Tag Archives: Entrepreneurship

“EN VEZ DE SERVIR PARA REGULAR, LA LEY SIRVE PARA CONVERTIR A LA POBLACIÓN EN DELINCUENTES”

Hypermedia, 10 de Diciembre de 2018.

Ted A. Henken & Archibald R. M. Ritter

From Hypermedia, LA LEY…..

Original from the book entitled Entrepreneurial Cuba, The Changing Policy Landscape, Lynne Rienner Publishers, Boulder Colorado.

En el verano de 1992, el gobierno cubano despenalizó la posesión y el uso del dólar estadounidense, legalizando así una actividad realizada por un gran número de personas. Esta medida aceleró el proceso de “dolarización” de la economía y estimuló y legitimó aún más la búsqueda popular del dólar mediantes actividades de la economía clandestina. Posteriormente, el 8 de septiembre de 1993, entró en vigor el Decreto Ley 141 que legalizaba el trabajo autónomo, bajo el término “trabajo por cuenta propia” (Granma). Esto representó un cambio de política decisivo, que permitió a estas microempresas salir de la clandestinidad y funcionar de manera más eficaz, eficiente y rentable.

Con la aparición de la microempresa fuera de la clandestinidad en aquellos años, comenzó a evidenciarse una suerte de jerarquía. El espectro de escala y éxito sería más pronunciado en las escasas ocupaciones de mayor envergadura y dinamismo, especialmente: las casas particulares, los taxis, y los paladares que estaban conectados con la floreciente industria del turismo.

La ley del trabajo por cuenta propia se creó originalmente para aplicarse a los cubanos que ya brindaban servicios a otros ciudadanos, por lo cual la mayoría de las licencias y las tarifas fijas mensuales se pagaban en pesos. Sin embargo, con la expansión acelerada del turismo a lo largo de la isla en la década de 1990, algunas empresas, especialmente en las áreas de los servicios alimenticios, el transporte, y el alojamiento, comenzaron a brindar servicios a extranjeros y a cobrarles en dólares americanos. Como consecuencia parcial, se añadieron algunas modificaciones a la legislación original entre 1995 y 1997, incluyendo la expansión de los servicios alimenticios (1995), el transporte (1996) y el alquiler de casas particulares (1997), en la lista de ocupaciones permisibles, puesto que los cuentapropistas de estos tres sectores, a menudo, brindaban sus servicios a extranjeros y obtenían ingresos en dólares.

Estas tres ocupaciones —el transporte, el alquiler de habitaciones y los servicios de alimentos — se convirtieron rápidamente en las ocupaciones privadas más populares durante el “Período Especial”. Y una vez más reemergieron como las más comunes —junto a los trabajadores contratados—, luego de la reapertura y la expansión significativa del trabajo por cuenta propia después de octubre de 2010.

Para continuar: La Ley…..

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PUNTO FIJO: CUENTAPROPISTAS

El Nuevo Día,  miércoles, 13 de mayo de 2015

por Jorge Duany

En febrero pasado, el gobierno cubano reportó 489,929 trabajadores por cuenta propia, el 9.6% de la fuerza laboral. Dicha cifra representa más del triple de la cantidad registrada inicialmente cuando el gobierno autorizó el autoempleo en 1993, en plena crisis económica bautizada como “Período Especial en Tiempos de Paz”. Conocidos popularmente como “cuentapropistas”, miles de cubanos emprendedores han establecido pequeños negocios privados, especialmente en la elaboración y venta de alimentos, el transporte de pasajeros y el arrendamiento de viviendas.

Este es el tema central del valioso libro del economista canadiense Archibald R. M. Ritter y el sociólogo estadounidense Ted A. Henken, “Entrepreneurial Cuba: The Changing Policy Landscape” (Boulder: FirstForumPress, 2015). Los autores se proponen explicar las causas y consecuencias socioeconómicas del auge del trabajo por cuenta propia durante la era de Raúl Castro (2006–2014).

El estudio se basa en entrevistas a profundidad con 60 microempresarios cubanos, completadas entre 1999 y 2009, así como en extensas observaciones sobre el terreno de varios negocios independientes. Su análisis se concentra en tres sectores  económicos vinculados a la industria turística: los paladares (pequeños restaurantes familiares), las casas particulares (alquiladas a extranjeros) y los taxis privados, incluyendo los “bicitaxis”, “cocotaxis” y “almendrones”, como llaman los cubanos a los antiguos carros americanos. En el 2010, el gobierno cubano anunció el despido de 500,000 empleados estatales “redundantes” como parte de la “actualización” del modelo económico en la Isla. Al mismo tiempo, fomentó la expansión de empleos en el sector no estatal, muchos de los cuales ya se realizaban clandestinamente.

El número de oficios autorizados para el trabajo por cuenta propia incrementó de 55 en 1993 a 201 en el 2013. El grueso son ocupaciones de servicios poco calificados, como aguador, amolador, barbero, jardinero, limpiabotas, mago, masajista, mensajero, payaso, peluquera y productor de piñatas. A la vez, se sigue prohibiendo el autoempleo en los servicios profesionales y técnicos, excepto profesores de idiomas, música y arte, programadores de computadoras y reparadores de equipos electrónicos y de oficina. Según Ritter y Henken, aún persisten numerosas restricciones burocráticas, desincentivos económicos y obstáculos ideológicos al trabajo por cuenta propia en Cuba. Para empezar, las tasas impositivas mucho más onerosas que para la inversión extranjeramantienen artificialmente el tamaño pequeño de las empresas. Más aún, la estigmatización de los cuentapropistas como “macetas” (adinerados, en el argot cubano) niega la legitimidad del motivo de lucro individual. El discurso oficial ni siquiera utiliza los términos “mercado” o “sector privado” al referirse a las pequeñas empresas independientes, sino al “sector no estatal”. El crecimiento del cuentapropismo tiene implicaciones políticas en Cuba, en tanto permite ensanchar un segmento de la población que no depende del gobierno para su sustento. Asimismo, subvierte algunas premisas claves del gobierno, como el monopolio estatal de los medios de producción, la planificación central, la distribución equitativa de los ingresos y la política de pleno empleo.

Los autores de “Entrepreneurial Cuba” recuerdan que la confiscación estatal de todos los establecimientos comerciales privados a fines de la década de 1960 agravó la escasez de productos básicos, infló los precios de bienes y servicios y deprimió los niveles de vida de la población cubana. La intensa antipatía oficial contra cualquier “timbiriche” (pequeña tienda al aire libre) estuvo vigente hasta principios de la década de 1990. Según los autores, las reformas económicas iniciadas por el gobierno de Raúl Castro han impulsado la recaudación de impuestos, ayudando a subsidiar servicios sociales y estimulando nuevas fuentes de ingresos. Sin embargo, Ritter y Henken recomiendan legalizar el autoempleo en todas las actividades económicas incluyendo los servicios profesionales, reducir los impuestos y aumentar la cantidad de trabajadores empleados en cada empresa. Solo entonces podrá el cuentapropismo desempeñar un papel protagónico en la revitalización de la precaria economía cubana.

Jorge Duany

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BOOK REVIEW, ENTREPRENEURIAL CUBA: THE CHANGING POLICY LANDSCAPE

Boulder, CO: First Forum Press, 2015. 373 pp.

