• This Blog on The Cuban Economy is dedicated to Cuba's Generation "A". Although inspired by Yoani Sánchez' blog "Generation Y" this is not dedicated to those with names starting with the letter "A". Instead, it draws from Douglas Coupland's novel Generation A which begins with a quotation from Kurt Vonnegut at a University Commencement that was brought to my attention by Andrew Johnston of Ottawa: ".. ... I hereby declare you Generation A, as much as the beginning of a series of astounding triumphs and failures as Adam and Eve were so long ago."

    The objective of this Blog is to facilitate access to research resources and analyses from all relevant and useful sources, mainly on the economy of Cuba.

CARMELO MESA-LAGO, El desempleo en Cuba: de oculto a visible, in Espacio Laical Digital

Espacio Laical, the publication of the CONSEJO ARQUIDIOCESANO DE LAICOS DE LA HABANA , has just published an excellent analysis by Carmelo Mesa-Lago, on underemployment, unemployment and the ability of the small enterprise sector to reabsorb redundant labor to be released from the state sector. Mesa-Lago, the “Dean” of analysts of Cuban economy, has focused particularly on the labor sector in Cuba since he was an employee of the Cuba’s Ministry of Labor in the early 1960s and wrote his Ph.D. Dissertation (The Labor Force, Employment, Unemployment and Underemployment in Cuba, 1959-1970, Beverley Hills, Sage Publications, 1972).

Espacio Laical continues to consolidate its position as a leading fora for economic analysis on the Cuban economy!

The first few paragraphs are presented below. The full analysis can be found here: El desempleo en Cuba: de oculto a visible

El desempleo en Cuba: de oculto a visible: ¿Podrá emplearse el millón de trabajadores que será despedido?

Por CARMELO MESA-LAGO

Mi disertación doctoral, escrita hace 42 años, analizaba los problemas de desempleo declarado o visible, y subempleo o desempleo oculto (subutilización de mano de obra, empleo excedente) en países socialistas. Comparando a Cuba, China, la URSS y Yugoslavia, aportaba evidencia contraria a la teoría entonces en boga acerca del pleno empleo en economías socialistas de planificación centralizada. En el capítulo sobre Cuba (1970-1989) argumentaba que la reducción del desempleo visible durante la Revolución se había logrado en gran medida mediante el empleo excedente o innecesario. Por ejemplo, una fábrica, granja o entidad estatal de servicios, necesitaba 100 trabajadores, pero ocupaba a 200, así reducía el desempleo nacional visible, pero  ambién la productividad y el salario a la mitad, a más de erosionar el incentivo del esfuerzo laboral (Mesa-Lago, 1968, 1972).

Casi medio siglo después, los hechos en 2010 confirman la hipótesis.

Este artículo: 1) prueba con estadísticas oficiales y de CEPAL, así como con análisis de economistas cubanos,  que el problema no es nuevo, sino que se remonta al inicio de la  Revolución; 2) estima la magnitud del desempleo actual y sus efectos; 3) evalúa las medidas del

Gobierno para abrir empleo privado a más de un millón de trabajadores excedentes, y 4) ofrece opciones para mejorar dichas políticas (sus efectos fiscales son analizados por Vidal y Pérez Villanueva).

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Oscar Espinosa Chepe:, “Changes in Cuba: Few, Limited and Late” (Part 1 and 2)

Here is a commentary from Oscar Espinosa Chepe on the recent changes in Cuba.

Óscar Manuel Espinosa Chepe , a Cuban economist, was one of approximately 75 dissidents arrested, tried and convicted in 2003 as part of  a crackdown by the Cuban government. Amnesty International declared him  a prisoner of conscience.

He graduated from the University of Havana with a degree in economics. From 1965 until 1968 he worked in the Economic Advisory Group of Prime Minister Fidel Castro.  From 1970 until 1984, Espinosa was responsible for Cuba’s economic, technical and scientific cooperation with Czechoslovakia, YugoslaviaHungary. In the 1980s, Espinosa grew increasingly disillusioned with the Cuban government’s economic policies. In 1996 he was reportedly fired from his job at  Cuba’s central bank. Since then, he has written many articles, analyses, and commentaries about economic and other matters. (from Wikipedia)

¨Un sistema opresor no puede ser reformado.  Debe ser totalmente abandonado¨, Nelson Mandela

Con la  publicación oficial de los instrumentos legales para la Implementación de la política sobre el ejercicio del trabajo  por cuenta propia y los procesos de reducción de plantillas infladas y, posteriormente, del Proyecto de Lineamientos de la Política Económica y Social para aprobar en el VI Congreso del Partido Comunista a celebrarse en abril de 2011, el gobierno ha brindado elementos que ratifican que sus ideas para salir de la crisis se basan en medidas parciales e insuficientes, que no solucionaran los graves problemas existentes en Cuba.

Cuando se leen detenidamente esos documentos, se evidencia el propósito de realizar tardíos y pequeños cambios para mantener lo que en realidad constituye la fuente real de los problemas: un sistema absolutamente disfuncional y un régimen totalitario que ha llevado la nación al más completo desastre y a la incierta dependencia de factores externos.  Esos documentos denotan que los cambios que se quieren hacer son para que en esencia todo siga igual y se garantice el poder omnímodo y los privilegios detentados por un grupo de personas durante 51 años, sin importar los crecientes sufrimientos de la población.

Esos documentos soslayan la verdadera génesis de los problemas y exponen medidas que se quedan a mitad del camino, llenas de limitaciones y prohibiciones.  Repiten otras anteriores como la entrega de tierras en usufructo o el pago por resultado a los trabajadores, implementadas sin tener en cuenta una concepción integral de la economía.  Los resultados de la entrega de más de un millón de hectáreas de tierra no han logrado el incremento de la producción agropecuaria, sino todo lo contrario.  Hasta el 30 de septiembre de 2010, la caída ha sido del 5,1%, sin incluir el desastroso comportamiento de la producción cañera.

Todo debido a que el estrecho tutelaje estatal  ha quedado intacto, bloqueando y desalentando las capacidades productivas, mientras Cuba continúa comprando en el exterior el 80,0% de los alimentos de la canasta básica.  Similar ocurre en el ámbito salarial con el pago por resultado, al no eliminarse la excesiva burocratización en el sistema empresarial y sin garantizarse el fluido suministro de abastecimientos a los centros de trabajo, ni existir una correspondiente organización laboral.

Ahora se quiere impulsar la restructuración laboral, que abarcará el despido de 500 000 trabajadores  en su primera etapa a finalizar en abril de 2011; el 10,0% de la fuerza de trabajo empleada.  El proceso continuaría hasta completar 1,3 millón   de persona, el 25,0% del total.  Según la concepción gubernamental tendrán la opción ser ubicados en la construcción y la agricultura, o dedicarse al cuentapropismo que ahora se pretende ampliar.  Indudablemente la reorganización de la fuerza de trabajo en Cuba es indispensable.   Resulta imposible organizar los centros de trabajo con las plantillas infladas que no permiten incrementar la productividad, la eficiencia, la disciplina, y mucho menos el salario  para que motive al trabajador, en un país donde equivale a 21 dólares aproximadamente como promedio mensual, según datos oficiales, y reconocido por el Presidente Raúl Castro ¨como insuficiente para poder vivir¨.

Sin embargo, el proceso de racionalización, demorado por tantos años, se quiere hacer de forma muy rápida ahora, sin la preparación adecuada para que pueda tener éxito ni la organización para que en un plazo tan breve se pueda reubicar una cantidad tan grande de trabajadores.

Reconocidos expertos, con cargos oficiales importantes durante muchos años,  han señalado sus preocupaciones por tan amplio desempleo, cuando no se basa en un estudio técnico de organización del trabajo, y, como el Dr.Sc. Lázaro González Rodríguez, exviceministro del trabajo,  publicó en un blog de Internet  ¨el 90,0% de las normas de trabajo son elementales. Las empresas y demás entidades, en su inmensa mayoría, no han realizado durante los últimos años, estudios de organización del trabajo y, por tanto,  cualquier balance de cargas y capacidades es erróneo…durante los últimos 20 años no se han preparado técnicos en organización del trabajo ni se le ha prestado atención a esta disciplina¨.

En ese escenario se plantea efectuar la racionalización con ¨comisiones de expertos¨, compuestas por 5 o 7 personas, elegidas en asambleas en los centros de trabajo, con el evidente propósito de responsabilizar a los  trabajadores del complicado proceso de racionalizar la fuerza de trabajo, cuando se trata de una tarea que compete totalmente a la administración.

