Tag Archives: General Economic Analyses

Yoani Sanchez on Cuba’s Current Predicament: “ Country for Old Men”

BY YOANI SÁNCHEZ

This essay was originally published in Foreign Policy, October 12, 2011. It can be found here:  “ Country for Old Men” or here: http://www.foreignpolicy.com/articles/2011/10/11/country_for_old_men

At the end of his July 31, 2006, broadcast, the visibly nervous anchor on Cuban Television News announced that there would be a proclamation from Fidel Castro. This was hardly uncommon, and many Cubans no doubt turned off their TVs in anticipation of yet another diatribe from thecomandante en jefe accusing the United States of committing some fresh evil against the island. But those of us who stayed tuned that evening saw, instead, a red-faced Carlos Valenciaga, Fidel’s personal secretary, appear before the cameras and read, voice trembling, from a document as remarkable as it was brief. In a few short sentences, the invincible guerrilla of old confessed that he was very ill and doled out government responsibilities to his nearest associates. Most notably, his brother Raúl was charged with assuming Fidel’s duties as first secretary of the Communist Party’s Central Committee, commander in chief of the Revolutionary Armed Forces, and president of the Council of State. The dynastic succession had begun.

It was a miracle that the old telephone exchanges, with their 1930s-vintage equipment, didn’t collapse that night as callers rushed to share the news, in a code that was secret to no one: “He kicked the bucket.” “El Caballo” — the Horse — “is gone.” “The One is terminal.” I picked up the receiver and called my mother, who was born in 1957, on the eve of Castro’s revolution; neither of us had known any other president. “He’s not here anymore, Mom,” I said, almost whispering. “He’s not here anymore.” On the other end of the line she began to cry.

It was the little things that changed at first. Rum sales increased. The streets of central Havana were oddly empty. In the absence of the prolific orator who was fond of cutting into TV shows to address his public, homemakers were surprised to see their Brazilian soap operas air at their scheduled times. Public events began to dwindle, among them the so-called “anti-imperialism” rallies held regularly throughout the country to rail against the northern enemy. But the fundamental change happened within people, within the three generations of Cubans who had known only a single prime minister, a single first secretary of the Communist Party, a single commander in chief. With the sudden prospect of abandonment by the papá estado — “daddy state” — that Fidel had built, Cubans faced a kind of orphanhood, though one that brought more hope than pain.

Five years later, we have entered a new phase in our relationship with our government, one that is less personal but still deeply worshipful of a man some people now call the “patient in chief.” Fidel lives on, and Raúl — whose power, as everyone knows, comes from his genes rather than his political gifts — has ruled since his ultimate accession in February 2008 without even the formality of the ballot box, prompting a dark joke often told in the streets of Havana: This is not a bloody dictatorship, but a dictatorship by blood. Pepito, the mischievous boy who stars in our popular jokes, calls Raúl “Castro Version 1.5” because he is no longer No. 2, but still isn’t allowed to be the One. When the comandante — now barely a shadow of his former self — appeared at the final session of the Communist Party’s sixth congress this April, he grabbed his brother’s arm and raised it, to a standing ovation. The gesture was intended to consecrate the transfer of power, but to many of us the two old men seemed to be joining hands in search of mutual support, not in celebration of victory.

Raúl’s much-discussed reforms followed the supposed handover of power, but in reality, they have been less steps forward than attempts to redress the legal absurdities of the past. One of these was the lifting of the tourist apartheid that prevented Cubans from enjoying their own country’s hotel facilities. For years, to connect to the Internet, I had to disguise myself as a foreigner and mumble a few brief sentences in English or German to buy a web-access card in the lobby of some hotel. The sale of computers was finally authorized in March 2008, though by that time many younger Cubans had assembled their own computers with pieces bought on the black market. The prohibition on Cubans having cell-phone contracts was also repealed, ending the sad spectacle of people begging foreigners to help them establish accounts for prepaid phones. Restrictions on agriculture were loosened, allowing farmers to lease government land on 10-year terms. The liberalization brought to light the sad fact that the state had allowed much of the country’s land (70 percent of it was in state hands) to become overgrown with invasive weeds.

While officially still socialist, the government has also pushed for an expansion of so-called self-employment, masked with the euphemism of “nonstate forms of production.” It is, in reality, a private sector emerging in fits and starts. In less than a year, the number of self-employed grew from 148,000 to 330,000, and there is now a flowering of textile production, food kiosks, and the sale of CDs and DVDs. But heavy taxes, the lack of a wholesale market, and the inability to import raw materials independent of the state act as a brake on the inventiveness of these entrepreneurs, as does memory: The late 1990s, when the return to centralization and nationalization swept away the private endeavors that had surged in the Cuban economy after the fall of the Berlin Wall, were not so long ago.

So for now, the effects of the highly publicized reforms are barely noticeable on our plates or in our pockets. The country continues to import 80 percent of what we consume, at a cost of more than $1.5 billion. In the hard-currency stores, the cans of corn say “Made in the USA”; the sugar provided through the ration book travels from Brazil; and in the Varadero tourist hotels, a good part of the fruit comes from the Dominican Republic, while the flowers and coffee travel from Colombia. In 2010, 38,165 Cubans left the island for good. My impatient friends declare they are not going to stay “to turn off the light in El Morro” — the lighthouse at the entrance to Havana Bay — “after everyone else leaves.”

The new president understands all too well that transformations that are too deep could cause him to lose control. Cubans jokingly compare their political system to one of the dilapidated houses in Old Havana: The hurricanes don’t bring it down and the rains don’t bring it down, but one day someone tries to change the lock on the front door and the whole edifice collapses. And so the government’s most practiced ploy is the purchase of time with proclamations of supposed reforms that, once implemented, fail to achieve the promised effects.

But this can only continue for so long. Before the end of December, Raúl Castro will have to fulfill his promise to legalize home sales, which have been illegal since 1959, a move that will inevitably result in the redistribution of people in cities according to their purchasing power. One of the most enduring bastions of revolutionary imagery — working-class Cubans living in the palatial homes of the bygone elite — could collapse with the establishment of such marked economic differences between neighborhoods.