By Archibald R. M. Ritter and Ted A. Henken

Review by Sergio Díaz-Briquets,

Cuban Studies, Volume 46, 2018, pp. 375-377, University of Pittsburgh Press

The small business sector, under many different guises, often has been, since the 1960s, at the center of Cuban economic policy. In some ways, it has been the canary in the mine. As ideological winds have shifted and economic conditions changed, it has been repressed or encouraged, morphed and gone underground, surviving, if not thriving, as part of the second or underground economy. Along the way, it has helped satisfy consumer needs not fulfilled by the inefficient state economy. This intricate, at times even colorful, trajectory has seen the 1968 Revolutionary Offensive that did away with even the smallest private businesses, modest efforts to legalize self-employment in the 1979s, the Mercados Libres Campesinos experiment of the 1980s, and the late 1980s ideological retrenchment associated with the late 1980s Rectification Process.

Of much consequence—ideologically and increasingly economically—are the policy decisions implemented since the 1990s by the regime, under the leadership of both Castro brothers. Initially as part of Special Period, various emergency measures were introduced to allow Cuba to cope with the economic crisis precipitated by the collapse of the communist bloc and the end of Soviet subsidies. These early, modest entrepreneurial openings were eventually expanded as part of the deeper institutional reforms implemented by Raúl upon assuming power in 2006, at first temporarily, and then permanently upon the resignation of his brother as head of the Cuban government.

In keeping with the historical zigzag policy pattern surrounding small businesses activities—euphemistically labeled these days as the “non-state sector”—while increasingly liberal, they have not been immune to temporary reversals. Among the more significant reforms were the approval of an increasing number of self-employment occupations, gradual expansion of the number of patrons restaurants could serve (as dictated by the allowed number of chairs in privately owned paladares), and the gradual, if uneven, relaxation of regulatory, taxing, and employment regulations. Absent has been the authorization for professionals (with minor exceptions, such as student tutoring) to privately engage in their crafts and the inability to provide wholesale markets where self-employed workers could purchase inputs for their small enterprises.

The authors of this volume, an economist and a sociologist, have combined their talents and carefully documented this ever-changing policy landscape, including the cooperative sector. They have centered their attention on post–Special Period policies and their implications, specifically to “evaluate the effects of these policy changes in terms of the generation of productive employment in the non-state sector, the efficient provision of goods and services by this emergent sector, and the reduction in the size and scope of the underground economy” (297).

While assessing post-1990 changes, Entrepreneurial Cuba also generated a systematic examination of the evolution of the self-employment sector in the early decades of the revolution in light of shifting ideological, political, and economic motivations. Likewise, the contextual setting is enhanced by placing Cuban self-employment within the broader global informal economy framework, particularly in Latin America, and by assessing the overall features of the second economy in socialist economies “neither regulated by the state nor included in its central plan” (41). These historical and contextual factors are of prime importance in assessing the promise and potential pitfalls the small enterprise sector confronts in a changing Cuba.

Rich in its analysis, the book is balanced and comprehensive. It is wide ranging in that it carefully evaluates the many factors impinging on the performance of the small business sector, including their legal and regulatory underpinnings. The authors also evaluate challenges in the Cuban economic model and how they have shaped the proclivity for Cuban entrepreneurs to bend the rules. Present is a treatment of the informal social and trading networks that have sustained the second economy, including the ever-present pilfering of state property and the regulatory and transactional corruption so prevalent in Cuba’s centralized economy.

While none of the above is new to students of the Cuban economy—as documented in previous studies and in countless anecdotal reports—Ritter and Henken make two major contributions. First, they summarize and analyze in a single source a vast amount of historical and contemporary information. The value of the multidisciplinary approach is most evident in the authors’ assessment of how the evolving policy environment has influenced the growth of paladares, the most important and visible segment of the nonstate sector. By focusing on this segment, the authors validate and strengthen their conclusions by drawing from experiences documented in longitudinal, qualitative case studies. The latter provide insights not readily gleaned from documentary and statistical sources by grounding the analysis in realistic appreciations of the challenges and opportunities faced by entrepreneurial Cubans. Most impressive is the capacity of Cuban entrepreneurs to adapt to a policy regime constantly shifting between encouraging and constraining their activities.

Commendable, too, is the authors’ balanced approach regarding the Cuban political environment and how it relates to the non-state sector. Without being bombastic, they are critical of the government when they need to be. One of their analytical premises is that the “growth of private employment and income represents a latent political threat to state power since it erodes the ideals of state ownership of the means of production, the central plan, and especially universal state employment” (275).

This dilemma dominates the concluding discussion of future policy options. Three scenarios are considered possible. The first entails a policy reversal with a return to Fidel’s orthodoxy. This scenario is regarded as unlikely, as Raúl’s policy discourse has discredited this option. A second scenario consists of maintaining the current course while allowing for the gradual but managed growth of the non-state sector. While this might be a viable alternative, it will have limited economic and employment generation effects unless the reform process is deepened by, for example, further liberalizing the tax and regulatory regimes and allowing for the provision of professional services.

The final scenario would be one in which reforms are accelerated, not only allowing for small business growth but also capable of accommodating the emergence of medium and large enterprises in a context where public, private, and cooperative sectors coexist (311). As Ritter and Henken recognize, this scenario is unlikely to come to fruition under the historical revolutionary leadership, it would have to entail the resolution of political antagonisms between Washington and Havana, and a reappraisal by the Cuban government of its relationship with the émigré population. Not mentioned by Ritter and Henken is that eventual political developments—not foreseen today—may facilitate the changes they anticipate under their third scenario.

In short, Entrepreneurial Cuba is a must-read for those interested in the country’s current situation. Its publication is timely not only for what it reveals regarding the country’s economic, social, and political situation but also for its insights regarding the country’s future evolution.

…………………………………………………………………………….

Table of Contents

 Table of Contents,

 List of Charts and Figures

Chapter I Introduction       

Chapter II      Cuba’s Small Enterprise Sector in International and Theoretical Perspective

Chapter III    Revolutionary Trajectories, Strategic Shifts, and Small Enterprise, 1959-1989

Chapter IV    Emergence and Containment During the “Special Period”, 1990-2006

Chapter V        The 2006-2011 Policy Framework for Small Enterprise under the Presidency of    Raul Castro

Chapter VI    The Movement towards Non-Agricultural Cooperatives

Chapter VII  The Underground Economy and Economic Illegalities

Chapter VIII  Ethnographic Case Studies of Microenterprise, 2001 vs. 2011

Chapter IX  Summary and Conclusions

APPENDIX                                                              

GLOSSARY                                                                                                                         

BIBLIOGRAPHY

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EL PAQUETE: CUBA’S UNDERGROUND NETWORK IS LIKE NETFLIX AND SPOTIFY, WITHOUT THE INTERNET

“Quartz Obsession”

March 16, 2018 at 3:46:38 PM

Cuba has one of the lowest rates of internet usage in the Western Hemisphere, and access to media is strictly restricted—but that doesn’t stop Cubans from watching Game of Thrones. Their secret is El Paquete Semanal (“The Weekly Packet”), a clandestine in-person file-sharing network that distributes hard drives and flash drives full of media.

Nobody quite knows how El Paquete, which has thrived since the mid-2000s, is created or how it makes its way across the country every week. But Cubans have come to rely on the pervasive distribution of music, TV, and movies—not to mention pirated software and e-commerce platforms.

Ultimately, the uniquely Cuban tech phenomenon is proof that just like life in Jurassic Park, information always finds a way—especially when you’re jonesing for the latest episode of a subtitled South Korean soap opera and the closest open internet is an ocean away.

BY THE DIGITS

  • 5.6%: Cuban households with dial-up connections, at speeds of 4–5 kB/s
  • 386%: Cost of household internet service in Cuba as a percentage of per capita GDP
  • 0.007%: Cuban broadband internet penetration (8,157 connections for 11 million people)
  • 2018: Year the Cuban government has promised to offer mobile internet service
  • $2: Cost per hour of public Wi-Fi hotspot access, equivalent to 10% of the average monthly salary
  • $3: Estimated cost of one week’s Paquete, accessed on a Monday
  • $1: Estimated cost on a Wednesday

 

How does it work?