Las condiciones para recibir una cantidad tan grande de desempleados no se han preparado convenientemente. Ni siquiera existe un mercado mayorista para abastecer a los cuentrapropistas, por tanto no tienen dónde comprar los insumos en condiciones razonables  para realizar las   producciones y prestar los servicios. Por consecuencia tendrán que adquirirlos en las caras tiendas de venta en divisas o en el mercado negro que seguramente se ampliará ante la falta de previsión del Estado.  Todo esto está unido a altas tasas de impuestos, en un país donde durante decenios fueron suprimidos todos los mecanismos tributarios, por lo que no hay una cultura al respecto.

El colmo de la falta de preparación del proceso se aprecia  en contradicciones entre las decisiones tomadas para ampliar el cuentapropismo y artículos de la Constitución, que no ha sido reformada.  Indudablemente, el anuncio del 1 de agosto por el General Raúl Castro de que se permitiría contratación de fuerza de trabajo por las personas decididas a ejercer el trabajo independiente es positivo.  Sin embargo, no se ha modificado el Artículo 21, que establece: ¨Se garantiza la propiedad sobre los medios e instrumentos de trabajo personal o familiar, los que no pueden ser utilizados para la obtención de ingresos provenientes de la explotación del trabajo ajeno¨. Artículo 45: ¨El trabajo en la sociedad socialista es un derecho…lo garantiza el sistema económico socialista, que propicia el desarrollo económico y social, sin crisis, y que con ello ha eliminado el desempleo….¨ Asimismo, cuando se despiden 500 000 personas, sin totales garantizas de un trabajo honrado, se choca con  el

(SEGUNDA PARTE)

¨Un sistema opresor no puede ser reformado.  Debe ser totalmente abandonado¨, Nelson Mandela

Como señaláramos en la primera parte, los propósitos del gobierno cubano son realizar modificaciones que le permita remontar la actual crisis, cada día más aguda, pero sin perder el control absoluto mantenido sobre la sociedad durante decenios.  Objetivo  imposible de lograr, debido a la acumulación de los problemas existentes, que no sólo son económicos y sociales, sino que abarcan la política, los valores éticos, la identidad nacional, la demografía, el medio ambiente y otros.

Las autoridades pretenden evitar las ¨concentraciones de riquezas¨, como ha reconocido el periódico Granma, y que los ciudadanos al alcanzar la libertad económica deseen obtener la libertad política en una Cuba democrática.  Eso se aprecia en la implantación de un elevado sistema tributario implantado al nuevo sector emergente, mucho más severo y limitante que el existente para las empresas estatales y las mixtas con capital extranjero.   Ejemplo de ello está en el impuesto por la utilización de la fuerza de trabajo que pagarán los trabajadores por cuenta propia, del 25,0% del salario de los trabajadores contratados, considerándose como remuneración mínima pagada a cada trabajador contratado ¨el monto equivalente a un salario medio mensual, incrementado en un 50,0%¨.  Se considera como salario medio mensual el vigente en cada provincia y el Municipio Especial Isla de la Juventud, en el ejercicio fiscal anterior, reconocido por la Oficina Nacional de Estadísticas (ONE).

En caso de contratarse más de 10 y hasta 15 trabajadores, se contempla como remuneración mínima pagada a cada trabajador el monto equivalente a dos salarios medios mensuales; y de contratarse más de 15 trabajadores, el monto equivalente a tres veces un salario medio mensual.  Con ello, y otros obstáculos, el Estado muestra su propósito de impedir el crecimiento del trabajo por cuenta propia y el surgimiento de pequeñas y medianas empresas (PYMES).

A esto se une que los gastos que podrán deducirse de los impuestos sobre los ingresos personales como máximo, y solo en el caso de los elaboradores y vendedores de productos alimenticios y transportadores de carga y pasajeros, podrán ser  hasta un 40,0% de los ingresos obtenidos en el año. En otras actividades, los gastos permitidos a deducir tendrán un porcentaje inferior,  llegando en algunos  oficios hasta únicamente el 10,0% de los ingresos anuales.

Otro ejemplo de las intenciones de limitar la iniciativa individual es la forma como se cobrará el impuesto sobre los ingresos personales.  De acuerdo a las ¨Normas¨, se determinarán por la suma de todos los ingresos devengados menos los gastos deducibles permitidos.  Para la determinación de la base imponible, se deducen además de los ingresos declarados los tributos pagados y el porciento por concepto de los gastos necesarios de la actividad de acuerdo a la siguiente escala progresiva:

UM: PESOS

INGRESOS NETOS ANUALES                                                                                        %

Hasta                      5.000.00                                                                                     Exento

El exceso de          5,000.00 hasta 10,000.00                                                            25

El exceso de        10,000.00 hasta 20,000.00          30                       El exceso de        20,000.00 hasta  30,000.00                                                            35

El exceso de        30,000.00 hasta 50,000.00                                                            40

El exceso  de       50,000.00                                                                                          50

Como puede observarse a partir de 50 000 pesos (2500 US dólares), existe una alta carga tributaria que unida a la existente para el pago por la utilización de fuerza de trabajo hará prácticamente imposible la capitalización indispensable para el crecimiento de los nuevos negocios. A esto se une la obligatoriedad de la contribución a la seguridad social, con el pago del 25,0 % de una base de contribución seleccionada por la persona en cuestión, en  una escala que va de de 350 a 2000 pesos.  La creación de una red de protección económica para los cuentapropistas es en principio algo positivo, pero resulta cuestionable el carácter compulsivo de la medida, mucho más cuando comienza a nacer el sector privado en un contexto sin la debida preparación y   con grandes dificultades de todo tipo.

A los frenos tributarios descritos y la carencia de un mínimo mercado mayorista donde los cuentapropistas pudieran comprar legalmente los productos necesarios para realizar sus actividades, se suman barreras administrativas tendientes a limitar el tamaño de los negociones y evitar el supuesto enriquecimiento de las personas. Así las capacidades de los restaurantes no podrán exceder a 20 comensales, ni las barberías a un numero pequeño de sillones, cuando lo que  requiere urgentemente la economía nacional es alentar a los ciudadanos emprendedores, así como   centros de trabajo prósperos y eficientes donde sean creados a la mayor velocidad posible puestos de trabajo para dar empleo a las personas que próximamente serán masivamente despedidas y que, a la medida que se desarrollen, contribuyan a la riqueza del país con el aumento del pago de impuestos que sirvan para el financiamiento de las necesidades sociales.

Continuará…

La Habana, Noviembre 17 de 2O1O

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Partido Comunista de Cuba, “Proyecto de Lineamientos de la Politica Economica y Social”: Viable Strategic Economic Re-Orientation and / or Wish List ?

I. “Structural Adjustment” on a Major Scale

On Tuesday, November 9, a major document appeared for sale in Cuba entitled “Proyecto de Lineamientos de La Political Economica y Social” or “Draft Guide for Economic and Social Policy.”  The purpose of the “Guide’ presumably is to spark and to shape public discussion and education on the economic matters that will be the focus of the long-postponed Sixth Congress of the Cuban Communist Party to take place in April, 2011. It also provides the essentials of the new approach that will likely be adopted at the Sixth Congress.

It can be found in its entirety, courtesy of the Blog Caf Fuerte. (http://cafefuerte.com/

, here: Projecto de Lineamientos de la Politica Economica y Social,

The “Guide” is a broad-reaching and comprehensive document that puts forward 291 propositions for the improvement of the functioning of the Cuban economy. It signals a break in the four years of near inaction that the Cuban economy endured since Raul Castro took over as acting and then actual President – and the ten years of paralysis from about 1995 to 2006 under President Fidel.  It amounts to a major process of “structural adjustment” of the sort that was begun in 1992-1994, but was then stalled when the Cuban economy appeared to rebound after 1994.  The document is also a contradiction and maybe a “slap-in-the-face” for Fidel Castro, as it indeed indicates that the Fidelista-style Cuban model – his life’s work – is not working. (See “Fidel’s No-Good Very Bad Day” and The “FIDEL” Models Never Worked; Soviet and Venezuelan Subsidization Did.)

II. General Character of the Proposals

The Table of Contents provides a quick idea of the scope of the document:

Introduction

Contours of Economic and Social Policy

I           Economic Management Model

II          Macroeconomic Policies

III        External Economic Policies

IV        Investment Policy

V         Science, Technology and Innovation Policy

VI        Social Policy

VII       Agroindustrial Policy

VIII     Industrial and Energy Policy ix

IX        Tourism Policy

X           Transport Policy

XI         Construction, Housing, and Hydraulic Resource Policy

xii        Commercial Policy.