And yet the old Cuba persists in subtle, sinister forms. Raúl works more quietly than Fidel, and from the shadows. He has increased the number of political police and equipped them with advanced technology to monitor the lives of his critics, myself among them. I learned long ago that the best way to fool the “security” is to make public everything I think, to hide nothing, and in so doing perhaps I can reduce the national resources spent on undercover agents, the pricey gas for the cars in which they move, and the long shifts searching the Internet for our divergent opinions. Still, we hear of brief detentions that include heavy doses of physical and verbal violence while leaving no legal trail. Cuba’s major cities are now filled with surveillance cameras that capture both those who smuggle cigars and those of us who carry only our rebellious thoughts.

But over the last five years the government has undeniably and irreversibly lost control of the dissemination of information. Hidden in water tanks and behind sheets hanging on clotheslines, illegal satellite dishes bring people the news that is banned or censored in the national media. The emergence of bloggers who are critical of the system, the maturation of independent journalism, and the rise of autonomous spaces for the arts have all eroded the state’s monopoly on power.

Fidel, meanwhile, has faded away. He appears rarely and only in photos, always dressed in the tracksuit of an aging mafioso, and we begin to forget the fatigues-clad fighting man who intruded on nearly every minute of our existence for half a century. Just a year ago, my 8-year-old niece was watching television and, seeing the desiccated face of the old commander in chief, shouted to her father, “Daddy, who is this gentleman?”

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New Publication from Cuba: Cooperativas y Socialismo: Una Mirada DesdeCuba

A collection of essays on Cooperatives has just been published in Cuba, compiled by Camila Piñeiro Harnecker of the Centro de Estudios sobre la Economia Cubana. Ms. Camila Piñeiro comes with an impeccable political pedigree, with parents Manuel Piñeiro Losada (a Revolutionary from 1952 onwards and a 32 year veteran of the Central Committee) and Marta Harnecker, (a Chilean sociologist,  leading ideologue and prolific author.) The volume was made available courtesy of ASCE and Joaquin Pujol

The complete document is available hyperlinked here: Cooperativas y Socialismo: Una Mirada DesdeCuba, La Habana: Editorial Caminos, 2011

Compiladora: Camila Piñeiro Harnecker; Coordinador editorial: José Ramón Vidal

Edición: Mayra Valdés Lara; Diseño: Olmer Buchholz Espinosa

The Table of Contents is reproduced below.

Índice

Prólogo Camila Piñeiro Harnecke, 7

Parte 1 ¿Qué es una cooperativa?

1.       Una introducción a las cooperativas, Jesús Cruz Reyes y Camila Piñeiro Harnecker, 31

2.       La construcción de alternativas más allá del capital,  Julio C. Gambina y Gabriela Roffinelli, 55

Parte 2 Las cooperativas y los pensadores socialistas

3.       Cooperativismo y autogestión en las visions de Marx, Engels y Lenin,  Humberto Miranda Lorenzo 71

4.       Cooperativismo socialista y emancipación humana. El legado de Lenin, Iñaki Gil de San Vicente, 103

5.       El Ché Guevara: las cooperativas y la economía política de la transición al socialism, Helen Yaffe 132

6.       Las bases del socialismo autogestionario: la contribución de István Mészáros, Henrique T. Nova, 167

Parte 3 Las cooperativas en otros países

7.       Mondragón: los dilemas de un cooperativismo maduro, Larraitz Altuna Gabilondo, Aitzol Loyola Idiakez y Eneritz Pagalday Tricio, 191

8.       Cuarenta años de autogestión en vivienda popular en Uruguay, El “Modelo FUCVAM”,  Benjamin Nahoum, 219

9.       Economía solidaria en Brasil: la actualidad de las cooperativas para la emancipación histórica de los trabajadores/ Luiz Inácio Gaiger y Eliene Dos Anjos, 245

10.   Autogestión obrera en Argentina: problemas y potencialidades del trabajo autogestionado en el contexto de la poscrisis neoliberal, Andrés Rugge, 272

11.   De las cooperativas a las empresas de propiedad social directa en el proceso venezolano Dario Azzellini, 301

Parte 4 Las cooperativas y la construcción socialista en Cuba

12.   Las cooperativas agropecuarias en Cuba: 1959-presente,  Armando Nova González, 321

13.   La UBPC: forma de rediseñar la propiedad estatal con gestión cooperative, Emilio Rodríguez Membrado y Alcides López Labrada, 337

14.   Notas características del marco legal del ambiente cooperativo cubano,  Avelino Fernández Peiso, 366

15.   Retos del cooperativismo como alternativa de desarrollo ante la crisis global. Su papel en el modelo económico cubano, Claudio Alberto Rivera Rodríguez, Odalys Labrador Machíny Juan Luis Alfonso Alemán, 397

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POLITICAL ECONOMY OF CHANGE IN CUBA

A three-day international symposium held under the auspices of the Bildner Center at City University of New York. and spearheaded by its Director Mauricio Font, was held in March 2011. It was entitled Cuba Futures: Past and Present, and focused on the dynamics of change in contemporary Cuba—the politics, culture, economy.

A selection of the papers on the Cuban economy have been published on the web by the Bildner Centre.  The are all hyperlinked here: Political Economy of Change in Cuba, Bildner Center, CUNY New York. A Table of Contents is presented below. Of special interest are the essays by the analysts from the Centro de Estudios sobre la Economia Cubana, Armando Nova, Camila Piñeiro, Pavel Vidal Alejandro and Omar Everleny Pérez .