There are a lot of question marks about El Paquete—more accurately, Los Paquetes, as there are reportedly several versions—but this much is clear: At the end of each week, its creator(s) compile the most in-demand media of the week—roughly 15,000 to 180,000 files, 1 terabyte in total. The provenance is murky, but the most likely source is a mix of illicit broadband internet access, secret satellite dishes, and hard drives and flash drives smuggled in from overseas.

From there, it’s top-down distribution. A network of Paquete wholesalers (many based in street-level phone repair and DVD shops) copy the contents onto their own hard drives and flash drives, which are then copied many more times. The last links are the door-to-door Paquete delivery guys, who will bring it to individual residences, copying over select files or the entire thing to customers.

The network is based in the capital Havana, but El Paquete also makes its way to most Cuban towns, with a noticeable time lag. El Paquete is most expensive early in the week; by Thursday or so, prices will have dropped by 50% or more.

 The kingpins of El Paquete

Former engineering student Elio Hector Lopez is one of the people credited with starting El Paquete around 2006, where it built on longstanding clandestine networks used to distribute physical media like books, videotapes, CDs, and DVDs.

“At the beginning we saw this as a way to make money—but after having penetrated the entire country we see it more as a responsibility,” he told NBC in 2015.

“For the time being, El Paquete replaces the Internet for those who don’t have it,” Lopez told Reuters. “If tomorrow El Paquete disappears I don’t know what people would do, it’s like water, or a pill for the Cuban body.” According to the CBC, as of 2016 Lopez had moved to the United States.

“El Paquete was founded by several people, each with a desire to find a way to entertain their towns,” he told Polygon last year. “We wanted to find a way for the island to see the world in ways outside of politics, showing them culture, sports, entertainment, economy and society, showing them all the things going on in the world that weren’t making it to our TVs.”

 Cuba’s make-do culture

El Paquete is a distinct phenomenon of the internet age, but according to Nick Parish, author of a fascinating in-depth study,there’s an interesting precedent in Cuban history. After the collapse of the Soviet Union in 1989 left Cuba reeling, “the military issued a book called “Con Nuestros Propios Esfuerzos” (With Our Own Efforts) that served as a chronicle to survival through shared knowhow, with everything from horticultural knowledge and recipes to herbal medicines to public health to transport, featuring tips submitted by ordinary Cubans.”

“The make-do culture in Cuba, known locally by the term “resolver,” and the propensity for Cubans to bring a unique isolated, constrained lens to solving problems is important to bear in mind as we see some of the features and systems that make el paquete a unique Cuban solution.”

This week’s list

A volunteer site, Paquete de Cuba, lists the weekly contents, though they’re not available for download.

In the absence of actual internet access, techies in Havana and elsewhere have created a homebrewed network called SNET “that reproduces much of the consumer internet we know in the free world,” according to Wired. It includes copycat versions of Facebook and Instagram—and facilitates dissemination of El Paquete.

 

How does advertising work?

There are classifieds in El Paquete. According to a report from the Yugoslavia-based Share Foundation: “If you send an SMS to a certain number, the content of the message will appear in the El Paquete folder ‘classifieds’ in form of a jpeg image that has your message on one half and some advertisement on the other half.”

But local ads are also embedded directly into the content: Users might also see video advertisements for local services embedded at the end of a trailer for a Hollywood movie, or ads sandwiched between magazine pages.

There’s even an e-commerce supplement: “a 199-page PDF catalog with interlinked product pages and ordering instructions, so people can purchase handmade products such as purses, shoes, boots, backpacks, and belts,” according to Nick Parish.

 So, does the government know?

Cuba’s authoritarian government is known for its censorship and intolerance of dissent, which has prompted many conspiracy theories about El Paquete: Is it all a government scheme to placate the masses with the opiate-like effects of western mass media?

There’s perhaps one telltale clue that Raul Castro’s government chooses to tolerate the existence of El Paquete: It contains no porn or political speech, or even western news accounts that might run afoul of the country’s communist party.

“There exists a kind of established agreement in which El Paquete must not reproduce content critical of the government, propaganda, or pornography, and in exchange the state turns a blind eye,” one Paquete distributor told Cubanet.

At least, that was true until recently: Cubanet reports a new folder called “Tremendo lío” (“tremendous mess”) recently appeared in El Paquete, which contains videos from some Cuban social media stars who voice anti-government views, along with those who support it. Is this a brave new era for El Paquete, or a signal that a government crackdown is coming?

“In a country where materials, shopping, and consumption are limited to food and maybe clothing, El Paquete becomes a luxury, a form of asserting one’s independence from the state’s attempts to suppress individuality.”

— “El Paquete: A qualitative study of Cuba’s Transition from Socialism to Quasi-Capitalism,” an undergraduate thesis by Princeton sociology major Dennisse Calle.

“Prefiero gastar un dólar que estar como un zombi. (I would rather spend a dollar than be a zombie.)”

 El Paquete customer Alejandro Batista

 

 

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CUBA ABRE SU PRIMER MERCADO MAYORISTA DESTINADO SOLO A COOPERATIVAS PRIVADAS

EFE,  17 de marzo de 2018 01:15 PM

Original Article: MERCADO MAYORISTA

LA HABANA

Mercabal, el primer mercado mayorista de Cuba, abrió el sábado sus puertas en La Habana destinado inicialmente solo a cooperativas privadas no agropecuarias y con la promesa de extenderlo a los demás trabajadores autónomos de la isla, informa el diario oficial Granma en portada.

El mercado cuenta ya con 35 clientes, que tienen acceso a un descuento del 20 por ciento del precio de venta minorista en productos como frijoles, cigarros, refrescos, cervezas, azúcar, sal, confituras, hamburguesas y salchichas, muy demandados en los restaurantes, cafeterías y bares del sector privado.

El pollo, uno de los alimentos más consumidos, se rebajará hasta un 30 por ciento respecto a su precio en la red minorista, indica Granma, que reconoce que el gobierno cubano responde así a “uno de los reclamos más reiterados de quienes ejercen las nuevas formas no estatales de gestión en el país”.

Localizado por ahora solo en la capital del país, los próximos mercados mayoristas abrirán “de forma paulatina” en el resto de la isla, “una vez que esta propuesta inicial esté en óptimo funcionamiento y en dependencia de los lugares donde más trabajadores por cuenta propia existan”, señaló la ministra.

En Cuba existen hoy más de medio millón de trabajadores privados o “cuentapropistas”, acogidos a las categorías de trabajo permitidas por el gobierno cubano.

Más de 12,000 son socios de cooperativas no agropecuarias, que ya suman unas 420 en todo el país, en su gran mayoría dedicadas a la gastronomía, el comercio, los servicios, la construcción y la industria.

Ubicado en el municipio habanero de Plaza de la Revolución, Mercabal abrirá de lunes a sábado con productos de diez proveedores directos, que reabastecerán el mercado según los pedidos mensuales de los clientes.

Para poder contratar los servicios de la nueva instalación los autónomos deben tener actualizada su ficha de cliente y poseer una cuenta con tarjeta magnética, emitida por el estatal Banco Metropolitano.

La ampliación del trabajo privado -donde se incluyen las cooperativas no agropecuarias- en el 2010 ha sido una de las reformas clave del gobierno del saliente mandatario cubano Raúl Castro para actualizar el modelo socialista y reducir las abultadas plantillas del sector estatal.

