeled abortions (if there is any chance of infant ill-health or a congenital health problems.)

While perhaps further work is needed to analyze this LFD-END puzzle, Gonzalez work has certainly raised serious questions about Cuba’s long-vaunted Infant Mortality Rate.

New Picture (14a )

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Cuba’s Conception Conundrum: A Valentine’s Day Puzzle

14febrero_down

By Arch Ritter

An interesting phenomenon, namely the seasonal character of the numbers of births in Cuba – and of course the accompanying though implied seasonality of conception rates – is apparent in Table II.5 of the 2012 ONE Anuario Demográfico[i]. This is illustrated in Chart 1 below.

 New Picture (12)

The number of births over the course of the year follows a clear pattern that is apparent in the six years illustrated in the Chart. The number of births peak from September to December, decline sharply during the months of January to April, bottom out from May to June and then rise again from July to September.

In view of the nine-month period between conception and birth, the chart says something interesting about the amorous character of Cuban citizens. The implication of the birth pattern is that conception levels are highest from January to April and lowest from August to October.

Why would Cubans be so much more amorous in the January-April period than the August to October period?   

Is it the weather? Perhaps the cooler sunny weather of Cuba’s winter months is more conducive to amorous events and conception. And, conversely, perhaps the heat and mugginess of summer and the autumn rainy season is less conducive to “amor.”

Is it economics? Possibly there is greater optimism and dynamism during the more prosperous times of the tourist high season (which once corresponded to the Zafra, when sugar was king.)

Is it tourism? The pattern of conception levels corresponds closely to the seasonal pattern of tourism in Cuba as can be inferred from Chart 2 below. ­.

Does Valentine’s Day itself generate more conceptions and related activities, given that births often spike nine months later in October?

If anyone has clearer and more definitive insights into this phenomenon, please let me know!

 New Picture (11)

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[i] Cuba’s Oficina Nacional de Estadisticas (ONE) recently published the 2012 Edition of the Anuario Demográfico de Cuba 2012. Statistical information for Cuban demography is available comprehensively and conveniently. ONE’s coverage and presentation of demographic statistics is impressive. (In contrast, basic information on the economy such as unemployment, the consumer price index, trade and GDP is opaque, minimalist, not clearly defined, and now very late in appearing on ONE’s web site.)

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Carmelo Mesa-Lago, “Sistemas de protección social en América Latina y el Caribe: Cuba”