Table of Contents

Preface                                                                                                                                   xi

1 La actualización del modelo económico cubano, Omar Everleny Pérez Villanueva

2 Forecasting Cuba’s Economy: 2, 5, and 20 Years, Emily Morris*    10

3 Las restricciones de divisas en la economía cubana, 2010, Pavel Vidal Alejandro 19

4 New Forms of Enterprise in Cuba’s Changing Economy, Camila Piñeiro Harnecker    43

5 Valoración del impacto de las medidas más recientes en los resultados de la agricultura en Cuba, Armando Nova González     63

6 Las nuevas transformaciones en la agricultura cubana: éxitos y desafíos, Reynaldo Jiménez Guethón           81

7 Cuba y el turismo norteamericano. Analisis de potencialidades y de impactos en la región caribeña, Gerardo González Núñez and Roberto Orro Fernández         9

78 Tourism in Cuba: Barriers to Economic Growth and Development Hilary Becker     117

9 Cuba: A Services-Centered Survival and Development Pattern, Alberto Gabriele        133

10 Theoretical Foundations of a Future Privatization in Cuba: The Property and Ownership Paradigm, Frank-Christian Hansel   155

11 Globalization and the Socialist Multinational: Cuba and ALBA’s Grannacional Projects at the Intersection of Business and Human Rights, Larry Catá Backer         183

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Can Cuba Recover from its De-Industrialization? I. Characteristics and Causes

By Arch Ritter

[Note: a subsequent Blog Entry will analyze “Consequences and Courses of Action” ]

Since 1989, Cuba has experienced a disastrous de-industrialization from which it has not recovered. The causes of the collapse are complex and multi-dimensional. Is it likely that the policy proposals of the Lineamientos approved at the VI Congress of the Communist Party of Cuba will lead to a recovery from this collapse? What can be done to reverse this situation?

One of the last Cane-Harvesting Machines Fabricated in Cuba, en route to its Destination, November 1994

Perhaps it should be noted to begin with that the  manufacturing sector of many if not most high income countries have shrunk as a proportion of GDP and especially in terms employment. This has been due to the migration of  labor-intense manufacturing to lower wage countries, most notably China and India, as well as technological change and rising labor productivity in many areas of manufacturing. However, given Cuba’s income levels and its historical record, it could and should be expanding its manufacturing base and perhaps even increasing employment in the sector rather than remaining in melt-down phase

I. Characteristics of Cuba’s De-Industrialization, 1989-2010

The accompanying Charts and Tables, all using data from Cuba’s Oficina Nacional de Estadisticas, indicate the severity of Cuba’s manufacturing situation.

Chart 1 illustrates the almost 60% decline in the physical volume of industrial output – excluding sugar – from 1989 to 1998. By the year 2010, the level of output was at 49.9% of the 1989 level. This does not constitute a recovery.

The physical volume of output by destination is presented in Appendix Table 11.2 below. This Table indicates industrial output including sugar in 2010 was at 43% of its 1989 volume. Products for Consumption were at 81.8% of their 1989 value in 2010. Some product areas had improved, namely manufactures for consumption and “other manufactures” but food drink and tobacco production were at 71.5% of their 1989 volume. Footwear and clothing were at 21.8% of their 1989 volume.  Equipment production had almost totally disappeared and was at 6.6% of their 1989 volume in 2010. Intermediate products were at 34.7% of their 1989 volume, despite a near 50% increase in volumes of mineral extraction. .

Volumes of industrial output by origin or industrial sub-sector are presented in Appendix in Table 11.1 Some manufacturing sub-sectors have virtually disappeared with production at very low levels as a percentage of 1989 levels. For example, for the following sectors, 2010 levels as a percentage of 1989 levels were as follows:

  • Textiles:                                     6.9%
  • Clothing:                                      27.8%
  • Paper and paper products:        6.5%
  • Publications and recordings:   18.0%
  • Wood products:                         12.3%
  • Construction Materials:           27.1%
  • Machinery and Equipment:      0.4%

On the other hand, pharmaceutical production increased dramatically, with 2008 production at 822% of the 1989 level. Tobacco, drinks (presumably alcoholic) and metal products were approximately at the 1989 levels. But almost everything else was around 25% of the levels of 1989 or less.

The collapse of the sugar agro-industrial complex is well known and is illustrated in Chart 2.

II. Causal factors

There are a variety of reasons for the collapse of the industrial sector.

1.      The initial factor was the ending of the special relationship with the Soviet Union that subsidized the Cuban economy generously for the previous 25 years or so. This resulted from the shifting of the Soviet Union to world prices in its trade relations with Cuba rather than the high prices for Cuba’s sugar exports as well as an end to the provision of credits to cover Cuba’s continuing trade deficits with the USSR. The break-up of the Soviet Union and recession in Eastern Europe also damaged Cuba’s exports. These factors reduced Cuba’s imports of all sorts, especially of imported inputs, replacement parts, and new machinery and equipment of all sorts.  The resulting economic melt-down of 1989-1993 reduced investment to disastrous levels and resulted in cannibalization of some plant and equipment for replacement parts. The end result was a severe incapacitation of the manufacturing sector.

2.      The technological inheritance from the Soviet era as of 1989 was also antiquated and uncompetitive, as Became painfully apparent after the opening up of the Soviet economy following Perestroika.

3.      Since 1989, levels of investment have been continuously insufficient. For example, the overall level of investment in Cuba in 2008 was 10.5% of GDP in comparison with 20.6% for all of Latin America, according to UN ECLA, (2011, Table A-4.)

4.      Maintenance and re-investment was also de-emphasized even before 1989. After 1989, maintenance and re-investment were a category of economic activity that could be postponed during the economic melt-down – for a little while. But over a longer period of time, lack of adequate maintenance of the capital stock has resulted in its serious deterioration or near destruction. This can be seen graphically by the casual observer with the dilapidated state of housing in Havana and indeed the frequent “derrumbes” or collapse of houses and abandoned urban areas.

5.      The dual monetary and exchange rate system penalizes traditional and potential new exporters that receive one old (Moneda Nacional) peso for each US dollar earned from exports – while the relevant rate for Cuban citizens is 26 old pesos to US$1.00. This makes it difficult if not impossible for some exporters and was a key contributor to the collapse of the sugar sector.

6.      The blockage of small enterprise for the last 50 years has also prevented entrepreneurial trial and error and the emergence of new manufacturing activities.