The Introduction summarizes the basic objectives required to overcome the principal problems of the economy. These include putting into productive use the unused lands constituting almost 50% of total, raising agricultural yields, developing new mechanisms to reverse the process of industrial and infrastructural de-capitalization, eliminating excess and redundant employment, raising labor productivity, recovery of export capacity in traditional exports, undertake studies in order to eliminate monetary dualism, and provide improved capacities for more decentralized regional development.

The “Contour” section then states that “…only socialism is capable of overcoming the difficulties and preserving the conquests of the Revolution, and the implementation of the economic model prioritizes planification and not the market”. However, the next paragraph states “…socialism is equality of rights and equality of opportunity for all citizens, not egalitarianism.” The latter sounds less like “socialism” and more like “social democrat” if not the common approach of most Western countries. The latter quotation makes the former somewhat hard to interpret if not meaningless.

The document then goes on to list the 291 propositions under the 12 different headings. A few of the more interesting propositions are summarized below:

  • Wholesale markets for supplying state, cooperative and self-employment enterprises will be established. (9)
  • State enterprises will decide themselves how to allocate their investment funds, and normally will not receive budgetary support for this. (13)
  • Insolvent enterprises will face liquidation. (16)
  • Workers incomes in state enterprises will be linked to enterprise performance (# 19)
  • Monetary and exchange rate unification will be “advanced” (54)
  • The taxation system will be advanced in terms of progressivity and coverage, and will be based on generality and equity of its structure. (56 and 57)
  • The centralized character of the determination of the planned level and structure of prices will be maintained. (62)
  • Recover the place of work as the fundamental means of contributing to the development of society and the satisfaction of personal and family needs. (130)
  • Modify the structure of employment, reducing inflated staffing and increasing employment in the non-state sector (158-159)
  • Eliminate the ration book as a means of distributing products. (162)
  • Improve agriculture so that Cuba is no longer a net importer of food, prioritizing import substituting activities, reviving citrus fruit production, augmenting sugar production. (166, 174, 179, 194.)
  • Promote export-oriented industry (197)
  • Develop a range of new industries such as tires, construction materials and metallurgy (213, 215, 216)
  • Restructuring of domestic retailing and wholesaling. (283-291)

III. Preliminary Evaluation

This document will receive a great deal of attention inside and outside Cuba. It provides fodder – along with the recent legislation on self-employment – for analysts and observers of Cuba, who have had little of hard substance on which to base their analyses of Cuban policy under the “Raulista” Presidency for some time.

In some senses, this document is remarkable. It sets out an ambitious reform program for much of the Cuban economy. It may indeed constitute a “Wish List” of all the types of policy improvements and changes that would be nice to have. The question is “can and will they be implemented?”

This document also is a major risk for the Raul Castro Administration. It provides a check-list of tasks that will be difficult to achieve. If future implementation and economic performance is far below the expectations that are now being raised to high levels, there could well be a serious fall-out for the Government and the Party.

The document is also broad and ambitious but does not set any clear priorities and does not propose a sequence of actions. Everything can’t be done at once. How should the policy changes be phased or sequenced?

Some observers are skeptical and perhaps cynical regarding the “Guide” – for good historical reasons. In her Blog Entry entitled The Art of Speaking Without Speaking (http://www.desdecuba.com/generationy/?p=2088) Yoani Sanchez states:

When you grow up decoding each line that appears in the newspapers, you manage to find, among the rhetoric, the nugget of information that motivates, the hidden shreds of the news. We Cubans have become detectives of the unexpressed, experts in discarding the chatter and discovering — deep down — what is really driving things. The Draft Guidelines for the Communist Party’s VI Congress is a good exercise to sharpen our senses, a model example to evaluate the practice of speaking without speaking, which is what state discourse is here.

The Guide undoubtedly could be seen as an economic rescue program designed to rescue also the Communist party of Cuba, which faces steady de-legitimation as the economy deteriorates – even as the official GDP statistics appear to rise steadily.

What is missing from the “Guide”? Here is a first brief listing. Further analysis will be incorporated here later.

1.      Nothing is said regarding labor rights. A vital part of the reform approach if labor is to be used effectively would be freedom of association, collective bargaining and the right to strike. In the absence of these, pressures and insights from the grass roots to improve economic policy and its effectiveness are suppressed.

2.      Nothing is said regarding freedom of expression and the right to criticize the policies and institutions openly, honestly and continuously. The absence of this right leads to economic inefficiency and corruption as argued elsewhere. ( Freedom of Expression, Economic Self-Correction and Self-Renewal)

3.      No further elaboration of how the self-employment or micro-enterprise sector is presented, suggesting that the recent reforms are the end of the journey not a first step.

4.      The dedication to centralized determination of prices is problematic. If maintained strictly, it would make the decentralized decision-making allotted to enterprises for investment, the hiring of resource inputs, etc. meaningless, and the problems of trying to run the economy from a few office towers in Havana would continue.

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New Analysis by Francesc Bayo Fornieles, “LAS RELACIONES ECONÓMICAS ENTRE ESPAÑA Y CUBA: ANTECEDENTES Y PERSPECTIVAS”

A recent analysis of Cuba-Spain economic relations has been published by Francesc Bayo Fornieles:

“LAS RELACIONES ECONÓMICAS ENTRE ESPAÑA Y CUBA: ANTECEDENTES Y PERSPECTIVAS”, BOLETÍN ECONÓMICO DE ICE Nº 2995,  DEL 16 AL 31 DE AGOSTO DE 2010

www.revistasice.com/cmsrevistasICE/pdfs/BICE_2995_25-34__2D9DCB3F50615CADB089354D24A747A1.pdf

Here is the summary:

La economía cubana afronta retos muy importantes para superar el estancamiento actual y los problemas estructurales acumulados, que obligan a pensar como asegurar una futura viabilidad. Según las decisiones que acabe adoptando el Gobierno presidido por Raúl Castro, el actual marco de inserción internacional y las condiciones de apertura externa podrían verse afectadas. En las últimas décadas las relaciones económicas entre España y Cuba han seguido una pauta de relativa continuidad, a pesar de los notables altibajos y, a la vez, se han producido frecuentes adaptaciones a los diferentes patrones que las han regido en cada momento. Con estos antecedentes y ante la posibilidad de que puedan abrirse nuevas expectativas, en este trabajo se pretende analizar las perspectivas para avanzar en esas relaciones.

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Still the “Bestest” and the “Worstest” and Maybe the Most Opaque: Cuba in the 2010 UNDP Human Development Report

By Arch Ritter

The 2010 UNDP Human Development Report , published on November 5, 2010, presents the definitive and much-awaited “Report Card” on the social, economic, political, environmental and security dimensions of development for all countries of the world. In this Report, Cuba fares well in some indices, badly on others, but is also “out-of-the-running” on the major UNDP Human Development Indices due to lack of reliable information.

The whole of the UNDP Human Development Report can be accessed here:   2010http://hdr.undp.org/en/mediacentre/

Here are a few of the interesting comparative insights and results for Cuba.

1.      Main Human Development Indices

Cuba is excluded from the main Human Development Indices that the UNDP presents, namely the Human Development Index (Table 1), the Inequality-adjusted Human development Index (HDI) (Table 2) and the Multidimensional Poverty Index (Table 5)  as well as the HDI Trends from 1980 to 2010 (Table 3). This is unfortunate because it is not possible this year to make a comparison of Cuba with other countries or with itself over time.

Due to the existence of the dual exchange rate system in which there is no reasonable single exchange rate, together with the complexity of the highly segmented markets – underground economy, rationing system, farmer’s markets, non-market allocation of some goods and services, and quasi-dollar stores – it was concluded by the UNDP that it was impossible at this time to construct a measure of GDP per capita in purchasing power terms as is done for some 169 other countries. . The UNDP apparently is working with the Government of Cuba to correct this situation. The UNDP’s explanation of the problem is presented in Appendix 1.

2.      Gender Inequality Index

Cuba comes first in Latin America and 47th in the world for this measure, which includes maternal mortality rates, adolescent fertility rate, share of parliamentary seats held by each sex, attainment at secondary and higher education, labor market participation rates, contraception availability, and births attended by health personnel (Table 4).