Desde agosto, la isla comenzó un proceso de reordenamiento del “cuentapropismo”, dentro del que paralizó temporalmente la entrega de licencias a restaurantes privados y casas de renta turísticas, entre otras actividades, para frenar ilegalidades, “desviaciones” y “corregir deficiencias”.

Las licencias congeladas son, precisamente, las más demandadas del sector.

A pesar de que prometió que no mantendría “por un período de tiempo muy largo” esta medida, el Gobierno cubano aún no ha retomado la entrega de autorizaciones a los autónomos cubanos, que ya representan el 12 por ciento de la fuerza laboral del país.

  

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Book Review Essay: THE EMERGING NON-STATE SECTOR IN CUBA’S ECONOMY

Carmelo Mesa-Lago, University of Pittsburgh,

Latin American Research Review, July 2017  https://doi.org/10.25222/larr.2

This essay reviews the following works:

Open for Business: Building the New Cuban Economy. By Richard E. Feinberg. Washington DC: Brookings Institution Press, 2016. Pp. vii + 264. $22.00 cloth. ISBN: 9780815727675.

Miradas a la economía cubana: Análisis del sector no estatal. Edited by Omar Everleny Pérez Villanueva and Ricardo Torres. La Habana: Editorial Caminos, 2015. Pp. 163. $5, paper. ISBN: 9789593031080.

Entrepreneurial Cuba: The Changing Policy Landscape. By Archibald R. M. Ritter and Ted A. Henken. Boulder, CO: First Forum Press, 2015. Pp. xiv + 374. $79.95 cloth. ISBN: 9781626371637.

Retos para la equidad social en el proceso de actualización del modelo económico cubano. Edited by María del Carmen Zavala et al. La Habana: Editorial Ciencias Sociales, 2015. Pp. vi + 362. $20 paper. ISBN: 9789590616105.

Soon after current president of the State Council Raúl Castro took over power in Cuba from his brother Fidel in 2006, he started structural reforms to cope with the serious socioeconomic problems accumulated in the previous forty-five years. Some authors, including a few in this review, argue that Cuba is in transition to a mixed economy. Despite the importance of these changes, however, the official view is that central planning will predominate over the market, and state property over private property.1 A main reform goal was to fire 1.8 million unneeded workers in the state sector, which demanded an expansion of the “non-state sector” (NSS) to provide jobs to those dismissed. The four books I review are commendable additions to the growing literature on the NSS (inside and outside Cuba), as they fill some of its existing gaps, to be identified below.2 A few authors rely on surveys to gather data, but surveys are not easy to take in Cuba; hence the majority used interviews of different size and representativeness, as well as in-depth conversations.

Within the NSS, the most dynamic four groups are self-employed workers (507,342), usufruct farmers (312,296), and members of new nonagricultural and service co-ops, NASCs (only 7,700 so far). Altogether these make up 17 percent of the labor force, out of a total 29 percent in the entire NSS.3 Except for the most recent NASCs, the other three forms were legalized during the severe crisis of the 1990s but did not take off until much later. Selling and buying of private dwellings, banned in 1960 and reauthorized in 2011, involve at least 200,000 transactions but still only 5 percent of the total housing stock. The books reviewed in this essay mainly concentrate on self-employment and to a much lesser extent on NASCs.

The main gaps treated by the books are the NSS’s history; size and personal profiles; relations with the state; progress achieved and obstacles faced; the role of variables—age, gender (most treated), race, educa­tion, and location—on growing inequalities; particular issues such as access to raw materials, capital and credit, competition, and taxes; and NSS perspectives. This review discusses the data, method, and evidence that each researcher uses and the major issues and findings, arguing that the size of the NSS remains questionable.

In Entrepreneurial Cuba, Archibald Ritter and Ted Henken combine their economic and sociological exper­tise to produce an encyclopedic, balanced, and laudable volume on the development of the NSS in Cuba. Targeted on self-employment and, to a lesser extent, on NASCs, the book also tackles broader topics like the “underground” economy. It starts with an examination of small enterprises in general, internationally, and its lessons for Cuba. Based on historical and comparative approaches, Ritter and Henken discuss the evolution of self-employment throughout Cuban contemporary history. In the socialist period, they com­pare Cuban policies with those of the USSR and Eastern Europe; furthermore they contrast Fidel’s hostility to the NSS (except for reluctant support in times of economic crisis) with Raúl’s more pragmatic and posi­tive style, which does not exempt the sector from tight controls, restrictions, and taxes. Largely based on my cycles approach,4 the history of self-employment under socialism is divided in three periods (each one covered in a chapter): 1959–1990, trajectories and strategic shifts; 1990–2006, the “Special Period”; and 2006–2014, Raúl’s reforms.

Ritter and Henken conclude that the NSS has grown and achieved substantial progress: for instance, increase in authorized activities and licenses, broadened legal markets, deduction of part of the expenses for tax purposes, micro credits and banking facilities, and rental of state facilities. Conversely they identify limi­tations, like narrow definition of legal activities, exclusion of most professional and high-tech occupations, multiple taxes and taxation at a high level, lack of wholesale markets, bureaucratic resistance, obstacles to hiring employees, and discrimination in favor of foreign firms. They provide suggestions to overcome these problems. Lack of space impedes a more profound treatment of this book, the most comprehensive and profound on self-employment so far. The structure of the book, combining historical stages and current analysis of self-employment and NASC, however, is somewhat complex and leads to a certain overlapping.

Ritter and Henken rely on three series of interviews conducted in Cuba with sixty self-employed workers in 1999–2001, half of them re-interviewed in follow-up visits in 2002 and 2009 and, finally, some revisited in April 2011 to evaluate the impact of Raúl’s reforms. The authors select the three most dynamic, lucrative, and sizeable private activities: small restaurants (paladares), taxis, and lodging. They asked their informants about three issues: (1) ambitions and expectations for the future (whether they expected to become true small- and medium-sized enterprises—SME—in the long run); (2) survival strategies in negotiating with the state (how they responded to the government regulations, licenses, and taxes); and (3) distinctions between licensed and clandestine self-employed workers.

Accompanying abundant evidence, deep analysis, statistical tables, synoptic charts, figures, and useful appendices (including a list of the 201 authorized activities for the self-employed and a timetable of the evo­lution of NSS in 1959–2014), the authors intersperse vignettes that allow the reader to better understand the daily life of the self-employed. Occasional jewels in the book brighten our knowledge, such as uncover­ing in fascinating detail the bureaucratic shutdown of El Cabildo, which was the most prosperous private, medium-sized business in Cuba.

Miradas a la economía cubana, a collection edited by well-known Cuban economists Omar Everleny Pérez Villanueva and Ricardo Torres, includes twelve essays that offer a first-rate sample of scholarship on the NSS at the Center for the Study of the Cuban Economy, the best economic think tank in Cuba. The anthology, an excellent complement to the Ritter and Henken book, includes self-employment and NASCs. In the prologue, Juan Valdés Pérez notes that “the new economic model in Cuba is moving [transita] toward a mixed economy, based on a public sector, a mix-capital sector, and a private sector, mostly SME” (14). Most contributors to the volume propose reasonable policies to help the consolidation and further expansion of the NSS.

In the opening chapter, Torres discusses the role of the private sector in a centrally planned economy such as Cuba, which generates an intrinsic conflict. Despite NSS advances, the government still sees it as a supplement to the state sector and imposes clear limits. Hence the NSS role is and will continue to be very minor, if currents trends hold. An important point, among many discussed by Torres, is that its productivity is low, despite the very highly educated labor force (ranked at the top of Latin America), and shows a declin­ing trend due to the low skills of the activities approved. He ends by suggesting, “In a scenario [Cuba] where public enterprises are predominant and mostly inefficient, wealth is not socialized and man is not liberated from alienation, just the opposite” (25). Torres believes that the solution to all existing problems is neither privatization of all public assets nor to insist on old formulas overcome by time, and urges a serious national social debate on these issues.