7.      Finally, China has played a major role in Cuba’s de-industrialization as it has done with other countries as well. China has major advantages in its manufacturing sector that have permitted its meteoric ascent as a manufacturing power house. These include

  • Low cost labor;
  • An industrious labor force;
  • Past and current emphases on human development and higher education;
  • A relatively new industrial capital stock;
  • Massive economies of scale;
  • Massive “agglomeration economies”;

But of particular significance has been its grossly undervalued exchange rate that has permitted it to incur continuing trade and current account surpluses and amass foreign assets now amounting to around US$ 3 trillion. Indeed, in my view, China has cheated  in the globalization process and captured the lion’s share of its benefits through manipulation of the exchange rate, and has contributed to the generation of major imbalances for the rest of the world, including both the United States and Cuba among other countries. .

China’s undervalued exchange rate has co-existed with Cuba’s grossly overvalued exchange rate that has been partly responsible for pricing potential Cuban exports of manufactures out of the international market. The result is that Cuba is awash with cheap Chinese products that have replaced consumer products that Cuba formerly – in the 1950s as well as the 1970s – produced for itself.

With respect to the sugar sector, there are a number of factors have been responsible for its decline.

1.      Most serious, the sector essentially was a “cash cow” milked to death for its foreign exchange earnings, by insufficient maintenance and by insufficient re-investment preventing productivity improvement.

2.      The monetary and exchange rate regimes under which it labored have also damaged it badly. Earning one “old peso” for each dollar of sugar exports has deprived the sugar sector of the revenues needed to sust4ain its operations.

3.      Finally the decision by former President Fidel Castro to shut down close to half the industrial capacity of the sector and try to convert former sugar lands to other uses sealed its fate.  In view of Cuba’s natural advantages in sugar cultivation, the sophistication and diversity of the whole sugar agro-industrial cluster of activities, the high sugar prices of  recent years and the competitiveness of ethanol derived from sugar cane, this decision was foolish in the extreme.

Next: Part II, The Consequences of Deindustrialization and Possible Future Courses of Action. will be published in the next Blog Entry

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NUEVA EDICIÓN DE LA REVISTA ESPACIO LAICAL

The July-September 2011 edition of La Revista Espacio Laical has just been published.  Its primary focus is on an evaluation of the results of the VI Congress of the Communist party of Cuba.Included also is an interview with Phil Peters, author of the Blog The Cuban Triangle and Carlos Saladrigas.Unfortunately it is available only in Spanish.

Here is a full Table of Contents together with Abstracts of some of the Economics Essays with hyper-links.

Table of Contents:

Índice General
Secciones y artículos:

EDITORIAL : El reto de ser audaces  – Del Magisterio.

RELIGIÓN
– Contemplarán al que traspasaron.  Por Sandro Magister

– La contemplación de la belleza.  Por Joseph Ratzinger

PÁGINAS RESCATADASA cargo de Jorge Domingo Cuadriello
– El patriotismo cubano. Por Eliseo Giberga

EL DOSSIER: Post VI Congreso PCC
– El VI Congreso del Partido y los Lineamientos: ¿un punto de vi raje para Cuba?  Por Archibald Ritter
– El VI Congreso: una evaluación preliminar.  Por Armando Chaguaceda.
– Cuba: ¿qué cambia tras el VI Congreso del Partido Comunista?  Por Carmelo Mesa-Lago.
– Cambios en marcha y consensos por lograr.  Por José Ramón Vidal
– Tratando de reinventar el socialismo. (Entrevista a Ricardo Alarcón). Por Manuel Alberto Ramy
– Reformas económic as y desarrollo en el Este de Asia: ¿una experiencia para Cuba? Por Arturo López-Levy

INTERNACIONALES

– La apuesta egipcia. Entrevista a Antonios Naguip. Por Gianni Valente
– Mi vida para la libertad de Chile. Entrevista a Sergio Bitar. Por Roberto Veiga González

BÚSQUEDA:

– Cuba y su diáspora: el desafío de facilitar un reencuentro.  Por Carlos Saladrigas

– Poder  e ineptitud en el exilio de Miami. Por Alejandro Armengol

CUBA
– Vivir como vecinos. Entrevista a Philip Peters. Por Roberto Veiga González

– Aportando para el diálogo y el consenso.  Entrevista a Roberto Veiga González.  Por Armando Chaguaceda

TEMA POLÉMICO

– Saladrigas, Arboleya y el debate sobre el futuro de Cuba.  Por Lenier González Mederos

CULTURA

– Re-señas de libros. Por Jorge Domingo Cuadriello

– Elogio y digresión.  Por David Mateo

– Aspera ad Astra o el itinerario espiritual de un líder político. Por Habey Hechavarría Prado

– José María Chacón y Calvo. Por Malena Balboa Pereira

– Cambiar o no cambiar: ¿es ese el dilema? Por Francisco Almagro Domínguez

– Harold Bloom y yo. Por Roberto González Echeverría

ESPIRITUALIDAD

– En busca de una transformación relevante. Por Raúl Fornet-Betancourt

DE LAS ENTRAÑAS DE LA ISLA

– Cuba en su diversidad cultural. Por Jesús Guanche

EN DIÁLOGO

– El lugar de la ciudadanía. Participación política  y República en Cuba.  Por Julio César Guanche

LA POLÉMICA

– Las propuestas de Carlos Saladrigas para Cuba. Por Jesús Arboleya Cervera

– Comentarios sobre la entrevista a Saladrigas y las opiniones de Arboleya. Por Ramón de la Cruz Ochoa

– Saladrigas y el debate con Ramón de la Cruz. Por Jesús Arboleya Cervera

– Soberanía nacional, emigrados e inversionistas Por Arturo López-Levy

Abstracts

El VI Congreso del Partido y los Lineamientos: ¿un punto de viraje para Cuba? Por Archibald Ritter

El VI Congreso del Partido Comunista de Cuba (PCC) probablemente será de gran importancia para el futuro de Cuba. La revisión que el Congreso hizo de los Lineamientos de la Política Económica y Social del Partido y la Revolución significa que ahora es políticamente correcto apoyar, promover e implementar esta ambiciosa agenda de reformas. Por deducción, es también políticamente correcto llegar a la conclusión de que medio siglo de experimentación económica estuvo en su mayor parte equivocada, y fue contraproducente e insostenible. A pesar de los intentos de crear una impresión de continuidad histórica con la referencia a una “actualización” del modelo económico, los viejos enfoques de gestión económica han quedado profundamente desacreditados. El Congreso ha certificado el clima creado por los cambios de opinión acerca de cómo puede funcionar mejor la economía cubana. Ahora parece que es altamente improbable un regreso a los viejos modos de operar.
(leer más…)