3.      “Empowerment”” Measures

In a new dimension of its analysis (Table 6), the UNDP brings together a variety of indicators of human “empowerment.”  Cuba fares uniformly badly, and indeed worst in Latin America for many measures:

  • “Democracy”: worst in Latin America;
  • “Press Freedom”: worst in the world, including China;
  • “Satisfaction with Freedom of Choice”: worst in Latin America, with 26% and 28% satisfaction for males and females respectively;
  • “Journalists Imprisoned”: worst in the world with the exception of  China;
  • “Human Rights Violations”: among the worst.

4.      Education

Cuba fares well in education generally (Table 13). One notable feature of Cuba’s comparative experience is that it has the largest tertiary education enrolment in the Hemisphere and the world at 121.5% compared to an average of 36.5% for all of Latin America.

How can this be? Presumably more people than are in the normal tertiary education age cohort are attending colleges or University. This is the result of increasing the supply of tertiary education, by creating alleged “Universities” in every Municipality, plus an increase in the demand for higher education by those who have been put out of work in various areas including the sugar sector. It is difficult to know without further information if the 121.5% figure represents an achievement or a gross misallocation of resources given that Cuba needs to produce real products in agriculture and industry, and seems to be overproducing university graduates – not unlike some higher income countries .

5.      Health

As is well-known, Cuba also fares well in health measures and has been particularly successful in squeezing strong health outcomes from very scarce resources (Table 14).

One interesting measure is the number of doctors per 10,000 people that stands at 64 for Cuba. This again is the highest ration by far in Latin America and the world. Again, this looks like an over-allocation of resources to the “doctor” category in health. However, given that the 30,000 doctors abroad are now the largest earner of foreign exchange for Cuba, it is likely that this over-abundant resource is now being used effectively.

6.      Access to Information and Communications Technology.

Cuba’s performance is in communications and access information is also the weakest in the Hemisphere. Here are a number of indicators noted by the UNDP (Table 16).

  • The access of Cubans to land-line and mobile telephones stands at 13%. This is by far the lowest in the Hemisphere. Even the lower income countries in the region have much higher access to telephones, with Haiti at 33%, Nicaragua 60%, Guatemala 120%; Grenada 86%, El Salvador 131%, Paraguay 103%m and Honduras 96%.
  • The cost of a mobile telephone connection in Cuba is by far the highest in the world, at $120.00.  Obviously this limits the demand for mobile connections and helps explain Cuba’s 13% access rate.
  • Access to the internet is particularly low at 12.9 per 100 persons, though not the lowest in the Hemisphere.
  • The proportion of the population with personal computers was estimated at 5.6 per 100 persons, again low but not the lowest in the Hemisphere.

This illustration shows the HDI trajectories for all countries of the world from 1980 to 2010, excepting Cuba and a few others.
Appendix !: Purchasing power parity conversions and the HDI: an illustration with the case of Cuba (Source: UNDP,  HDR 2010, p.138).

The HDI uses internationally comparable data on gross national income (GNI) per capita from the World Bank (2010g). These data are expressed using a conversion factor that allows comparisons of prices across countries. This conversion, known as purchasing power parity (PPP), is necessary to take into account differences in the value of a dollar across countries.  Four countries have data on all HDI components except for GNI: Cuba, Iraq, Marshall Islands and Palau. For three of these countries (Cuba, Marshall Islands and Palau) this is due to the fact that they do not participate in the International Comparisons Program. Iraq lacks information about GNI for the last 10 years.
To illustrate the options and problems that arise in attempting to reliably estimate GNI per capita in PPP terms, Cuba is used as an example. One well known approach to estimating GNI—used by the Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania (Heston, Summers and Aten 2009)—is a regression that relies on data from the salaries of international civil servants converted at the official exchange rate. However, because the markets in which foreigners purchase goods and services tend to be separated from the rest of the economy, these data can be a weak guide to the prices citizens face in practice. The Center for International Comparisons of Production, Income and Prices recognizes this problem, rating its own estimate of Cuba’s GDP as a “D” (the lowest grade).
An alternative estimate applies the exchange rate used in Cuba and the PPP conversion of an economy with similar attributes, but this method goes against the principle of using a country’s legally recognized exchange rate and prices to convert its national aggregates to an international currency. Another option is to not apply any PPP correction factor to the official exchange rate for convertible pesos. Both of these options yield far lower estimated income than the PPP correction does. The wide variation in income estimates arising from these different techniques indicates that no single robust method exists in the absence of reliable data.
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Does Sherritt International Have a Future in Cuba?

By Arch Ritter

The joint venture between Sherritt International and Cuba is a cooperative masterpiece that generates great benefits for both parties.  However, when looked at from the perspective of transportation costs – shipping nickel/cobalt concentrate from Cuba to Fort Saskatchewan Alberta – together with the “Helms-Burton” status of the mine, some questions occur as to its long term viability.

The Moa mine was initially constructed by US interests – the Moa Bay Mining Company and expropriated by the government of Cuba in August, 1960. The US Foreign Claims Settlement Commission valued the company at $88,349,000 at the time of the take-over.

Sherritt’s connection with Cuba began in 1991 with purchases of Cuban nickel concentrate for its Alberta refinery.  Sherritt had had insufficient volumes of concentrate for many years and in 1990 a refining contract with INCO expired. In 1994, Sherritt International and the Compania General de Niquel of Cuba established a 50/50 joint venture, which now owns the Moa extraction, processing, and smelting operation, the Alberta refinery and the international marketing enterprise. The President of the company, Ian Delaney, also negotiated agreements with the Cuban Government, permitting Sherritt to enter other sectors of the economy, including electric energy, oil and gas, agriculture, tourism, transportation, communications, and real estate. By 2000, Sherritt International had become a major diversified conglomerate in Cuba.

Sherritt International CEO Ian Delaney and President Raul Castro appreciate a comment.

In this deal, the Cuban Government became and is currently a foreign investor in Canada, as the Compania General de Niquel owns 50% of the nickel refinery, a fact not well known in either Cuba or Canada.

I. The Nickel/Cobalt Operation

The linking of the Moa nickel deposit and part of Cuba’s processing capacity with the Alberta refinery and its access to attractive energy sources was a masterful move and has generated important benefits for Cuba and for Sherritt. Cuba has acquired a market for its nickel concentrate. It acquired access to improved production technologies relative to its older 1950s-vintage US technology and its 1960s-vintage Soviet technology which has generated improvements in productivity, energy efficiency, environmental impacts, and health and safety. The Government of Cuba is now the joint owner of a vertically integrated nickel operation, from extraction through to refining and international marketing. Cuba also has obtained new technologies and managerial skills for oil and gas extraction and utilization, as well as electricity generation.

(Click to enlarge)

The Nickel Refinery at Fort Saskatchewan Alberta, jointly owned 50/50 by Sherritt International and the Compania General de Niquel of Cuba.

Sherritt is able to utilize more fully its Canadian refinery and to use its base in nickel to enter other sectors in Cuba. Its earnings from its Cuban operations are significant. The joint venture has been able to increase metal production and achieve high net operating earnings, which have been in the area of 40 to 50 percent of the company’s gross revenues for most years, depending on international nickel prices.  The following Table presents some information on Sherritt’s Cuban operations, drawn from its Annual Reports.

(Click to enlarge)

II. Petroleum, Natural Gas and Electric Power

Sherritt International’s petroleum and natural gas activities also have been successful. New sources of oil and gas have been discovered and extraction rates have increased through enhanced recovery techniques from 1996 to 2000. Natural gas recovery and utilization has also been improved through the construction of two processing plants, a feeder pipeline network, and a 30 Kilometer pipeline to Havana (Sherritt International, Annual Report, 1997, 13).

Sherritt invested CDN $215 million for the construction of two integrated gas processing and electrical generation systems. The natural gas feedstock previously had been flared and wasted. Commissioned in mid-2002, these operations had a combined capacity of 226 megawatts and generated a significant proportion of Cuba’s electricity. At the same time they reduced sulfur emissions, a potential problem especially at the Varadero site, which is adjacent to the hotel zone. By 2007, installed electricity generation capacity had been further increased to 375 mega watts, following an 85 MW expansion that came on stream in early 2006.

In February 1998, Sherritt acquired a 37.5 percent share of Cubacel, the cellular telephone operator in Cuba for $US 38 million, but this has been resold. “Sherritt Green,” a small agricultural branch of the company, entered market gardening, cultivating a variety of vegetables for the tourist market. Sherritt also acquired a 25 percent share of the Las Americas Hotel and golf course in Varadero and a 12.5 percent share of the Melia Habana Hotel, both of which were managed by the Sol Melia enterprise but these also have been divested.  By 2010, Sherritt’s Cuban operations were large and growing. Gross revenues reached CDN $1,040 million in 2008.