Carmelo Mesa-Lago, Documento de Proyecto,  CEPAL, Santiago Chile, 2012

Ensayo original:  Mesa-Lago, Cuba Proteccion Social CEPAL-13

Carmelo Mesa-Lago

Desde el inicio de la República en 1902 hasta 1958 el Estado introdujo sistemas públicos de educación y de salud gratuitos; el primero complementado por escuelas privadas y el segundo por una red de cooperativas, mutuales y clínicas privadas, esquemas de mejor calidad que los sistemas públicos, mientras que el acceso y la calidad de los últimos era muy inferior en el campo que en la capital y otras ciudades. La Constitución de 1940 y la legislación laboral y de seguridad social estaban entre las más avanzadas de América Latina pero, a diferencia del resto de la región (salvo Uruguay), no se creó un seguro nacional de salud, si bien el inusual desarrollo de cooperativas, mutuales y clínicas urbanas en parte  alivió ese vacío. En 1957 el desempleo abierto promediaba el 16% más el 14% de subempleo  (30% en total), bajaba durante la cosecha azucarera que proveía el 25% del empleo y se  duplicaba en el resto del año. Tampoco se creó un seguro de desempleo que era lo usual en la región. Se estableció gradualmente un sistema de pensiones de seguro social que cubría alrededor del 62% de la PEA pero segmentado en 54 esquemas separados, con amplias e injustificadas diferencias entre ellos. No existían programas integrados a nivel nacional de asistencia social ni de viviendas estatales o subsidiadas. Tal como ocurría en el resto de la región, no había estadísticas de incidencia de pobreza y de desigualdad del ingreso, pero la escasa información disponible indicaba que ambas eran substanciales. No obstante, en 1958 Cuba se ordenaba entre el primero y el quinto puesto de la región en sus indicadores sociales nacionales, pero con considerable desigualdad especialmente entre las zonas urbanas y rurales. Por ejemplo, la tasa de analfabetismo nacional era del 23%, pero en las ciudades   41,7% en el campo del 41,7%.
En el período de 1959-1989, la revolución logró avances muy notables en la protección social. El Estado dio prioridad y asignó cuantiosos recursos fiscales para: 1) promover el pleno empleo; 2) reducir la desigualdad en el ingreso mediante la expropiación de la riqueza y la disminución de las diferencias salariales en el empleo que era básicamente público; 3) universalizar los servicios gratuitos de educación y de salud que redujeron de forma substancial las disparidades en el acceso y calidad de los servicios sociales entre la ciudad y el campo; 4) lanzar una campaña de alfabetización, graduar masivamente maestros y médicos, y construir escuelas y establecimientos de salud; 5) acelerar la incorporación de la mujer a la fuerza laboral con políticas de educación y guarderías infantiles;  6) expandir la cobertura y monto de las pensiones de seguro social, financiadas por las empresas estatales y el fisco, sin cotización de los trabajadores; 7) crear un programa de asistencia social nacional y municipal; y 8) convertir a la gran mayoría de la población en propietaria de las viviendas que tenían arrendadas. El gobierno expropió todas las instalaciones de educación y salud privadas y cooperativas, además absorbió, unificó y homologó los 54 esquemas de pensiones. La construcción y mantenimiento de las viviendas, fundamentalmente a cargo del Estado, fue insuficiente y aumentó el déficit habitacional. Coadyuvó al desarrollo social la ayuda de 65.000 millones de dólares por la Unión Soviética en 1960-1990 (sin contar otros países socialistas), 60,5% en donaciones y subsidios de precios más 39,5% en préstamos que virtualmente no fueron pagados. Aunque dicha ayuda no se dio al sector social, liberó recursos internos para financiar la política del gobierno en este campo. En 1989 Cuba se colocaba a la cabeza de América Latina en la gran mayoría de los indicadores sociales.
El colapso de la Unión Soviética provocó en 1990-1994 una crisis económica muy severa: la caída 35% del PIB, la virtual paralización de la industria y de la agricultura por falta de combustible, insumos y piezas de repuesto, y una mengua drástica en las exportaciones e importaciones (incluyendo insumos para servicios sociales). A la crisis contribuyó el “Proceso de Rectificación de Errores”2, y la incapacidad del modelo de desarrollo para resolver los problemas estructurales, generar un crecimiento económico sostenible, expandir las exportaciones y substituir importaciones. Además, la política social adolecía de fallas: el pleno empleo se logró en parte creando empleo estatal innecesario lo que afectó a la productividad; el excesivo igualitarismo y énfasis cíclico en incentivos “morales” (no económicos) indujo una caída en el esfuerzo laboral y alto ausentismo; y el alto costo de los programas sociales se agravó por el envejecimiento demográfico. A pesar del esfuerzo del gobierno para proteger los programas sociales, casi todos sus indicadores se deterioraron y en 1993 Cuba había descendido en su ordenamiento social en la región.
Las modestas reformas orientadas al mercado en 1993-1996 lograron a partir de 1995 una recuperación económica parcial, pero ocurrió una desaceleración en 2001-2003 en gran  medida por la virtual paralización de las reformas y la “Batalla de Ideas”. Este programa, facilitado por la ayuda económica venezolana y centrado en la lucha ideológica incluyó varias políticas: revirtió las reformas de los años noventa, re-acentuó el centralismo, creó una cuenta única de divisas y CUC en el Banco Central de Cuba (BCC), puso énfasis de nuevo en el igualitarismo y la movilización laboral, redujo el trabajo por cuenta propia, intentó universalizar la educación superior, continuó expandiendo el empleo estatal innecesario, y acrecentó el gasto social haciéndolo insostenible. A partir de 2004, el PIB  creció con rapidez y alcanzó una cima en 2006, debido a la ayuda económica de la República Bolivariana de Venezuela, la expansión de los servicios sociales y un cambio en la  metodología internacional para calcular el PIB3. La crisis global de 2007-2009 y los problemas que arrastraba el modelo de desarrollo cubano indujeron otra desaceleración en la tasa del PIB. Aún con oscilaciones, la recuperación en 1995-2006 ayudó a mejorar los indicadores sociales y la mayoría sobrepasó los niveles pre-crisis de 1989, aunque la pobreza y la desigualdad aumentaron. Desde 2007 ocurrió otra regresión en dichos indicadores por la crisis global y las necesarias “reformas estructurales” del Presidente Raúl Castro para corregir los problemas económico-sociales del país, aprobadas por el VI Congreso del Partido Comunista de Cuba (PCC) en 2011 y extendidas en 2012. Este capítulo se concentra en el período comprendido entre 2007 y2012, describe las reformas por sector social y evalúa sus efectos.