El VI Congreso: una evaluación preliminar. Por Armando Chaguaceda
Pocos eventos han generado tantas esperanzas, frustraciones y debates como el pasado VI Congreso del Partido Comunista de Cuba. La postergación del mismo por 14 años y el trasfondo político del país (continuación de la crisis estructural del modelo socialista de Estado, inicio de reformas económicas e institucionales, relevo de liderazgo) fueron caldo de cultivo para las más variadas especulaciones. Por ello, al cierre inmediato de sus cortinas, diferentes analistas compartieron sus plurales evaluaciones del foro, tributando al necesario balance de sus resultados en cuyo seno se inserta el presente texto. (leer más…)


Cuba: ¿qué cambia tras el VI Congreso del Partido Comunista? Por Carmelo Mesa-Lago
En abril de 2011 se realizó el VI Congreso del Partido Comunista de Cuba (pcc), después de 14 años sin celebrar ese tipo de reuniones. El Congreso estuvo marcado por las ambiciosas reformas que Raúl Castro se propuso como meta tras reemplazar a su hermano Fidel Castro en 2006. No obstante, las contradicciones, las indecisiones, las inercias y las resistencias del aparato burocrático siembran dudas acerca de la eficacia de los cambios aprobados por el Congreso para sacar al país de la profunda crisis económica que enfrenta y recuperar unas fuerzas agotadas. (leer más…)


Cambios en marcha y consensos por lograr. Por José Ramón Vidal
Las sesiones del VI Congreso del Partido Comunista de Cuba, celebradas en abril último, cerraron una etapa de formulación y consulta de propuestas dirigidas a producir transformaciones en el modelo económico y social, que como es lógico suponer tienen y tendrán en lo adelante inevitables repercusiones en la esfera política. (leer más…)


Tratando de reinventar el socialismo. (Entrevista a Ricardo Alarcón). Por Manuel Alberto Ramy
Hace apenas 48 horas concluyó el VI Congreso del Partido Comunista de Cuba, un congreso que, según lo que he leído y escuchado, prefigura un país cualitativamente distinto y una sociedad diferente. El presidente de la Asamblea Nacional y miembro del Buró Político del Partido Comunista, Ricardo Alarcón, me ha concedido esta entrevista. Sé que dispone de poco tiempo así que me gustaría hacerle tres preguntas muy concretas. La primera está referida al ámbito del Poder Popular.(leer más…)


– Reformas económicas y desarrollo en el Este de Asia: ¿una experiencia para Cuba? Por Arturo López-Levy
Al discutir los cambios planteados en los Lineamientos económicos y sociales del VI Congreso del Partido Comunista de Cuba, muchos observadores han evocado las reformas en el Este de Asia, particularmente los procesos ocurridos en China y Vietnam. El contexto cultural, económico y social cubano es diferente al de estas naciones; sin embargo, conviene plantearse si hay lecciones de aquellas experiencias que Cuba pueden adaptar. (leer más…)


 

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Centro de Estudios sobre la Economía Cubana, “Seminario Anual sobre la Economía Cubana” 21-24 de junio de 2011

 The Centro de Estudios sobre la Economia Cubana has just completed and publicized its 2011 Annual Report on the Cuban economy. Here are hyperlinks to the main economics articles. A number of essays focussing on enterprise management have not been included here.

Juan Triana Cordoví, “Cuba 2010-2011, del crecimiento posible al desarrollo necessario

Jorge Mario Sánchez Egozcue, “La Relación Crecimiento Económico y Sector Externo, una evaluación de la dinámica

Pavel Vidal Alejandro y Omar Everleny Pérez Villanueva, “Relanzamiento del cuentapropismo en medio del ajuste estructural1
 
Ileana Díaz Fernández y Ricardo Torres Pérez, “Los encadenamientos productivos, un análisis para Cuba

 

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Similar Policies, Different Outcomes: Two Decades of Economic Reforms in North Korea and Cuba

An interesting comparison of Cuba and North Korea has just been published by Dr. José Luis León-Manríquez, a professor of international studies at the Department of Politics and Culture of the Metropolitan Autonomous University-Xochimilco, in Mexico City. It is available here:

Similar Policies, Different Outcomes, Two Decades of Economic Reforms in North Korea and Cuba

Introduction: “This article is aimed at analyzing, in a comparative perspective, the economic reforms undertaken by Democratic People’s Republic of Korea (DPRK, or North Korea) and Cuba since the demise of the Soviet bloc in the late 1980s and the early 1990s.1 The comparison seems pertinent inasmuch as both the DPRK and Cuba are relatively small countries that managed to survive the collapse of real socialism. Although the geographic areas of both countries are roughly the same, the North Korean population is more than double Cuba’s; by contrast, the Cuban GDP per capita is four times bigger than the DPRK’s individual income (Figure 1). Both countries have been ruled by single parties and have undertaken successful dynastic successions, and both countries have tried to maintain, with increasing tribulations, economic systems that advocate central planning and state property.”

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Espacio Laical, “The Sixth Party Congress and “Lineamientos”: A Turning Point for Cuba?”

Just Published on Espacio Laical, Suplemento Digital No.132 / 16 de Junio 2011
Tomado de la sección Búsqueda (revista 3-2011) Hyperlink here:

The Sixth Congress of the Cuba’s Communist Party will likely be of immense importance for Cuba’s future. The ratification of the revised Lineamientos de la Política Económica y Social del Partido y la Revolución “by the National Assembly means that it is now politically correct to support, advocate and implement an ambitious reform agenda.  By implication, it also is politically correct to draw the conclusion that a half century of economic experimentation with the lives of Cuban citizens was for the most part misguided, counterproductive, and unsustainable.  Despite attempts to create an impression of historical continuity by referring to the “updating” of the economic model, the old approaches to economic management have been deeply discredited. The shifting climate of opinion regarding how the Cuban economy can best function has been certified as reasonable by the National Assembly.  It now appears that a regression to old modes of economic operation is now highly improbable..