III. Energy Costs, Transport Costs and Potential Relocation

However, there are two clouds on the horizon. First, Cuban nickel concentrate is transported by ship to the East coast of Canada and then overland to the Alberta refinery. This seems to make sense economically at this time low energy prices in Alberta and the existence of the refinery there compensate for high transportation costs. However, if – or when –transportation costs rise with higher energy prices, and when the existing plant becomes obsolete or simply reaches the end of its useful life, would a different location become more attractive?   Low cost energy is also available in Venezuela for example. The Chvez factor is also of relevance. Will a future Cuban post-Raul Government still be enamored of a Chvez or post-Chvez Government in Venezuela? What will be the relative risks of relocating the refinery to another location such as Venezuela?

So far, Cuba is tied to the Canadian location through its 50% joint ownership of the Alberta refinery. Would Sherritt ever accept a transfer of the refinery to Venezuela, if pushed by its Cuban partner?  Perhaps in a more distant future that is difficult to foresee. However, Alberta will continue to have competitive energy prices and low risk for a many years to come.

IV. “Helms-Burton” Status of the Mine Properties.

The second possible problem for Sherritt is that the Moa mine and the concentration plant are “Helms-Burton” properties for which there are US claimants. US-Cuba normalization may require Sherritt to negotiate some sort of compensation package for the original US owners.  In one scenario, the US claimants would simply take over the Cuba-Sherritt operation in Cuba. But this would not be reasonable because at this time, the refinery for Cuban nickel is in Alberta and it is jointly owned by Cuba. To construct another would be costly. My guess, however, is that Sherritt, the Government of Cuba and the US claimants will negotiate an arrangement that will be reasonable for all parties.

In any case, the claim of US interests on the mine property generates uncertainties and will be problematic at some time in the future. Sherritt International may well be one of the very few economic interests that perhaps could lose from US-Cuban economic and diplomatic normalization.

V. “Nickel Pig iron”

As noted in an earlier entry in this Blog, a technological breakthrough in the production of “Nickel Pig iron” (NPI), a substitute for refined nickel is already having an impact on the nickel market and causing reductions in the price of nickel. This technology will likely put a cap on nickel prices in future a as alternate new supplies enter the market. This will likely reduce Sherrittt and Cuba’s foreign exchange earnings from nickel exports in future, and may halt any expansions in nickel nickel mining for some time to come. (See Bad News for Cuba’s Nickel Industry and Sherritt.)

Thus, while the near-future looks as bright for Sherritt International in Cuba as the last 10 years or so, these three issues raise ambiguities about its medium and longer term future – at least in the nickel sector.

Ian Delaney: a Sympatico CEO, it would appear

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Jump-Starting the Introduction of Conventional Western Economics in Cuba

By Arch Ritter

I.   Initiation of the Joint Havana-Carleton Universities Economics MA  

As the Cuban economy was sinking into the nadir of its depression following the ending of the “Special Relationship” with the former Soviet Union, the Faculty of Economics at the University of Havana decided that the time was right to introduce conventional economics into University curricula and into Cuba generally. With the collapse of the Soviet Union and the transition to mixed economies throughout Eastern Europe and the Soviet Union, the Soviet version of the discipline of Economics virtually disappeared. Cuban economists were left orphaned with a discipline that had become extinct. They generally were unfamiliar with the near-universal language of economics and found it difficult to communicate in the discipline with their colleagues in Latin America and the rest of the world.

This move to introduce conventional economics was spear-headed by Dra. Lourdes Tabares, who was the Chair of the Economics Department at the University of Havana at the time. It had broad though far from unanimous support within the University.

A meeting was arranged in early December 1993 in Havana to discuss alternative approaches to accelerating the process of developing instruction in conventional economics. Financed by the International Development Research Centre (IDRC), and coordinated by Dr. Gary McMahon, this meeting brought together a number of academics and officials from Chile and Argentina and me from Canada, with University of Havana counterparts.

A decision was reached at that meeting to organize a joint MA program in Economics mainly for young faculty members from Cuban Universities to be given in Cuba at the University of Havana. An agreement was subsequently reached between the President of Carleton University, Dr. Robin Farquhar and the Rector of the University of Havana. Juan Vela, to provide the Carleton program adapted to the circumstances of Cuba.

The program was conceived in December 1993 and was up and running six months later in Havana.

The Economics MA was financed for the first two years by the IDRC and was supported by Gary McMahon and Pierre Beemans. Following that, the Canadian International Development Agency (CIDA) financed another three years of the MA Program. The program received crucial support from the United Nations Economic Commission for Latin America (UN ECLAC), which lent its good name as a co-sponsor of the program and provided about 40% of the faculty at its own expense. Particularly vital was the support of Francisco Leon and the Secretary General Gert Rosenthal of UN ECLAC. The Canadian Embassy in Havana, notably through Ambassador Mark Entwistle and Nobina Robinson, were instrumental in the extension of the program. CIDA was so pleased with the first two IDRC-financed years that it decided to extend the Economics MA for an additional three years.

It also agreed to expand collaboration between Carleton University and the University of Havana for five years and to five other units at the two Universities: Biology, Business, Linguistics, Women’s Studies and Public Administration. Professors were recruited from a number of Latin American countries as well as Canada. Among the contributing professors were

  • Canada: Keith Acheson, Zhiqi Chen, Donald McFetridge, Gary McMahon, Carl McMillan, Soo Bin Park, Simon Power, Arch Ritter, Nicholas Rowe, Larry Willmore (also with the United Nations), and Frances Woolley.
  • UN ECLAC: Ricardo Ffrench-Davis, Michael Mortimer, Bernardo Kosakoff Juan Carlos Lerda, Luis Felipe Jimenez, , Jorge Katz, , Joe Ramos, Daniel Titelman.
  • Argentina: Jose Maria Fanelli. Mario Damill, Guillermo Rozenwurcel
  • Bolivia: Juan Antonio Morales
  • Brazil: Ricardo Paez de Barras
  • Peru: Alberto Pasco-Font

Senior Cuban professors worked with the visiting Canadian and Latin American professors and took over some of the classes. Among the Cuban professors were Felix Marero, Elena Hernandez, Lourdes Tabares, Nelida Gancedo, Vilma Hidalgo, Manuel Miranda, Frank Hidalgo, Ela de Quezada, Raul Sandoval, Celia Fernandez, Ermida Gonzalez and, and Marta Madero.  

 

II. Impacts of the Program

The objective of the five years of the MA Economics Program was to support the introduction of conventional economics into the curriculum of Cuba’s universities. From this perspective, I think that it could be considered to have been reasonably successful. At the University of Havana for example, a program in conventional economics was initiated quickly and is in operation. Similarly the University of Oriente soon established a conventional economics program, under the leadership of the MA graduate Ulisses Pacheco who became Dean of the Faculty. These programs have been producing some impressive graduates and new academics for over a decade.

A substantial number of the MA graduates went on to earn Doctoral degrees in Economics both inside Cuba, notably in a program with the University of Barcelona and outside Cuba at Carleton University, Ottawa Canada. However, significant numbers of the graduates have emigrated and built their lives elsewhere. This is undoubtedly a loss for Cuba, as all were just at the early stages of their productive professional and family lives. (Remittances are small compensation for this loss.) 

Of the 76 graduates of the program, 16 now are employed in Cuban Universities, 22 have other employment in Cuba, most in government, 7 were citizens of other countries and have returned to their own countries, and 31 have left Cuba. The visiting professors were particularly happy with the level of qualification and the strong commitment and motivation of the Cuban students. It was a positive and pleasant experience for all the professors involved. There were of course some minor frictions in the implementation of the program but surprisingly few and most were resolved quickly and satisfactorily. 

One such issue was a conflict with the Ministry of Cooperation and Foreign Investment, MINVEC. The problem was that the University of Havana had entered into an agreement with Carleton and IDRC but had not gone through MINVEC. It was some five months after the beginning of the program in July 1994 that MINVEC finally gave its approval.

Another issue that had to be dealt with has been described by Luis Casaco in a his Blog entitled “historias mínimas – short tales, palabras, amigos y un poco de música”,  and can be seen at the following address: when carleton university knocked my door at  http://kaskouy.blogspot.com/2008/03/when-carleton-university-knocked-door.html.