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The Economist, Special Report on Cuba, March 24, 2012

 

The Castros, Cuba and America; On the road towards capitalism

Change is coming to Cuba at last. The United States could do far more to encourage it.

The Economist has produced one of its excellent surveys, this time focusing on Cuba.

Below are a set of hyperlinks to the various chapters of the Cuba Report. The chapter on the economy is presented following the Table of Contents.

Hyperlinked Table of Contents

  Revolution in retreat; Revolution in retreat

Under Raúl Castro, Cuba has begun the journey towards capitalism. But it will take a decade and a big political battle to complete, writes Michael Reid

  Inequality; The deal’s off

Inequalities are growing as the paternalistic state is becoming ever less affordable

Population; Hasta la vista, baby

The population is shrinking, ageing—and emigrating

The economy: Edging towards capitalism

Why reforms are slow and difficult

Politics; Grandmother’s footsteps

With no sign of a Cuban spring, change will have to come from within the party

Cuban-Americans; The Miami mirror

Cubans on the other side of the water are slowly changing too

After the Castros; The biological factor

Who and what will follow Raúl?

The Economy: Edging towards capitalism

Why reforms are slow and difficult

GISELA NICOLAS AND two of her friends wanted to set up an events-catering company, but that is not one of the 181 activities on the approved list for those who work por cuenta propia (“on their own account”), so in May 2011 they opened a restaurant called La Galeria. With 50 covers, it is a fairly ambitious business by Havana standards. They have rented a large house in Vedado and hired a top chef and 13 other staff who are paid two to three times the average wage, plus tips. The customers are mainly foreign businesspeople and diplomats, Cuban artists and musicians and visiting Cuban-Americans.

“This opportunity means a lot to us,” says Ms Nicolas, who used to work for a Mexican marketing company. “But they haven’t created the conditions for a profitable business.” There are no wholesalers in Cuba, so all supplies come from state-owned supermarkets or from trips abroad. Reservations are taken on Ms Nicolas’s mobile phone. Advertising is banned, though classified ads in the phone book will soon be allowed.

Across Cuba small businesses are proliferating. Most are on a more modest scale than La Galeria. Fernando and Orlandis Suri, who are smallholders at El Cacahual, a hamlet south of Havana, can now legally sell their fat pineapples and papaya from a roadside stall, along with other produce. Orlandis plans to rent space on Havana’s seafront to sell fruit cocktails and juice. In Santa Clara, Mr Pérez’s wife, Yolanda, sells ice-cream from their home. Having paid 200 pesos for a licence and 87 pesos in social-security contributions, she earns enough “to buy salad”. The streets around Havana’s Parque Central heave with vendors hawking snacks and tourist trinkets. Many of them are teachers, accountants and doctors who have left their jobs for a more lucrative, if precarious, life in the private sector.

No reason to work

This cuentapropismo is only the most visible part of Raúl Castro’s reform plan. “The fundamental issue in Cuba is production,” says Omar Everleny, a reformist economist. “Prices are high and wages are low because we don’t produce enough.”

Cuban statistics are incomplete, inconsistent and often questionable. But in a lifetime’s detective work, Carmelo Mesa Lago at the University of Pittsburgh has calculated that output per head of 15 out of 22 main agricultural and industrial products was dramatically lower in 2007 than it had been in 1958. The biggest growth has come in oil and gas and in nickel mining, largely thanks to investment since the 1990s by Sherritt, a Canadian firm. But output per head of sugar, an iconic Cuban product, has dropped to an eighth of its level in 1958 and 1989. Capital investment has collapsed. Raúl Castro has repeatedly lamented that Cuba imported around 80% of the food it consumed between 2007 and 2009, at a cost of over $1.7 billion a year.