Pérez Villanueva analyzes and defines self-employment and SME, tracing their evolution and identifying needs such as autonomy, a wholesale market with competitive prices, facilitation of payments through the national banks, and use of highly skilled personnel; he also notes adverse effects like social inequalities (see Zavala et al., below). At the end of his chapter, he asserts that “the Cuban SME would be more viable than the actualization of our economic model and contribute more positive results, providing that the government understands its role and potential” (35).

Camila Piñeiro provides the most comprehensive and deep analysis of NASCs so far. These cooperatives grew 74 percent, from 198 to 345, in 2013–2014, but their tempo slowed to 6 percent in 2015.5 Based on diagnosis and audits done on sixty NASCs in 2014, Piñeiro identifies their achievements (increase in income and motivation, improvement in the locale and working conditions) and problems (complex and delayed creation, insufficient training, and lack of a wholesale market). The most successful NASCs are those cre­ated by the voluntary initiative of a group of persons that share the same goals and values (23 percent of all NASCs), and the least successful are those coming from former state enterprises, without negotiating with their workers so that they accept what is decided from above (77 percent).

Mariuska Sarduy, Saira Pons, and Maday Traba analyze tax evasion and underdeclaration of income among self-employed owners. They report that evasion was 12 percent of total fiscal revenue and 60 percent of registered self-employed contributors in 2013–2014. They carried out 300 interviews with self-employed workers in Havana in 2014 and found that 55 percent omitted income in their declaration for the follow­ing reasons: 95 percent due to very high taxes; 77 percent blamed the complex procedure to pay taxes; 80 percent knew that evasion or underdeclaration are toughly penalized crimes, but half believed that they were necessary to survive, and 20 percent thought that it was improbable that fiscal authorities would catch them.

Expanding her substantial work on geographic inequalities, Luisa Íñiguez uses the 2012 population census to explore the distribution of NSS enterprises in Cuban provinces and municipalities and shows their differences and contribution to social inequalities. She develops various maps of the island, displaying the location of total NSS enterprises, as well as key components such as the self-employed, usufruct farmers, and small private farmers. In addition, she calculates percentages of components of the NSS relative to the employed labor force. The NSS developed much further after 2012, but her work remains valuable and sets a solid foundation for future study.

The role of women in microenterprises is examined by Ileana Díaz and Dayma Echevarría, relying on data from the 2012 population census and Ministry of Labor and Social Security in 2013, and a survey of thirty-five self-employed owners in Havana circa 2014 (63 percent women and 37 percent men). Among other gender inequalities, they find that women are more hurt than men by the lack of a state policy to foster microenterprises, and by poor access to credit as well as to legal and accounting advice. Interviewees answered key questions with a fair consensus: 50 percent noted unfair competition from state and mixed enterprises; most preferred to work as self-employed instead of for the state; public or private financing was judged insufficient; elementary-secondary school didn’t help in their activity but university did; and they noted poor access to wholesale markets, telecommunications, and vanguard technology. Virtually all inter­viewees, but a sizably lower percentage of women than men, said that their success was more than expected. Both genders agreed on the major obstacles: limited demand, excessive state bureaucracy and regulations, too much competition, absence of a wholesale market, and difficulties to get inputs.

Retos para la equidad social, edited by Maria del Carmen Zavala et al., contains twenty contributions, all but one authored by women, focused on socioeconomic inequality under Raúl’s structural reforms. Three chapters of the book deal with expanding inequalities among the self-employed by age, gender, race, educa­tion, and location, and also with their motivation, satisfaction, competition, capital access, obstacles faced, and views of the future.

The best chapter in the collection, by Daybel Pañellas, Jorge Torralbas, and Claudia Caballero, relies on a survey taken between October 2013 and March 2014 among 419 persons self-employed in fifty-seven activities and located in three districts of Old Havana. They find that age, gender, education, and location are important factors in the quality of occupation, access to capital, and earnings of the self-employed. In the sample, 76 percent worked by themselves, without employees; 13 percent were employers and 11 percent employees; 64 percent were men and 36 percent women; 48 percent were white and 52 percent nonwhite; 54 percent were middle-aged adults, 30 percent young people, and 15 percent elderly; 54 percent had precollege or university education, 31 percent had a low level of education, and 15 percent had a technical education (a highly trained labor force and NSS, also noted by Torres). Not only are women underrepresented, but their activities reproduced their roles in domestic life, such as work in cafeterias, food preparation, manicure, makeup, and as seamstresses. While women rented rooms mostly in national pesos (CUP), men rented rooms in the more advantageous convertible pesos (CUC = 24 CUP). Combining education, race, and gender, the best-educated white males had better occupations than the lowest trained nonwhite females (e.g., computer programing vis-à-vis seamstress). The self-employed were mainly attracted by these features of self-employment (not exclusive categories): better income (80 percent), easier labor journey (20 percent), and being their own bosses (15 percent). Their level of sat­isfaction ranged from so-so (53 percent), to good/very good (38 percent), to bad/very bad (9 percent)—the higher the educational level the more occupational satisfaction.6 Success in competition was attributed to the quality of product or service (56 percent), business location (24 percent), and low prices (14 percent). Access to capital was mostly by employers that receive remittances, are white, and have higher or mid­dle education, ample social networks, and good locations; conversely, investment is minimal among low-educated nonwhites. Obstacles encountered by the self-employed were lack of access to raw materials (49 percent), heavy taxes (44 percent), lack of financing (35 percent), state control and inspections (33 percent), and legal procedures (23 percent). These proportions varied in the three districts and were influenced by gender, race, and type of activity; for example, controls and inspections were mostly mentioned by workers with low education, nonwhites, and women. On their perceptions for the future, 81 percent believed that the self-employed would prosper—especially if the mentality of the state and the self-employed changes— and 10 percent didn’t think so.

Geydis Fundora expands on the growing inequalities enumerated above, based on a study of fifty-two self-employed residents of Havana Province in 2010–2013, reaching similar conclusions. Out of the 201 activities approved, 65 percent have a male profile; paladar owners mostly hire women because of their sex appeal to clients and because the work is similar to that done at home; other activities are in practice barred to the “weak sex.” Men tend to be employers and women employees, thus resulting in lower decision making and income for women. The elderly are disadvantaged because most activities require physical strength; most young people are hired as employees and in less specialized activities. There is no political will to gather statistics on race, but whites predominate over blacks and mulattoes, opposite to what Pañellas, Torralbas, and Caballero found; nonwhites have less access to capital and hence to success and higher earnings. Those that have a high initial capital—coming from savings, remittances, or hidden foreign investment—enjoy an advantage over the rest not only to establish the business but also to buy inputs, pay taxes, and bribe inspec­tors. Location in more attractive and populous zones are keys to success.

Magela Romero targets self-employed women engaged on infant care, a most-needed occupation to increase female participation in the employed labor force, which was 37 percent of the total in 2015;7 the low proportion is an outcome of resilient traditional gender roles at home and work. Based on eighteen cases in the town of Cojímar (in Havana) in 2013, the study found that all those self-employed in infant care were women, and half of them had previously been informal domestic employees. All said that their main attraction was a higher income, but all also complained of exhausting work and high responsibility with a monthly salary of 200 CUP per infant, with a maximum of five infants, equal to US$40, still three times the mean average salary in the state sector.