 

III. Where are They Now: Graduates of the Havana-Carleton Economics MA, 1995-1999

As of October 15, 2010 This listing is based on information mainly from around 2002. Much has happened since then, and undoubtedly there are many inaccuracies. Please forward any corrections that you may be aware of regarding locations and employment or contact information. Please send any corrections or new information to Arch_Ritter@Carleton.Ca

1994-1995 COHORT

  • Raul Ávila Rodríguez, Ottawa Canadá
  • Regino Boti Llanes, Londres, RU
  • Idania Coello Caballero, La Habana, Cuba
  • Ledya Fernández Lleal, Facultad de Economía, Universidad de La Habana, Cuba
  • Luis René Fernández Tabío, Instituto de Investigaciones (CESEU), La Habana, Cuba
  • Nélida Lamelas Castellano. University of Santiago de Compostela, Santiago, España
  • María Rosa Moreno Fernández, PNUD, La Habana, Cuba
  • Ulises Pacheco Feria, Decano, Facultad de Economía, Universidad de Oriente, Santiago de Cuba
  • Carmen Quintela F., (Facultad de Economía, Universidad de La Habana,) Cuba, Deceased
  • María C. Sabourin Jovel, Miami USA 
  • Mario Sánchez Egozcue, Centro de Estudios sobre la Economía Cubana, La Habana, Cuba
  • Juana Sánchez Mesa, PNUD, La Habana, Cuba
  • José Somoza Cabrera, Dpto. del Medio Ambiente, Universidad de La Habana, La Habana, Cuba
  • Magda Valera Cepero, Miami, Estados Unidos
  • Ignacio Vera Paneque, Naciones Unidas, Nueva York

Class of 1995-1996

  • Fausto Arias Araluce, “Interholdings” Spain
  • Even Chi Pardo (ciudadano panameño) Universidad de Panamá, Panamá
  • Pablo Crespo Brito, Barcelona, España
  • Bernardo Cutié Rizo, Miami, Estados Unidos
  • Gelvis de Armas O., Facultad, ISRI, La Habana, Cuba
  • Pierre Fils Aimee, (ciudadano haitiano) Toronto, Canadá
  • Idania Gancedo Gaspar, Facultad de Economía, Universidad de La Habana, Cuba
  • Eduardo Hernández Roque, Banco Central de Cuba, La Habana, Cuba
  • Nelson Lim Chang, Departamento de Economía, Universidad de Oriente, Santiago de Cuba
  • Boris Moreno Capote, Iglesia Católica, San Antonio de los banos, Cuba
  • Olga Pérez Soto, Facultad de Economía, Universidad de La Habana, Cuba
  • Amarylis Rodríguez R., Ferris Management Ltd., La Habana, Cuba
  • Maria Sanabria Pis, Banco Central de Cuba, La Habana, Cuba
  • Javier Tella Reyes, USA
  • Jorge A. Uriarte Landa, Gobierno de Canadá, Ottawa, Canadá

Class of 1996-1997

  • Alex Gay Cabrera, ¿Alemania?
  • Yuri Gracia Morales, Integral S. A., La Habana, Cuba
  • Arturo López Callejas, Universidad de Denver, Estados Unidos
  • Ricardo Mansilla Corona, Center for interdisciplinary Research in Sciences and the Humanities of the National University of Mexico (UNAM) Ciudad de Mexico. Web site :  http://www.ceiich.unam.mx/0/13PerCur.php?tblPersonalAcademico_id=12  
  • René Mujica López, España
  • Mahe Parodi Heydrich, Mississauga, Canadá
  • Karel Regalado Alonso, Tembec, Temiskiming, Canadá
  • Judith Rodríguez Marcial, FinTur (empresa financiera) La Habana, Cuba
  • Luciano Rondón Hernández, Montreal, Canada
  • Ana Julia Yanes Faya, Gobierno de Canadá, Ottawa, Canadá

Class of 1997-1998

  • Alexis Aguilera Borges, Cuzco, Peru  
  • Raysa Alcalá Martínez, Investigadora, Oficina Nacional de Administración Tributaria (ONAT), La Habana, Cuba
  • Alberto Baly Gil, ¿Cuba?
  • Luis Casaco, Montevideo, Uruguay
  • Vladimir Díaz, Empresa Seguridad y Protección, La Habana, Cuba
  • Yaimí Farías Dominguez, Miami, Estados Unidos
  • Tania García, Facultad de Economía, Universidad de Oriente, Santiago de Cuba
  • Abel Izquierdo Falcón, Profesor, Universidad Central de Las Villas, Cuba
  • Ernesto Landa Falcón, Gobierno de Cuba, La Habana, Cuba
  • Adrián López Denis, Profesor, Universidad Princeton, Princeton, Estados Unidos
  • Osmel Martínez Trujillo, Toronto, Canadá
  • Cristian Meneses Torres (ciudadano chileno), ¿Chile?
  • Hector Molina, Facultad de Economía, Universidad Central de Las Villas, Cuba
  • Antonio Ruiz Cruz, Facultad de Economía, Universidad de Las Villas, Santa Clara
  • Esteban Salido Gamboa, Miami, United States
  • Víctor Sombart, Faculty de Economía, Universidad de Oriente, Santiago de Cuba
  • Thanh Huong Tran (“Alina”), (ciudadano vietnamita) Viet Nam
  • Eileen Tur, Toronto, Canadá

Class of 1998-1999

  • Maritza Álvares Herrera, Miami, Estados Unidos
  • Hamma Bachra Ahmed, (ciudadano saharaui), Sahara Occidental
  • Maria Boiko, (ciudadana ucraniana) Ucrania
  • Vilma Cervantes R., La Habana, Cuba
  • Marco Díaz Díaz, La Habana, Cuba, (deceased)
  • Kim Frederick, (ciudadano granadino) Grenada
  • Antonio Galis-Menéndez, Estados Unidos Radamés Gonzáles, Santiago de Chile
  • Tatiana González, Ministerio de Comercio Exterior, La Habana, Cuba
  • Luis Gutiérrez Urdaneta, La Habana, Cuba
  • Zoe Medina Valdés, Facultad de Economía, Universidad de La Habana, Cuba
  • Yenniel Mendoza, Instituto Nacional de Investigaciones Económicas, La Habana, Cuba
  • Mavis Morales, Rusia
  • Ana M. Pérez de la Cruz, Panamá
  • Heidi Portuondo C., Barcelona, España Eduardo Ramos D., n.a. Cuba
  • Lester Rodríguez, Business Analyst, Finantix (Italian financial software house),
  • Padua Italy Paul Valdes-Miranda, Market Research Analyst, Ciudad Mexico, Mexico
  • Katty Yeja López, Bahamas

At the Inauguration of the Program, Ambassador’s Residence,September 1994 Gary McMahon, Ambassador Mark Entwisle, Francisco Leon, and Lourdes Tabares

Nicholas Rowe, teaching a Macroeconomics class, October 1994

 

Class of 1996-1997 From left to Right: Nicki; Nicki’s son Junior, (Canadian, not known), Elizabeth Rohr (Carleton University), Rene Mujica, Victor Sombert,  Luciano Rondon,  Ana Julia Yanes Faya, Mahe Parodi, Karel Regalado, E. V. Diaz, Judith Rodriguez, Yuri Gracia,  

Class of 1997-1998   From left to right, Back:  Osmel Martinez, Yaimi Farias Dominguez, Raysa Alcala, Ernesto Landa, Belkis, Alberto Baly, Alina, Paul Valdes-Miranda, Tran Thang Huong, Esteban Salido, Eileen Tur, Alexis Aguilera and Arch Ritter. In front: Ricardo Mansilla, Adrian Denis with Luis Casaco’s son Mauri and Luis Casaco, Guabano, February 1998

Class of 1998-1999 Front row. left to right: M. Bachra-Ahmed, Maritza Alvarez,  Maria Boiko, Kim Frederick, Tatiana Gonzalez, Marcos Diaz Diaz Back row:  Radamez Gonzalez, Vilma Cervantes, Zoe Medina, Katty Yeja, Mavis Morales, Eduardo Ramos, Heidi Portuondo, Ana Margarita Perez. Luis Gutierrez, Paul Valdes-Miranda

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Cuba’s Achievements under the Presidency of Fidel Castro: The Top Ten

NOTE: For additional articles on various aspects of Fidel Castro’s presidency, see:

Fidel Castro: The Cowardice of Autocracy

Fidel’s Phenomenal Economic Fiascoes: the Top Ten

Fidel’s No-Good Very Bad Day

The “FIDEL” Models Never Worked; Soviet and Venezuelan Subsidization Did

On September 17, I published and entry on this blog entitled “Fidel’s Phenomenal Economic Fiascoes: the Top Ten” but stated that I would also write a statement on Cuba’s greatest achievements under the leadership of President Fidel Castro. Here it is.