The American embargo is an irritant, but the economy’s central failing is that Fidel’s paternalist state did away with any incentive to work, or any sanction for not doing so. So most Cubans do not work very hard at their official jobs. People stand around chatting or conduct long telephone conversations with their mothers. They also routinely pilfer supplies from their workplace: that is what keeps the informal economy going.

The global financial crisis in 2007-08 also took its toll. Tourists stayed away, the oil price plunged, and with it Venezuelan aid. Hurricane damage meant more food imports, just when world food prices were rising and those of nickel, now Cuba’s main export, were plunging. All this coincided with the political infighting in which Mr Lage was ousted, during which “all financial and budgetary discipline was blown away”, according to a foreign businessman. Having repeatedly defaulted on its foreign debt, Cuba has little access to credit. Instead of devaluing the CUC, which would have pushed up inflation, in January 2009 the government seized about $1 billion in hard-currency balances held by state-owned enterprises (SOEs) and foreign joint ventures. It did not finish paying them back until December 2011.

The guidelines approved by the party congress contain measures to raise production and exports, cut import demand and make the state financially sustainable. This involves, first, turning over idle state land to private farmers; second, making the state more productive by transferring surplus workers to the private sector or to co-ops; and third, lifting some of the many prohibitions that restrict Cuban lives, and granting much more autonomy to the 3,700 SOEs.

The grip of the state on Cuban farming has been disastrous. State farms of various kinds hold 75% of Cuba’s 6.7m hectares of agricultural land. In 2007 some 45% of this was lying idle, much of it overrun by marabú, a tenacious weed. Cuba is the only country in Latin America where killing a cow is a crime (and eating beef a rare luxury). That has not stopped the cattle herd declining from 7m in 1967 to 4m in 2011.

In 2008 Raúl allowed private farmers and co-ops to lease idle state land for ten years. By December last year 1.4m hectares had been handed out. The government has now agreed to extend the lease-period to up to 25 years, allow farm buildings to be put up and pay for any improvements if the leases are not renewed.

Credit and technical assistance also remain scarce, says Armando Nova of CEEC. Farmers suffer in the grip of Acopio, the state marketing organisation. It is the monopoly supplier of inputs such as seeds, fertiliser and equipment and was the sole purchaser of the farms’ output, but its monopoly is being dented. Farmers can now sell surplus production of all but 17 basic crops themselves. Under a pilot programme in Artemisa and Mayabeque provinces, near Havana, new co-ops will take over many of Acopio’s functions.

The reformers want to see Acopio go. More surprisingly, so does Joaquín Infante Ugarte at the National Association of Economists and Accountants (ANEC): “It’s always been a disaster. We should put a bomb under it.” But in around 100 of Cuba’s 168 municipalities the economy is based on farming, so Acopio is a big source of power and perks for party hacks, and its future is the subject of an intense political battle. That makes farmers nervous. A year ago the 30 or so farmers in the Antonio Maceo co-op in Mayabeque leased extra land, got a loan and planted bananas, citrus and beans. The administrator says output is up, but “it will take time to see a real difference.” And with that he clammed up.

Official data suggest that output of many crops fell last year; the price of food rose by 20%. That may be partly because farmers are bypassing the official channels. Granma, the official—and only—daily newspaper, reported in January that a spontaneous, self-organised and regulated wholesale market in farm products has sprung up in Havana. That looks like the future.

Letting go is hard to do

Reducing the state’s share of the economy has been even more contested. Raúl originally said the government would lay off 500,000 workers by March 2011 and a total of 1.1m by 2014. That timetable has slipped by several years because the government has been reluctant to allow sufficiently attractive alternatives for workers to give up the security (and the pilfering opportunities) of a state job. But including voluntary lay-offs and plans to turn many state service jobs into co-ops (as has already happened with small barber’s shops, beauty parlours and a few taxi drivers), some 35-40% of the workforce of 4.1m should end up in the private sector by 2015, reckons Mr Everleny.