The economic future for Cuba clearly lies in a newly-rebalanced albeit vaguely-envisaged mixed market economy that will be the outcome of the various reforms that are slated to be implemented.  This is a surprising reversal of fortunes. It also constitutes a vindication of the some of the views of the critics of past economic policies.

The “Lineamientos” represent an attempt by President Raul Castro to forge his own “legacy” and to emerge from the long shadow of his brother, as well as to set the Cuban economy on a new course. The ratification of the reform agenda represents a successful launch of the “legacy” project.  President Raul Castro would indeed make a unique and valuable contribution to Cuba and its citizens were he to move Cuba definitively through dialogue and agreement among all Cubans towards a model that guarantees both economic and social rights as well as civil liberties and authentic democracy.

Are moves in these directions likely to happen? Not under current political circumstances. However, there are bottom-up pressures building and some official suggestions that movement towards political liberalization is not impossible. In the meantime, Raul’s de-centralizing, de-bureaucratizing and “market-liberalizing” reforms been launched. This is a good start for the construction of a positive independent “legacy.”

I. Cuba’s Economic Situation

In various speeches since 2006, Raul Castro has indicated that he recognizes the problems that Cuba confronts in terms of the production of agricultural and industrial goods and improvement of Cuba’s infrastructure (despite the ostensibly solid GDP performance from 2005 to 2009 before Cuba was hit by the international recession.) He is well aware of the central causal forces underlying weak Cuba’s economic vulnerabilities and weaknesses such as the unbalanced structure of the economy, the overburden of deadening rules and regulations and a sclerotic bureaucracy and the monetary and exchange rate pathologies and dysfunctional incentive environment that deform the energies and lives of Cuban citizens.

Cuba’s economic plight can be summarized quickly with a couple of illustrations. First, Cuba’s underwent  serious de-industrialization after 1989 from which it has not recovered, reaching only about 51% of the 1989 level by 2009 (Chart 1)

Source: ONE AEC, 2004, Table 11.1 and 2IX.1

Note: Data for 1990-1997 are not available

There are a variety of reasons for the collapse of the industrial sctor:

(a)    The antiquated technological inheritance from the Soviet era as of 1989;

(b)   Insufficient maintenance over a number of decades before and after 1989;

(c)    The 1989-1993economic melt-down;

(d)   Insufficient levels of investment; (The overall level of investment in Cuba in 2008 was 10.5% of GDP compared to 20.6% for all of Latin America  according to UN ECLA, 2011, Table A-4.)

(e)    The dual monetary and exchange rate system that penalizes potential exporters that would receive one old (Moneda Nacional) peso for each US dollar earned from exports;

(f)    Competition in Cuba’s domestic market with China which has had a grossly undervalued exchange rate, coexisting with Cuba’s grossly overvalued exchange rate.

Second, the collapse of the sugar agro-industrial complex is well known and is illustrated in Chart 2. The sugar sector essentially was a “cash cow” milked to death for its foreign exchange earnings, by insufficient maintenance, by insufficient re-investment preventing productivity improvement, and by the exchange rate regime under which it labored.
Source: NU CEPAL, 2000 Cuadro A.86; ONE, 2010 Table 11.4

The consequences of the collapse of the sugar sector include the loss of about US$ 3.5 billion in foreign exchange earnings foregone (generated largely with domestic value added); reductions in co-produced electricity; a large increase in idled farm land; a destruction of the capacity to produce ethanol; damaging regional and local development impacts, and a destruction of much of the “cluster” of input-providing, output-processing and marketing activities related to sugar.

Third, the production of food for domestic consumption has been weak since 1989, despite some successes in urban agriculture.  Food imports have increased steadily and in recent years account for an estimated 75 to 80% of domestic food consumption despite large amounts of unused farm land. Meanwhile agricultural exports have languished,

 

Chart 3  Cuban Exports and Imports of Foodstuffs, 1989-2009
(excluding Tobacco and Alcoholic Beverages) (Millions CUP)

Source: NU CEPAL, 2000 Tables A.36 and A.37, and ONE, AEC, Various Years.

Fourthly, “inflation-adjusted “ or “real” wages in the official economy collapsed and have not recovered significantly according to estimates from the Centro de Estudios sobre la Economia Cubana (Chart 4.)  This is indeed a major calamity for the official state economy. But though the official 2008 wage rate remained around 25% of its level of 1989, most people had other sources of income, such as remittances, legal self-employment, home produced goods and services, economic activities in the underground economy, income supplements in joint ventures, goods in kind from the state and widespread pilferage.  Those without other sources of income are in poverty.

Chart 4   Cuba: Real Inflation-Adjusted Wages, 1989-2009
(
Pesos, Moneda Nacional)

Vidal  Alejandro, Pavel, “Politica Monetaria y Doble Moneda”, in Omar Everleny Perez et. al., Miradas a la Economia Cubana, La Habana: Editorial Caminos, 2009

Furthermore, despite the exceedingly low official rates of unemployment – around 1.6 to 1.7%, (far below the “natural rate” of unemployment which represents normal new entrants, job-changers and structural changes in any economy) – underemployment is obviously very high. Presumably the 1.8 million workers considered by the Government to be redundant and subject to probable lay-off and transfer to small enterprise, are “underemployed”, accounting for around 35 per cent of the labor force.

A further dimension of the fragility of Cuba’s economic situation is the dependence on the special relationship with Venezuela that relies upon high oil prices and the presence and munificence of President Chavez.

It is to the credit of President Raul Castro that he has faced these problems directly, diagnosed their sources, and produced the “Lineamientos” to deal with them. The central sources of the difficulties are the general structure of incentives that orients the economic activities of Cuban citizens, this including the dual monetary and exchange rate system, the tight containment of individual economic initiatives, the detailed rules and regulations of the omnipresent bureaucracy. Paradoxically, in attempting to control everything in the past, the government has ended up controlling very little. The effectiveness of stricter state controls actually leads to weaker genuine control due to their promotion of illegalities, corruption and the ubiquitous violation of unrealistic regulations.