There certainly were economic policy blunders from 1959 to mid-2006 when Fidel Castro stepped aside in favor of his brother Raul. However, as is well known, Cuba made major achievements over these years in socio-economic terms. I will begin with a quick summary of Cuba’s socio-economic performance from 1959 to 1990 and 1990-2010, and then proceed to a listing of the Tip Ten Achievements

I. Socio-Economic Performance, 1959-1990

While the performance of the Cuban economy from 1959 to 1990 period was mixed, major improvements were made in terms of socio-economic well-being. The summary of changes in a few key socio-economic indicators in Table 1 illustrates the absolute and relative improvements achieved in human well-being. Life expectancy and infant and child mortality are summary indications of nutrition, income distribution and poverty and the quality of a nation’s health care system. Literacy and educational attainment are key factors in the investment in human capital and in citizen empowerment in a modern economy.

(click to enlarge)

Cuba’s rankings for these indicators in 1960 were relatively high in the Latin American context so that it was building on reasonably strong foundations.

However, despite improvements in the rest of Latin America, Cuba raised its relative ranking for all five of the socio-economic indicators vis-à-vis the rest of Latin America (excluding the English-speaking Caribbean.)  However Cuba’s economic ranking – in terms of the purchasing power of GDP per person – fell well down the list in 1990 placing Cuba at the 14th rank. As a result, Cuba placed at #10 in the UNDP Human Development Index.

II.        Socio-Economic Performance 1990-2010

Despite the economic difficulties of the 1990s, Cuba continued to improve its socio-economic performance in relative and absolute terms, at least as these are measured by the indicators in Table 2. Cuba continued to lead the Latin American countries in infant mortality and the education indicators. The improvements in education and health indicators and rankings occurred despite weakening of resource allocations and problems of maintaining quality. Cuba’s success in these areas was due largely to the quality and quantity of the educational systems built up in the previous1960-1990 period and institutional momentum.

(click to enlarge)

III.             Top Ten Achievements

Here is a listing of the Cuba’s socio-economic and economic achievements under the Presidency of Fidel Castro. They are not presented in order of importance. Some are the result of specific policy decisions or design or negotiations of Fidel Castro, though others are not.

#1        The 1961 Literacy Campaign

#2        Reorganization of the Health Sector

#3        Redesign of the Educational System

#4        Rapid Expansion of the Tourism Sector

#5       Provision of Medical Services to Latin America and Other Countries

#6        Survival in the Face of the 1989-1993 Economic Melt-Down

#7        Winning Economic Support from the Soviet Union, 1961-1990 and Venezuela, 2004-2010

#8        Establishment of the “Polo Cientifico” and the Development of the Bio-Technological Sector

#9        Dedication to their Jobs by Cuban Citizens during the Catastrophic Decline in Real Wages and Incomes after 1990

#10      Fruitful Collaboration with Foreign Enterprises


IV.             Achievements in Detail

#1        The 1961 Literacy Campaign

The 1961 literacy campaign was an inspired approach to improving educational levels among the relatively large proportion of the population that was illiterate in 1959. This was done at relatively low cost with strongly motivated volunteers. It quickly improved literacy rates immensely, though there is some disagreement as to the quality of the literacy that was achieved.

#2       Reorganization of the Health Sector

Cuba succeeded in reorganizing its medical system so as to provide universal access to health services, and managed to obtain excellent results relative to the amounts of resources that it was able to devote to the health sector.  As a result, Cuba’s health indicators improved quickly and remain among the very best in Latin America (See Tables 1 and 2)

#3        Redesign of the Educational System

Cuba’s reorganization and expansion of the educational system in the early 1960s also made education universally accessible and increased investment in people (human capital.) As a result, Cuba moved from 5th place in Latin America in terms of literacy and school enrolment in 1970 to 1st in 2007 – a fine achievement.

#4        Rapid Expansion of the Tourism Sector

As a result of the 1989-1994 economic melt-down, it was decided to earn foreign exchange by expanding the tourist sector. This required massive involved massive investment by both Cuba and foreign enterprises and the rapid shifting of resources to the sector. This was done and by 2008, Cuba was earning almost MN 2.4 billion from tourism.

#5        Provision of Medical Services to Latin America and Other Countries

By the latter 1990s, Cuba had a major surplus of medical personnel, with doctors and nurses posted in small tourist hotels and day care centers. However, this was converted into a major humanitarian asset, with Cuba’s provision of medical assistance to many countries in need, and expanding the Latin American Medical School outside Havana. The services of medical personnel are also exported to other countries – paid mainly by the Government of Venezuela. The foreign exchange earnings from medical (and educational) service exports amounted to MN 6.1 billion, almost half of Cuba’s foreign exchange earnings in 2008, as indicated in the accompanying chart.

#6        Survival in the Face of the 1989-1993 Economic Melt-Down

With the loss of Soviet subsidization and the near 40% decline in income per capita from 1989 to 1994, Cuba reorganized its economy, “depenalizing” the use of the US dollar, legalizing farmers’ markets, liberalizing self-employment and promoting new economic activities and exports etc. With no support from the international financial institutions of which it was not a member, thanks to the embargo with the United States, Cuba survived, at a cost borne almost directly, immediately and totally by its citizens.

#7       Winning Economic Support from the Soviet Union, 1961-1990 and Venezuela, 2004-2010

As noted in an earlier blog, The “FIDEL” Models Never Worked; Soviet and Venezuelan Subsidization Did posted on September 9, 2010 ,  Cuba received generous subsidization from the Soviet Union for a substantial period of time. An estimate of the amount of the subsidization is presented in the accompanying chart.  Presumably President Fidel Castro is responsible for negotiating this support. Similarly, Cuba has received substantial support from President Chavez of Venezuela through export and investment credits, low-cost oil imports and generous payments for Cuba’s exports of medical services.  How beneficial any of this assistance has been is debatable partly because it has been and is unsustainable and it has made possible the continuation of economic policies and institutions that have been counterproductive in the longer term. Fidel Castro can undoubtedly take the credit for these special relationships.

(click to enlarge)

#8        Establishment of the “Polo Cientifico” and the Development of the Bio-Technological Sector

To my knowledge, there has been no careful analysis of Cuba’s huge investment in the “Polo Cientifico” and the Bio-Technological sector. Indeed, I have not seen any analysis of the investment in the sector so I cannot judge accurately if it has been commercially viable so far or not.

However, Cuba is beginning to achieve major exports of pharmaceutical products amounting to MN 296.8 million pesos vis-à-vis MN 233.4 million for sugar in 2008.  These exports should continue to increase in future and the investment in the sector may be valuable. Moreover, Cuba’s investment in the “Polo Cientifico” has built a professional and institutional foundation for future success in pharmaceutical and other scientific areas.

#9        Dedication to their Jobs by Cuban Citizens despite the Decline in Real Incomes after 1990

I have always been impressed at the professionalism of many Cuban citizens that I have known over the years since 1990. In the face of huge declines in the purchasing power of their incomes, they continued to work seriously and with dedication in medicine, the Universities, the schools, the public service, or other employment. Many professionals and others in effect subsidized their state sector employers by earning other incomes that permitted them to survive in the unofficial economy. We have all heard of the doctors and engineers forced to provide taxi services on the side in order to make ends meet and continue to function in their professional capacities. The dedicated work of countless citizens over the difficult years of the Special Period, 1990-2010, is essentially what has brought about some recovery since the depths of the depression in 1993.

#10      Fruitful Collaboration in Nickel, Oil, Gas and Electric Power Generation with Sherritt International

Cuba opened up to foreign direct investment in joint venture arrangements with state firms. This has paid off handsomely, most notably with Sherritt International (nickel, cobalt, oil, gas, and electric power) and other enterprises as will be argued later in this Blog.

 

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Review: Cuban Currency: The Dollar and Special Period Fiction, by Esther Whitfield.