Raúl sees corruption as politically incendiary at a time of rising inequality

By October 2011, he says, some 338,000 people had requested a business licence, 60% of whom were not leaving state jobs, suggesting that they were simply legalising a previous informal activity. As happens to small businesses the world over, many fail in the first year. Few of the cuentapropistas have Ms Nicolas’s business experience. Many clearly find it hard to distinguish revenue from profit. ANEC is organising training courses. But the government has stalled an attempt by the Catholic church to set up an embryonic business school.

If cuentapropismo is not to be a recipe for poverty, the government will have to ease the rules. Mr Everleny wants to see private professional-service firms being established: architects, engineers, even doctors. Already the taxes levied on the new businesses have been cut, but they are still designed to produce “bonsai companies”, in the words of Oscar Espinosa Chepe, a dissident economist.

Lack of credit is another obstacle. Start-up capital for new businesses comes mainly from remittances. In a pilot scheme the government approved $3.6m in credits in January, nearly all for house improvements. As for deregulation, Raúl has taken some simple and popular steps, lifting bans on Cubans using tourist hotels and owning mobile phones and computers, and last year allowing them to buy and sell houses and cars.

But reforming SOEs is far more complicated. They have been told to introduce performance-related pay. The boldest step was last year’s abolition of the sugar ministry. In principle, SOEs that lose money will be merged or turned over to their workers as co-ops. But a planned bankruptcy law is still pending. So is the elimination of subsidies and the introduction of market pricing. Mr Ugarte of ANEC thinks much of this will happen this year, along with a new law to introduce corporate income tax.

The pace of change has picked up since the party congress set up a commission with 90 staff under Marino Murillo, a Politburo member and former economy minister, to push through the reforms, says Jorge Mario Sánchez at CEEC. “By 2015 there won’t be the socialist economy of the 1990s, nor the same society.” But there are several gaps.

For one, the government seems undecided what to do about foreign investment, a key element in the rapid growth in Vietnam and China. It has cancelled some of the joint ventures it had signed (often in haste) during the Special Period, and such new agreements as it is entering are almost exclusively with companies from Venezuela, China and Brazil. Odebrecht, a Brazilian conglomerate, has reached an agreement under which it will run a large sugar mill in Cienfuegos for ten years. Many foreign companies are keen to invest in Cuba but are put off by the government’s insistence on keeping a majority stake and its history of arbitrary policy change.

Officials worry that foreign investment brings corruption. Raúl has launched an anti-corruption drive with the creation of a powerful new auditor-general’s office. Several hundred Cuban officials, some very senior, have been jailed, as have three foreigners. Raúl rightly sees corruption as politically incendiary at a time of rising inequality. But he is tackling the symptoms rather than the cause. “People who were making $20 a month were negotiating contracts worth $10m,” says a foreign diplomat.

The guidelines involve only microeconomic reforms. Raúl’s macroeconomic recipe has so far been limited to austerity: he has managed to trim the fiscal and current-account deficits. The trickiest reform of all will be unifying the two currencies, by devaluing the CUC and revaluing the peso. It would help if Cuba were a member of the IMF and the World Bank and had access to international credit, but so far the government has shown no interest in joining. Mr Vidal of CEEC points out that for devaluation to provide a stimulus, rather than just generating inflation, the economy would have to be far more flexible. That will require a political battle.

 

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Cuban Demography and Development: the “Conception Seasonality Puzzle”, the “Dissipating Demographic Dividend” and Emigration.

By Arch Ritter

Cuba’s Oficina Nacional de Estadisticas (O.N.E.) recently published the 2010 Edition of the Anuario Demográfico de Cuba 2009, available on line here: http://www.one.cu/anuariodemografico2009.htm. A wide-ranging listing of the web publications on demography and population is located at this address: Oficina Nacional de Estadisticas, LA POBLACION CUBANA . Comprehensive statistical information for Cuba is available quickly, comprehensively. ONE’s coverage and presentation of demographic statistics has been improving steadily in terms of quality and timeliness. (In contrast, basic information on the economy such as unemployment, the consumer price index, and GDP is opaque, minimalist, and not clearly defined.)