Open for Business by Richard E. Feinberg deals mainly with the economic events following the process of normalization between the United States and Cuba that started at the end of 2014, preceded by a summary of the previous state of the Cuban economy and Raúl’s reforms. Feinberg believes that the emerging NSS “offers the best hope for a more dynamic and efficient Cuban economy, especially if it is permitted to partner with foreign investment and with more efficient state-owned enterprises” (132). One chapter on emerging entrepreneurs is based on a monograph he published in 2013, which at that time provided substantial data and analysis on self-employment, preceding the other three books reviewed herein.8 One graph and one table are updated to mid-2015, but most of the text remains unchanged. The author and an assistant had in-depth conversations with twenty-five microentrepreneurs between March 2012 and April 2013, emphasiz­ing financial issues (averages of time open, number of employees, starting capital, and use of domestic and foreign capital). Interesting profiles of self-employed activities are given on paladares, cafeterias and cater­ing, bed and breakfasts, accounting, a shop selling handicrafts to tourists, building construction and house remodeling, electronic repairs, and renting of 1950s cars; from such profiles he extracts useful lessons.9 A stimulating innovation is the selection of twelve young Cuban “millennials” (aged 20–35), one of them the owner of a cafeteria, for appealing interviews based on ten questions.

Feinberg envisages four stages of capital accumulation of microbusinesses: primitive household accumu­lation, early-mover super-profits, growth and diversification, and strategic alliances with state enterprises and with foreign investors (not yet authorized). Like the other authors whose books I review here, he stresses the progress and achievements of self-employment, perhaps more so than other authors. But he also pin­points the many constraints the self-employed face: poor banking and meager credit, serious scarcity of inputs of all sorts (as a visible exception he gives the wholesale market “El Trigal,” temporarily closed in May 2016), shortage of commercial rental space, a very challenging business climate, and government restric­tions including persecution by government inspectors and heavy fines, as well as constraints on capital accumulation and business growth. He provides his own recommendations to alleviate these problems.

One fundamental question left unanswered is the size of the NSS. Unfortunately, there are no official data on the NSS, complete and disaggregated by components. Neither Ritter and Henken nor most Cuban authors provide such a figure (Torres estimates it as 27 percent of the labor force; p. 21). The only elaborated calculation in the four books is Feinberg’s, who states that “altogether, as many as 2 million enterprising Cubans—40 percent of total employment—and possibly even more can be counted within the private sector” and predicts that “in the next three to five years, total private employment could reach 45 to 50 percent of the active labor force” (Feinberg, 132, 139; emphasis added); this exceeds by 10 percentage points Torres’s middle-term estimate of 35 to 40 percent (24).

Feinberg overestimates the NSS’s size. First, an important semantic and substantive issue is that not all NSS participants are private, only most self-employed workers and their employees as well as small private farmers are. Usufruct farmers, NASCs, and other cooperatives’ members do not own their land or buildings; these belong to the state, which leases them to the workers. Second, several figures in Feinberg’s estimates are either questionable or not supported by specific sources; the main query is what he labels “other private activities (estimated),” such as full-time unregistered self-employment and partial self-employment done by state-sector employees, which add up to between 185,000 and 1,185,000, based on guesstimates (while it is true that some government employees work part-time as self-employed workers, it is impossible to know for how many hours, which makes it difficult to estimate average full days of work). Third is the inclusion of 353,000 members of credit and service cooperatives (CCS), because that number exceeds by 65 percent the total number of all co-op members in 2015, including agricultural production (UBPCs, Basic Units of Agricultural Production, and CPAs, Agricultural Production Co-ops), CCSs (Credit and Services Co-ops) and NASCs.10 Furthermore, many private and usufruct farmers are also members of CCSs, thus they are counted twice. Fourth, the category of “land lease farmers” (172,000) is confusing; on the one hand Feinberg does not specifically include usufruct farmers (312,296), and on the other hand the official data on land leasers (arrendatarios) is only 2,843.11 Fifth, employees of self-employed workers are counted since 2011 in the total number of the self-employed, mixed with owners, and we have shown that there is a double counting in the overall figure. In any case, the official statistics on the total NSS share in the employed labor force expanded from 17 percent in 2008, when Raúl officially became president, to 29 percent in 2015.12 In conclusion, there is no doubt that the NSS is important and growing, but certainly not as much as Feinberg estimates.

In summary, the most studied NSS group is the self-employed; NASCs are briefly discussed by Ritter and Henkel and in Piñeiro’s chapter in Zavala et al. Largely excluded from the discussion are usufruct farmers, and totally omitted is the selling/buying of private homes. The historical approach is followed most inten­sively by Ritter and Henken, although several Cuban authors provide summaries of the evolution in their respective topics. The preferred methodology is interviews or conversations combined with research. There is a consensus that the NSS (mostly self-employment) has been successful despite considerable obstacles. We lack a reliable estimate of the NSS’s size.

Missing in the four volumes is an evaluation of the NSS’s macroeconomic effects.13 Ritter and Henken refer to some results of self-employment, such as job creation, noting the nonfulfillment of the official target of dismissing more than one million unneeded state employees. None of the books discuss the impact of usufruct farming on agricultural output, where NASC members are still minute and their impact is even more difficult to assess. It is true that the scarcity of available data hinder the task, but still some estimation could have been done on the NSS’s effect on produce sales, fiscal revenue, and GDP.14

Feinberg and Ritter and Henken are the only authors who explore the future of the NSS. Feinberg provides three broad overall scenarios, which are thought-provoking but touch little on the NSS: (1) “inertia” with little change, without citing potential precedents and projecting self-employment to 750,000, 48 percent higher than the March 2016 official figure of 507,342; (2) “botched transition and decay,” the most pessimistic, similar to former states of the USSR, but with self-employment expanding to 1 million, twice its 2016 size, as some restraints are removed; and (3) “soft landing” in 2030, the most optimistic, under market socialism as in Vietnam, where self-employment really takes off and reaches 2 million employees and 40 percent of the labor force—this is somewhat confusing because he refers to the private sector and had previously predicted, for the entire NSS, 45 to 50 percent in 2019–2021 (203–222).

Ritter and Henken offer three possible alternative routes for the NSS, without predicting its size: (1) reversal to Fidel’s hostile approach, which they judge very improbable because it is totally unfeasible and discredited (“unlikely to be reversed” for Feinberg, 131); (2) stabilization of Raúl’s current (2014) and cautious reform package to self-employment and NASCs, which would remain in place for the rest of his presidency, but with a significant expansion of both and the potential of creating a “mixed cooperative market economy”; and (3) acceleration of the reform and rebalancing among public, private, and cooperative sectors, with medium and large private enterprises advancing at the expense of co-ops and smaller private enterprises; the viabil­ity of this scenario, they say, could be helped by a “serious relaxation of US policy toward Cuba” that could “encourage the Cuban government pro-market openings” (311).