Cuban Currency: The Dollar and Special Period Fiction. By Esther Whitfield. Minneapolis: University of Minnesota Press, 2008. Pp. 217. $22.50 paper. ISBN: 9780816650378


Esther Whitfield

I must confess that when I first noticed the volume Cuban Currency: the Dollar and Special Period Fiction, I thought it was an analysis of Cuba’s monetary system, not having read the title carefully. To my trepidation, Esther Whitfield focuses instead on literature, but in the context of Cuba’s dual-currency pathology. Her survey of recent fiction has turned out to be a delight, even for an economist with little direct knowledge of Cuban literature.

Whitfield’s central argument is that the “Special Period” in Cuba generated a boom in cultural exports, including literature, due to a number of factors including the opening of Cuba’s economy and society, the subsequent expansion of international tourism and the popularity of all things Cuban, as well as the decriminalization of the use of the dollar in 1992, its adoption as a legal currency, and its quick ascent to supremacy over the “old peso.” Special Period literature then became market-driven—like many other activities in Cuba—with authors’ incomes dependent on foreign sales and hard-currency contracts, rather than on Cuba’s literary bureaucracy, membership in the writers’ union and the domestic market.

The dominance of the foreign market was further strengthened by the shrinkage of the domestic peso market for books because of declining incomes. This new foreign-market orientation was formalized by legislation in 1993 that permitted authors to negotiate their own contracts with foreign publishing houses and to repatriate their royalties under a relatively generous tax regime. Like other Cuban citizens, authors responded quickly to these new incentives.

In very simple terms, a key message of the book is that money talks and literary types listen. Or in “Special Period” Cuba, literary types chase dollars – like most other Cubans in this era, dollars having had greater purchasing power than “old pesos” in Moneda Nacional.

Special Period fiction is set in a “real Cuba” of interest to foreigners, namely in the Cuba of a behavior-warping dual-currency system, urban decay, dysfunctional Soviet-style economy, and political gerontocracy, together with a vibrant Afro-Latin culture and time-immemorial tropical eroticism. Ironically, the international boom in Cuban fiction during the sunset of the Revolution was a sequel to the literary boom of the 1960s, which was set in the confidence and vigor of the youthful Revolution.

Whitfield begins with an analysis of the circumstances of the Special Period that pushed authors into this external orientation. She then focuses on the works of Zoé Valdés, especially her award-winning I Gave You All I Had (1966), published in exile in Paris, which allows Whitfield to trace the central role played by a U.S. one dollar bill and its symbolic relevance for the culture of the Special Period. Short stories are the subject of the next chapter, with particular attention to the work of Ronáldo Menéndez. His story, entitled “Money,” is also set in the world of the doble moneda and doble moral, but criticizes the reliance on foreign markets and worries about the jineterización (or prostitution) of the writer-publisher relationship and possible debasement of “true” Cuban literature. Whitfield goes on to examine the work of Pedro Juan Gutiérrez, notably the five books of his Ciclo Centro Habana. Gutiérrez writes for a foreign readership, but also critiques it, placing the reader in the position of voyeur into the “lives of sexual disorder, moral depravity and economic despair” of Havana (98). In her final chapter Whitfield meditates on artists’ depictions of Cuba’s urban decay and on critical analyses of such depictions.

Whitfield has produced a fine analysis of how economic circumstances generated new problems and new possibilities for Cuban authors, who have risen to the challenge and produced a literature of broad international appeal. Whitfield’s writing is engaging, her knowledge seems profound, and her subject is enchanting. However, I am not a competent critic of Cuban literature or literary criticism, and cannot tender a confident evaluation of its value for scholars in these fields. Her book, linking socio-politico-economic circumstances of the Special Period to Cuban literature, will nevertheless interest a broad range of social scientists, as well as the more literary-minded.

Is the international market for Cuban fiction as transitory as one might expect or hope that the Special Period itself may be? Perhaps. It may be that when Cuba escapes the Special Period – now 20 years running – and becomes a “normal country” with a normal monetary system, the special interest in its literary portrayal may diminish. However, the difficulties of economic and political reform are likely to continue for some time, and are likely to take various twists and turns that will hold our interest for some time to come.

I hope that Cuba’s fiction writers are there to illuminate the process for a world readership.

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New Essay by Pavel Vidal and Omar Everleny Perez on Fiscal Adjustment, Structural Change and Self-Employment

An essay entitled “Entre el ajuste fiscal y los cambios estructurales: se extiende el cuentapropismo en Cuba”
by Pavel Vidal Alejandro y Omar Everleny Pérez Villanueva of the Centro de Estudios sobre la Economia Cubana has just been published in the Digital Supplement of Espacio Laical,   the CONSEJO ARQUIDIOCESANO DE LAICOS DE LA HABANA, Suplemento Digital No.112 / Octubre 2010.

Here is the web address for the article:

( “Entre el ajuste fiscal y los cambios estructurales: se extiende el cuentapropismo en Cuba” . )

The web address for Espacio Laical is

Espacio Laical: http://espaciolaical.org. (Then if necessary go to the October 2010 edition first page.)

This essay is well worth reading, outlining the general economic situation in Cuba provoking the September 2010 liberalization of the restrictions on self-employment, summarize the regulatory changes, and present a number of comments on the policy changes, summarized below in Spanish:

1. Una gran parte de la población y especialistas coincide que la lista publicada en Granma de 178 actividades es aún demasiado precaria
y reducida para poder asimilar el medio millón de desempleados estatales. Son necesarias nuevas categorías y agilizar la creación de
las cooperativas no agrícolas.

2. Las categorías son demasiado específicas y ello frena la iniciativa individual. Sería preferible una lista de categorías generales que le
dieran espacio a los cuentapropistas y microempresarios para proponer y perfilar una oferta de bienes y servicios diversa. Esta tiene queser lo suficientemente flexible como para poder adecuarse a una demanda cambiante en el tiempo y heterogénea en lo local, y que es indescifrable para cualquiera que se lo proponga centralmente.

3. Las actividades permitidas son poco intensivas en conocimiento y no permiten aprovechar la inversión en educación que ha hecho el
país por décadas. Muchos de los desempleados estatales serán graduados universitarios que necesitarán una opción acorde con su
calificación.

4. Se permite el crédito bancario, pero el sistema financiero tiene problemas de liquidez, y habría que ver cuánto del ahorro todavía está comprometido en los créditos que se dieron para la sustitución de equipos electrodomésticos dentro de la llamada Revolución
Energética. Como alternativa, se requiere agilizar y promover la colaboración internacional en el tema del microcrédito.

5. No se va a crear un mercado mayorista de insumos para las PYME´s. Hoy los mercados de insumos para las empresas estatales sufren de desabastecimiento como consecuencia de los problemas económicos y financieros del país. Por tanto, es muy difícil pensar por ahora en un apoyo estatal en este aspecto. Pero si se promueve el microcrédito con colaboración internacional, ello significaría una entrada de divisas al país que posibilitarían abrir la importación para los cuentapropistas, microempresarios y cooperativistas. En Cuba operan suficientes proveedores extranjeros que podrían abastecer un mercado de insumos para las PYME´s. Los mismos mercados mayoristas que hoy existen para las empresas estatales podrían darle entrada a las PYME´s. La doble moneda no es un problema para las PYME´s pues tiene abierta la convertibilidad del peso cubano y el peso convertible en las casas de cambio (CADECA).

6. La medida considera pocos incentivos a la legalidad. Algunas actividades, por su naturaleza, son más visibles y tendrán por obligación ue legalizarse y pagar impuestos. Pero hay otras que tienen como único incentivo la incorporación a la Seguridad Social.
Evidentemente, para los que ya reciben una jubilación, este no tiene ningún efecto. El microcrédito y el mercado de insumos, precisamente serían incentivos a la legalidad, pues se necesitaría estar registrado y pagar impuestos para acceder a ellos. Las PYME´s internacionalmente son apoyadas tributaria e  institucionalmente. La asesoría legal, económica, informativa y otras ayudas promoverían la legalidad y el desarrollo de las mismas.

7. Falta acompañar estos cambios con leyes que creen confianza para la inversión de esfuerzos y dinero en emprendimientos privados, y que garanticen, tanto al Estado como a los ciudadanos, el cumplimiento de derechos y deberes.

8. El estancamiento económico que vive el país es otro de los obstáculos para la creación de nuevas PYME´s. La oferta de bienes y servicios de los cuentapropistas, las microempresas y las cooperativas necesita de una demanda. Con estancamiento económico y aumento del desempleo es muy difícil pensar en una demanda suficiente desde las familias o desde las empresas estatales. Una gran parte de la demanda ya hoy está cubierta con una oferta desde la ilegalidad

Omar Everleny Perez and Pavel Vidal

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