Numerous useful and interesting insights into Cuba’s development, past and prospective, are apparent in the ONE data – and other demographic sources. A few are mentioned here.

1. Cuba’s Seasonal Conception Puzzle

An interesting phenomenon. of which I have been unaware. is the seasonal character of the numbers of births in Cuba – and of course the causal seasonality of conception rates. As Chart 1 illustrates, births peak from August to December but decline sharply during the months of February to June. This means that Cuba’s amorous months of high conception levels are from about December to April.

One can venture a number of guesses as to why this might be the case. For example, perhaps the cooler weather of Cuba’s winter months is more conducive to activities related to conception. Or maybe there is greater optimism and dynamism during the more prosperous times of the tourist high season. If anyone has clearer insights into this phenomenon, please let me know!

Chart 1 also shows increasing numbers of births from 2007 to 2009.

2. From Baby Boom to Baby Bust and Beyond?

From 1960 to 1970 Cuba experienced a major “baby boom” with fertility rates rising to around 4.5 children per woman on average Chart 2. This may reflect the improvement in living conditions for many families, improved medical facilities and perhaps greater optimism about the future, leading women and families to choose to have more children during the first decade of the Revolution.  As is well known, however, the fertility rate began a long descent to levels a good deal below the minimum necessary for long-term population stability which is considered to be around 2.2 children per woman.  This baby “bust” commenced in 1970 and has continued to 2009, bottoming out at 1.39 children per woman in 2006 but rising somewhat to 1.70 in 2009. Cuba’s demographic experience is similar to that of numerous higher income countries such as Spain, with a fertility rate of 1.6 in 2005-2010: Italy, 1.4 ; Portugal, 1.4; Russia, 1.5; Canada, 1.6 and Germany 1.3.)

The causes of the declining fertility rates in Cuba undoubtedly included similar factors to the experience of other countries: higher female labor force participation rates (so that the income sacrifice for additional children was higher), better pension systems (so that one’s children were no longer necessary for income-support during old age), reduced opportunities for employing children as income earning assets due to urbanization and increased schooling, different career aspirations for women, easy availability of contraception including abortion etc.

The impact of the changing fertility rates can then be observed in the 2010 population pyramid (Chart 3.) The 1960-1975 “Baby Boomers” reached age 40 to 50 during the 2000s leading to the large cohorts in the 2010 pyramid. But since 1970, the declining fertility rate has led to ever-narrowing cohorts of younger age groups. Even the demographic “echo” of the 1960-1970 cohort was muted.

Chart 3  Cuba’s Population Pyramid, 2010

The consequences for Cuba of an aging population also are similar to those for other countries, though some other high income countries, large scale immigration changes the picture. The main consequences are:

  • The Old Age Dependency rate increased by almost 40% over the 1990-2010 period. Child Dependency rates declined by about 30% in the same period, reflecting the declining fertility rate.  (Table 1.).
  • The aging population will cause the Total Dependency Ratio (the sum of Child and Old Age Dependency as a proportion of the total population) to increase in future, burdening the economically active population for the support of pensioners and their health care.
  • The “aging population” in time will become a “dying population.” The population, previously increasing or stable, will decline sharply when the “baby boom” cohorts hit age 65 or so in 10 to 15 years. This could be modified by compensating changes in fertility or international migration, but not in life expectancy which is unlikely to rise much further in future..
  • The “Total Dependency Ratio” has been particularly low during the years when Child Dependency declined but the large “Baby Boom” age cohorts were still of working age. It is now at 42.2% (Table 1). Consequently the economically active population between age 20 and 60 as a proportion of the total population has been large.This so-called “demographic dividend” or “demographic window of opportunity” normally provides a stimulus to growth and development as in China. However, in Cuba’s case, it is passing quickly and so far has been partly wasted as it has been underemployed in low productivity activities.

Emigration

The Anuario Demográfico de Cuba 2009 also provides comprehensive information on internal migration and some general figures for external migration. Emigration numbers are illustrated in Figure 4. The “Special Period” since 1994 has been characterized by a steady hemorrhage of emigration. While ONE does not present information on the sociological character of the emigrants, casual observation suggests that they are well educated, entrepreneurial and perhaps disproportionately in the early adult 18 to 35 age grouping.

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