II. The Lineamientos

The objective of the “Lineamientos” is “to guarantee the continuity and irreversibility of Socialism” as well as economic development (p.10). This is to be achieved through an “up-dating” of the economic model that should result in utilization of idle lands, reversal of decapitalization of infrastructure and industry, a restructuring of employment, increased labor productivity, increased and diversified exports, decentralized decision-making and elimination of monetary and exchange rate dualism (p. 8.)

But the term “Socialism” remains somewhat ambiguous in the document.  Reference is made to “socialist property” and “preserving the conquests of the Revolution.”  Especially interesting is the statement that

“…socialism signifies equality of rights and equality of opportunities for all the citizens, not egalitarianism” (p.9)

This assertion could be of game-changing significance, as it articulates a fundamental principle of “Social Democracy” more so that a traditional principle of  “Socialism.”  This leaves questions unanswered and doors unclosed.

The “Lineamientos” are in effect an ambitions and comprehensive “wish-list” or statement of aspirations. Many of the 313 recommendations are fairly obvious, trite and general statements of reasonable economic management. Some statements have been made repeatedly over a number of decades, including those relating to the expansion and diversification of exports, science and technology policy, the sugar agro-industrial complex, or the development of by-products and derivatives from the sugar industry (an objective at least since 1950.) Restating many of these as guidelines can’t do much harm, but certainly does not guarantee their implementation.

There are also opaque elements among the guidelines and seeming contradictions as some of them stress continuity of state planning and control while others emphasize greater autonomy for enterprises.  For example, Guideline 7 emphasizes how “planning” will include non-state forms of enterprise and “new methods…. of state control of the economy” while No. 62 states “The centralized character …of the degree of planning of the prices of products and services, which the state has an interest in regulating will be maintained.” But numerous other guidelines spell out the greater powers that state and non-state enterprises will have over a wide range of their activities including pricing (Guidelines 8 to 22 and 63.)

While there are a few gaps and shortcomings in the “Lineamientos” as well as the references to planning and state control, they include some deep-cutting proposals on various aspects of economic organization and policy that represent the inauguration of a movement towards a “market-friendly” economic policy environment. Among these are:

  • Greater autonomy of the enterprise in numerous dimensions, hiring and firing, wage structures, financing, price setting, investing, and also in facing bankruptcy;
  • A phase-out of rationing and the ration book and the more careful targeting of social assistance to those who need it, thereby also strengthening incentives to work (No. 162);
  • The establishment of wholesale markets for inputs for all types of enterprise. (No. 9);
  • Continuing distribution of unused state lands to small farmers (No. 187);
  • Reduction of state controls regarding small farmers and cooperatives regarding producer decision-making, marketing of crops, provision of inputs, and (No. 178-184)

A central policy thrust is the expansion of the self-employment and cooperative sector in order to absorb ultimately some 1,800.000 state workers considered redundant. The legislation already implemented in October 2010 liberalized policy somewhat so as to encourage the establishment of additional microenterprises – especially by the liberalization of licensing, the establishment of wholesale markets for inputs and the recent relaxation of hiring restrictions. However, the limitations of the policy changes are highlighted by the modest increase in the number of “Paladar” chairs – from 12 to 20.

Unfortunately current restrictions will prevent the expected expansion of the sector. These include the heavy taxation that can exceed 100% of net earnings (after costs are deducted from revenues)  for enterprises with high costs of production; the prohibition of the use of intermediaries and advertising, and continued petty restrictions. Perhaps most serious restriction is that all types of enterprises that are not specifically permitted are prohibited including virtually all professional activities.  The 176 permitted activities, some defined very narrowly, contrast with the  “Yellow Pages” of the telephone directory for Ottawa (half the size of Havana) that includes 883 varieties of activities, with 192 varieties for “Business Services”, 176 for “Home and Garden, 64 for “Automotive”  and 29 for “Computer and Internet Services.” Presumably policies towards micro-and small enterprise will be further liberalized in the months ahead if laid-off workers are to be absorbed productively.

One short-coming of the “Lineamientos” is the lack a time dimension and a depiction of how the various changes will be implemented. There are no clear priorities among the innumerable guidelines, no sequences of actions, and no apparent coordination of the guidelines from the standpoint of their implementation. It remains a “check-list” of good intentions, though none-the-less valuable.

The absence of a vision of how change was to occur and the slow pace of the adoption of the reforms so far is also worrisome. However, the Administration of Raul Castro has been deliberative and systematic though also cautious. It is probable that somewhere in the government of Raul Castro there is a continually evolving time-line and master-plan for the implementation of the reform measures.

A careful and well-researched approach to economic reform is obviously desirable. The difficulties encountered in laying off 500,000 state sector workers and re-absorbing them in the small-enterprise sector by March 31, 2011 has probably encouraged an even more cautious  “go-slow” approach.  Perhaps “slow and steady wins the race!”

A process of economic —but not political— reform seems to have already begun following the Congress. Where it will lead is hard to predict. Presumably Raúl Castro’s regime would like the process to end with the political status quo plus a healthy economy. The latter would require a new balance between public and private sectors, with a controlled movement toward the market mechanism in price determination and the shaping of economic structures, and with the construction of a rational configuration of incentives shaping citizens’ daily economic actions so that their private endeavors become compatible with Cuba’s broader economic well-being.

In such a reform process many things would be changing simultaneously with symbiotic impacts and consequences that will likely be painful and are difficult to foresee. Will President Raul Castro have the courage to take the risks inherent in an ambitious process of economic change? This remains to be seen. But the economic and political consequences of inaction are so bleak and the attractiveness of a positive historical “legacy” are so enticing that President Raul Castro will continue.

The economic reform process has been launched. It is in its early stages. It will likely continue under the leadership of Raul Castro. It will proceed far beyond the “Lineamientos” under new generations of Cuban citizens in economic as well as political spheres.

Bibliography

Naciones Unidas, CEPAL, La Economia Cubana: Reformas estructurales y desempeňo en los noventa, Santiago, Chile, 2000, Second Edition.