Cuba is always unpredictable, and none of the three scenarios by the above authors completely fit the situ­ation in August 31, 2016, when this review essay was finished. Ritter and Henken’s book was concluded in October 2014, thus this reviewer has the unfair advantage of almost two years that have brought significant changes, such as the evolution of US-Cuba rapprochement in 2014–2016 and the Seventh Congress of the Communist Party held in April 2016.15 In light of those events, their first and third alternatives are implau­sible, at least in the medium and long run; the second might be conceivable if the emphasis is placed on “stability” instead of significant expansion. By August 2016, however, rapprochement, rather than helping the reforms, appeared to have the opposite effect due to dread in the leadership caused by Obama’s visit and it effects, reflected in the results of the Seventh Party Congress. The number of self-employed workers peaked at 504,613 in May 2015, declined to 496,400 in December, and climbed again to 507,342 in March 2016, an increase of 0.7 percent in ten months, substantially lower that the expansion rate in 2014 and 2015 (14 and 3 percent, respectively). Furthermore, at the Congress, Raúl warned that although NSS forms are not antisocialist, “powerful external forces” try to “empower” them as agents of change, and could risk further “concentration of wealth and property” (the latter was not among the agreements of the Sixth Congress in 2011), making it necessary to impose “well-defined limits” on them.16 The Seventh Congress also recom­mended to halt the creation of new NASCs because of their deficiencies, and to concentrate on the existing ones instead.17 Finally, the only existing wholesale market was temporarily closed in May 2016. Feinberg’s book ended in early 2016, much later than Ritter and Henken’s, but his scenarios and predictions don’t cor­relate well with the facts explained above: “inertia” looks optimistic and even more so “decay”—both appear to be short- or middle-term effects—whereas the 2030 “soft landing” would require the drastic changes detailed by him, which are difficult to visualize now.

1 These basic principles of the reforms were set in the Sixth Communist Party Congress of 2011 and ratified in the Seventh Congress of 2016.

2 The pioneer book in the field is Jorge F. Pérez-López, Cuba’s Second Economy: From Behind the Scenes to Center Stage (New Brunswick: Transaction Publishers, 1995).

3 Oficina Nacional de Estadística e Información (ONEI), Anuario Estadístico de Cuba 2015 (La Habana, 2016).

4 Carmelo Mesa-Lago, Market, Socialist, and Mixed Economies: Comparative Policy and Performance; Chile, Cuba, and Costa Rica (Baltimore: John Hopkins University Press, 2000).

5 ONEI, Anuario Estadístico de Cuba 2015.

6 A series of interviews conducted by five authors in 2014–2015, in a much wider part of Havana City, agreed with the predominance of men over women, the highest participation of middle-aged adults, and the important role of education, but found a prevalence of whites and a higher level of satisfaction. Carmelo Mesa-Lago et al., Voces de cambio en el sector no estatal cubano: Cuentapropis­tas, usufructuarios, socios de cooperativas y compraventa de viviendas (Madrid: Editorial Iberoamericana Vervuert, 2016).

7 ONEI, Anuario Estadístico de Cuba 2015.

8 Richard E. Feinberg, Soft Landing in Cuba? Emerging Entrepreneurs and Middle Classes (Washington, DC: Brookings Institution, 2013).

9 These cases are more varied than those discussed by Ritter and Henken, but the latter provided the most comprehensive and profound analysis of paladares.

10 ONEI, Anuario Estadístico de Cuba 2015.

11 ONEI, Anuario Estadístico de Cuba 2014 (La Habana, 2015).

12 Mesa-Lago et al., Voces de cambio en el sector no estatal cubano; ONEI, Anuario Estadístico de Cuba 2015.

13 Valdés notes in the prologue to Pérez Villanueva and Torres’s book the absence of a macroeconomic essay to place all NSS forms in the proper context.

14 The percentage of GDP generated only by self-employment has been estimated as 5 percent by Saira Pons, Tax Law Dilemmas for Self-Employed Workers (La Habana, CEEE), but by 12 percent by Torres (in Pérez Villanueva and Torres, p. 24), a significant gap. For an assessment of some NSS effects see Mesa-Lago et al., Voces de cambio en el sector no estatal cubano.

15 After this essay was finished, the guidelines (lineamientos) for 2016–2021 were published; a rapid browse indicates no significant changes from the guidelines of 2011.

16 Raúl Castro Ruz, “Informe central al Séptimo Congreso del Partido Comunista de Cuba,” Granma, April 17, 2016 (emphasis added), 1–3. Mauricio Murillo mentioned, as examples of the limits to be imposed, the establishment of limits on the number of hectares that somebody may have (“Intervención en el VII Período Ordinario de la Asamblea Nacional,” Granma, July 9, 2016).

17 Carmelo Mesa-Lago, “El lento avance de la reforma en Cuba,” Política Exterior 30, no. 171 (2016): 94–104.155

 

 

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CUBAN ENTREPRENEURS START FIRST PRIVATE BUSINESS GROUP

A handful of entrepreneurs have quietly formed communist Cuba’s first private small business association, testing the government’s willingness to allow Cubans to organize outside the strict bounds of state control.

By ANDREA RODRIGUEZ, Associated Press. June 1, 2017

HAVANA (AP) — A handful of entrepreneurs have quietly formed communist Cuba’s first private small business association, testing the government’s willingness to allow Cubans to organize outside the strict bounds of state control.

More than a half million Cubans officially work in the private sector, with tens, perhaps hundreds, of thousands more working off the books. Cuba’s legal system and centrally planned state economy have changed little since the Cold War, however, and private business people are officially recognized only as “self-employed,” a status with few legal protections and no access to wholesale goods or the ability to import and export.

The government is expected to take an incremental step toward changing that Thursday when Cuba’s National Assembly approves a series of documents updating the country’s economic reform plan and laying out long-term goals through 2030. Those goals include the first official recognition of private enterprise and small- and medium-size businesses, although it could be years before any actual changes are felt on the ground in the country.

The Havana-based Association of Businessmen is trying to move ahead faster, organizing dozens of entrepreneurs into a group that will provide help, advice, training and representation to members of the private sector. The group applied in February for government recognition. While the official deadline for a response has passed, the group has yet to receive either an OK or negative attention from authorities, leaving it in the peculiar status known in Cuba as “alegal” or a-legal, operating unmolested but vulnerable to a crackdown at any time.

“People have approached with a lot of interest but they don’t want to join until we’re officially approved,” said Edilio Hernandez, one of the association’s founders. Trained as a lawyer, Hernandez also works as a self-employed taxi driver.

“Many people really understand that entrepreneurs need a guiding light, someone who helps them,” he said.

Another founder, Rodolfo Marino, has a construction license and has worked privately and under contract to state agencies. He said organizers of the association have gone door-to-door trying to recruit members by convincing them they need independent representation.

The group says roughly 90 entrepreneurs have signed up. Without legal recognition, the group is not yet charging membership fees, the organizers say. Until then, they meet occasionally in Marino’s Havana home to plan their path forward, which includes legal appeals for government recognition.

“We hope to push the country’s economic development forward,” he said.

The number of officially self-employed Cubans has grown by a factor of five, to 535,000 in a country of 11 million, since President Raul Castro launched limited market-based reforms in 2010. The government currently allows 200 types of private work, from language teacher to furniture maker. In reality, many officially self-employed people have become owners of small business, some with dozens of employees and hundreds of thousands of dollars in annual revenue — big number for a country where the monthly state salary is about $25.

Without access to government-controlled imports, exports or wholesale supplies, business owners are emptying the shelves of state stores, either by snapping up items as soon as they arrive or buying them stolen on the black market. That leaves them vulnerable to crackdowns and frequent extortion from state inspectors.

The government has taken a few tentative moves toward easing the situation in recent months — opening stores where owners of some of the country’s 21,000 bed-and-breakfasts and 2,000 private restaurants can buy large quantities of goods, although still at retail prices.

The state has also promised special access to gas and car parts to taxi drivers who comply with widely flouted government caps on fares.

Along with those small steps, the future of the Association of Businessmen is a gauge of Cuba’s openness to private enterprise and its ability to move forward, the group’s founders say.

“We really hope they approve us,” said Hernandez, the lawyer and taxi driver. “If they don’t, we’ll be in the hands of a state that considers us illegal and we won’t be able to reach our goal of representing entrepreneurs. If they do, it will be a sign that things are changing.”