Oficina Nacional de Estadisticas (ONE), Anuario Estadistico de Cuba (AEC), various years. Website: http://www.one.cu/

Partido Comunista de Cuba,  Lineamientos de la Política Económica y Social del Partido y la Revolución, Aprobado el 18 de abril de 2011, VI Congreso del PCC

United nations, Economic Commission for Latin America and the Caribbean, Preliminary Overview of the Economies of Latin America and the Caribbean, 2010, Santiago, Chile January, 2011

Vidal Alejandro, Pavel, “Politica Monetaria y Doble Moneda”, in Omar Everleny Perez et. al., Miradas a la Economia Cubana, La Habana: Editorial Caminos, 2009

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Special Revista TEMAS Panel on the “Special Period”

TEMAS, Ei Periodo Especial veinte anos despues

TEMAS: no. 65: 59-75, enero-marzo de 2011

http://www.temas.cult.cu/revistas/65/059%20Mesa.pdf

A special section of the TEMAS issue of January-March 2011 includes a Panel discussion on the causes, character and consequences of the “Special Period.” This still seems to be the epoch that Cuba is in officially, as there has been no official termination of the epoch nor a declaration of a new label for a new era. The panelists include Mayra Espina, sociologist ath the Centro de Investigaciones Psicológicas y Sociológicas (CIPS). José Luis Rodríguez, once again at the. Centro de Investigaciones de la Economía Mundial (CIEM) but formerly Minister of Finance and Planning,  Juan Triana, an economist at the. Centro de Estudios sobre la Economía Cubana (CEEC) and Rafael Hernández the Director de TEMAS

The questions addressed to the panel by Rafael Hernández include (in paraphrase):

1.      What was the character of the “Special Period” (SP)?

Were its causes essentially external?

Was it predominantly economic in character?

For how long has it continued?

2.      How effective were the policies implemented to deal with ot”

Were the policies based on scientific research?

Were the policies coherent and effective?

Were there unintended consequences?

To what extent did the policies succeed?

3.      Has the SP generated positive or progressive advances?

4.      Questions from the floor.


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Juan Tamayo citing Oscar Chepe on the Revised PCC Sixth Congress Guidelines

Juan Tamayo,

El Nuevo HeraldMay 10, 2011
External Link: http://www.miamiherald.com/2011/05/09/v-fullstory/2209271/cuba-publishes-list-of-proposed.html

Cuba’s ruling Communist Party finally published its pie-in-the-sky list of proposed economic reforms on Monday, raising both high hopes for a more efficient economy and deep questions about exactly how that would be achieved.

The 313 “guidelines” proposed expanding the sale of homes and cars and the ability of Cubans to travel abroad as tourists, creating production cooperatives and slashing state subsidies and payrolls, among many other changes.

Endorsed last month at a Communist Party Congress, the proposals are designed to rescue a crisis-plagued economy by opening the doors to private business activity without totally abandoning Cuba’s half-century of Soviet-styled central controls.

But the proposals published in the Granma newspaper, the official voice of the party, provided few details on how those changes would be carried out, leaving optimists and pessimists alike to read whatever they wanted into the list.

Cars already can be bought and sold if they were manufactured before 1959 — the year that Fidel Castro’s guerrillas seized power — and houses can be legally exchanged in a complicated system of “permutas” or swaps.

Cubans already can travel abroad as tourists — as long as the government grants them “white cards” — the coveted permissions to leave the country, and return without being considered permanent émigrés who loses all their properties on the island.

Dissident Havana economist Oscar Espinosa Chepe said he was still analyzing the guidelines but considered it “very positive” that they recognized the need for various forms of production, including cooperatives and what Cuba calls “self-employment” — micro enterprises such as family restaurants and party clowns.

But he added that guideline 265 — “to study a policy that would make it easier for Cubans to travel abroad as tourists” — could easily create chaos because “a lot of people would leave for good because of the economic conditions that we face.”

Though officially only “guidelines,” their sensitivity is reflected in their history.

Raúl Castro first proposed 291 items that closely matched his own thinking on reforms late last year, then threw it open to a national debate. By the time the Communist Party Congress opened April 16, more than 40 items had been dropped, one-third had been reworded and the total had grown to 311. And when the government announced Sunday that they would be published on Monday, they had grown to 313.

They are expected to be put into effect by either government decrees or laws approved by the National Assembly of People’s Power, which usually meets only for two brief sessions a year.

The latest list of 313 proposals was not available outside Cuba as of late Monday, but news agency reports from Havana noted some of the details mentioned or left out of the items.

The section on buying and selling home, for example, made no mention of what kinds of taxes or fees will be charged on the transactions, according to the Associated Press. Blogger Yoani Sanchez told journalists that she was skeptical about item 265 because it made no mention of lifting the need for the “white cards.”

Many Cubans already now receive permission to travel abroad, for tourism or family reunions, to any country that would issue them visas, though the “white cards” are often denied to dissidents, physicians, minors and members of the military.

One proposal on foreign investment described it as needed but noted that it should bring with it advanced technologies and management methods as well as new export markets in order to create skills and capital for new jobs.

Mid-sized government enterprises could be spun off as cooperatives run by their current employees, according to the news reports, and would be allowed to sell their products on the open markets. But there was no word on who would set the prices for the goods produced.

Some state-owned buildings could be turned into private residences to ease Cuba’s critical housing shortage, according to an Associated Press report. The government also wants to eliminate the country’s burdensome two-currency system and legalize the sale of construction material at unsubsidized prices.

Other guidelines calls for the continued shrinking of the ration card, which provides all Cubans with a basic basket of food and personal items per month at highly subsidized prices, and replacing it with a system of subsidies for poor families only.

One big issue now is whether any reform enacted will have the desired impact in a country where tight government controls mean that few things can be done legally — but almost anything can be done illegally — Espinosa Chepe told El Nuevo Herald.

Cubans have been illegally buying and selling cars and homes for decades, often paying bribes to the very government officials who were supposed to be blocking or catching and punishing such deals.

“Now comes the strong fight over these points,” Chepe said, “truly the most profound changes in 52 years but one could argue that not enough for the level of crisis that we face in Cuba.”

 

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