Some Small Enterprises and Entrepreneurs

Photos by Arch Ritter, February 2014

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ALTERNATE FUTURES FOR CUBA’S EMERGING NON-STATE ECONOMIC SECTOR

Presented at Florida International University, Cuban Research Institute Conference: “Beyond Perpetual Antagonism: Re-imagining U.S. – Cuba Relations.”

February 24, 2017

Complete Presentation:  FIU CRI 2017 Presentation


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FAR FROM SILICON VALLEY, CUBA CULTIVATES STARTUP SCENE

BY Leani García |

Americas Quarterly, June 15, 2016

Original Article Here: Cuba Cultivates Startup Scene

 Cuba’s startup community is developing despite a lack of funding, equipment or fast internet.

 zz wifi-hotspots zzCubans can access the internet at government-run wireless hotspots.

The barriers to founding a tech startup in Cuba are high. For starters, hardly anyone has access to internet connections faster than dial-up.

But that’s not stopping a generation of young entrepreneurs on the island, where a nascent tech community is challenging the idea that tech innovation has to come from places like Silicon Valley.

Two of those entrepreneurs, Eliecer Cabrera Casas and Pablo Rodríguez Yordy, spoke with AQ at a recent tech startup event in Miami about their experience founding the Yelp-like app Conoce Cuba.

“Cuba is an emerging market where there are a lot of opportunities and talented professionals,” Cabrera said.You can’t invest at the moment, but in a short amount of time conditions can change. We’re preparing the field for the future.”

In addition to the challenges that entrepreneurs face region-wide – from weak infrastructure to innovation-stifling corruption – Cubans like Cabrera face a number of unique obstacles to getting their ideas off the ground.

One of the first hurdles they face is funding. While bank lending on the island is increasing, it’s still not sufficient to meet the needs of the 500,000 registered self-employed Cubans. And having been excluded from Cuba’s recent foreign investment law, tech entrepreneurs don’t have a legal avenue to receive direct funding from foreign companies or investors. Instead, they rely on a combination of state salaries and family connections to support their ideas. An estimated 70 to 80 percent of Cuba’s small businesses are funded with remittances and family money, according to Sergio Lázaro, president of the Cuban software engineering startup Ingenius.

Then there’s web access. Cuba has the lowest internet penetration rate in the region, at just 3.4 percent for authorized households. For businesses like Ingenius, which specializes in cloud computing, the key is to make the most of limited time on the internet. Programmers connect just twice a day, once in the morning to download what they’re working on and again in the evening to push finished products to their clients.

The spotty internet can also create opportunities. Conoce Cuba, which functions as an offline app and website, was built as an upgrade to traditional phone books, one of the few ways to discover business and restaurants on the island. Because Cuba has limited internet and nearly non-existent 3G or 4G cell phone network coverage, the app was first distributed through a network of cell phone repair shops. The shops agreed to act as physical app stores where Cubans could download the latest version of Conoce Cuba.

“Now there are about 70 of these repair shops in Havana that can […] install or update [the app] for users for free,” Cabrera said.

Today, the Conoce Cuba app is also distributed through the paquete semanal — a digital selection of TV shows, movies, foreign newspapers and music known in the U.S. as the internet in a box because it can be downloaded and shared without an internet connection.

The company’s founders acknowledged the difficulties in coding software so smartphones function as if they’re on the web even while not being connected to the internet. But a bigger challenge has been a lack of access to hardware, in part because of the U.S. embargo.

“We weren’t able to see what we’d created come to fruition because we lacked the resources,” explained Rodríguez.

Like many Cubans, however, they said they found ways to resolver, or overcome. By borrowing devices from friends and the repair shops they used to distribute the app, or by purchasing them outside Cuba, Cabrera and Rodríguez found creative ways to test and distribute their product on the island. Now, the task is to convince business owners and consumers that their product deserves a look.

“We were doing something new that people had never seen before, we had to earn their trust,” Rodríguez said. “The biggest challenge for us, and for any entrepreneur in Cuba, is to change the Cuban mentality about how to consume a tech product.”

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ASSOCIATION FOR THE STUDY OF THE CUBAN ECONOMY, PAPERS AND PROCEEDINGS OF THE TWENTY-FIFTH ANNUAL MEETING, JULY 30-AUGUST 1, 2015

ASCE: Cuba in Transition: Volume 25

Papers and Proceedings of the Twenty-Fifth Annual Meeting,  July 30-August 1, 2015

All papers are hyperlinked to the ASCE Website and can be seen in PDF format.

wwwPreface

Conference Program

Table of Contents

Reflections on the State of the Cuban Economy Carlos Seiglie

¿Es la Economía o es la Política?: La Ilusoria Inversión de K. Marx Alexis Jardines

Los Grandes Retos del Deshielo Emilio Morales

Preparing for a Full Restoration of Economic Relations between Cuba and the United States Ernesto Hernández-Catá

Economic Consequences of Cuba-U.S. Reconciliation Luis R. Luis

El Sector Privado y el Turismo en Cuba Ante un Escenario de Relaciones con Estados Unidos José Luis Perelló Cabrera

The Logical Fallacy of the New U.S.-Cuba Policy and its Security Implications José Azel

Why Cuba is a State Sponsor of Terror Joseph M. Humire

The National Security Implications of the President’s New Cuba Policy Ana Quintana

Factores Atípicos de las Relaciones Internacionales Económicas de Cuba: El Rol de los Servicios Cubanos de Inteligencia Enrique García

Entrepreneurship in Post-Socialist Economies: Lessons for Cuba Mario A. González-Corzo

When Reforms Are Not: Recent Policy Development in Cuba and the Implications for the Future Enrique S. Pumar

Revisiting the Seven Threads in the Labyrinth of the Cuban Revolution Luis Martínez-Fernández

La Economía Política del Embargo o Bloqueo Interno Jorge A. Sanguinetty

Establishing Ground Rules for Political Risk Claims about Cuba José Gabilondo

Resolving U.S. Expropriation Claims Against Cuba: A Very Modest Proposal Matías F. Travieso-Díaz

U.S.-Cuba BIT: A Guarantee in Reestablishing Trade Relations Rolando Anillo, Esq.

Lessons from Cuba’s Party-Military Relations and a Tale of “Two Fronts Line” in North Korea Jung-chul Lee

The Military, Ideological Frameworks and Familial Marxism: A Comment on Jung-chul Lee,“A Lesson from Cuba’s Party-Military Relations and a Tale of ‘Two Fronts Line’ in North Korea” Larry Catá Backer

Hybrid Economy in Cuba and North Korea: Key to the Longevity of Two Regimes and Difference Young-Ja Park

Historical Progress Of U.S.-Cuba Relationship: Implication for U.S.-North Korea Case Wootae Lee

Estimating Disguised Unemployment in Cuba Ernesto Hernández-Catá

Reliable Partners, Not Carpetbaggers Domingo Amuchástegui

Foreign Investment in Cuba’s “Updating” of Its Economic Model Jorge F. Pérez-López

Global Corporate Social Responsibility (GCSR) Standards With Cuban Characteristics: What Normalization Means for Transnational Enterprise Activity in Cuba Larry Catá Backer

Bienal de la Habana, 1984: Art Curators as State Researchers Paloma Checa-Gismero

Luchas y Éxitos de las Diásporas Cubana Lisa Clarke

A Framework for Assessing the Impact of U.S. Restrictions on Telecommunication Exports to Cuba Larry Press

Measures to Deal with an Aging Population: International Experiences and Lessons for Cuba Sergio Díaz-Briquets

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