Resumen de lo "mejor" de la academia kubiche sobre las reformas economicas

Cuba Standard

By Domingo Amuchastegui*

What is the role and potential of foreign investment for the Cuban economy? Let us look at the views of some of the most influential Cuban academics.

These economists come from different backgrounds. Several are associated with the Center for the Study of the Cuban Economy (CEEC) at the University of Havana, one is from the former Center of Studies of the Americas (CEA), another from the Center of World Economy Research (CIEM), and another from the Higher Institute of International Studies (ISRI). For many years — since the late 1970s — they upheld different approaches to Cuba’s economic problems, including foreign investment. Some of them are working abroad today.

The CEEC and CEA – due to their interactions with universities abroad and international academia — have been perceived as the “liberal wing” of Cuba’s academia in the field of economics and political analysis while CIEM — due to its closer dependency on the Central Committee and the Council of State — were perceived as “the conservative wing.” Differences and clashes, even with the Cuban leadership, were not unusual. With the collapse of Soviet-style socialism and its consequences for the Cuba economy, these differences became more tense and outspoken.

Paradoxically, the worsening of Cuba’s economy brought together such different views.

Historical context

Ricardo Torres Pérez and Juan Triana, both with CEEC

One of the characteristics of the Cuban economy throughout history is its high external dependency and the damaging nature of that relationship. Cuba’s deepest economic crises have been linked to disturbances in the external sector. Within this picture, the limited dynamism of Cuban exports stands out, together with low diversity, a specialization tied to products with limited dynamics in international markets and low technological content, as well as dependency on one or the other big power. In its exports to the Latin American region, Cuba has one of the lowest trade intensities (trade, in relation to population size). This condition has not changed substantially over the last 25 years, even when the export of healthcare and education services is taken into consideration. Cuba’s mediocre performance contrasts with the high-growth trajectory of open economies.

Early stages of foreign investment in Cuba

Omar Everleny Pérez Villanueva, CEEC

Given Cuba’s incapacity to generate domestic savings sufficient for growth and development, foreign participation in the Cuban economy has become a top priority. Cuba has to break the vicious circle where foreign investment is needed for growth, yet it is impossible to get investments without achieving growth. It remains necessary to maintain the recovery initiated in 1994 by allocating foreign resources to those areas of rapid recovery that are technologically advanced, such as mining, tourism, communications, and products for tourism.

“Foreign financing in the form of development assistance has been very limited in the Cuban case, producing few results. Soft credit, which is necessary for some goals, has not been available to Cuba for many years, both for political and economic reasons (…) Cuba’s challenge is to acquire the most modern technologies through FDI…”

Accumulation

José Luis Rodríguez García, a former minister of economy, now with CIEM

The new foreign investment law “must aim at solving aspects that are crucial to the country’s investment capacity, in the midst of a situation in which it is not possible to squeeze consumption in order to increase the rhythm of accumulation.”

Foreign debt (José Luis Rodríguez): “Payment of the foreign debt is an indispensable requirement for achieving an expansion of the economy taking into account the need for greater flow of external resources, including greater foreign direct investment.”

Tourism and development

Pedro M. Monreal González, University of London)

“’Sun and beach’ tourism can not be in itself a sound pillar of national development because it does not offer possibilities of economic ‘escalamiento’ (upgrading) or, in a best-case scenario, such opportunities are very limited.”

Oil, energy, and development

Ricardo Torres

In case it strikes offshore oil, “Cuba would become less energy dependent and might eventually become an energy exporter; new credit and foreign investment would materialize, along with refining and service jobs.”

Arturo López-Levi, University of Denver

“With or without oil, the Cuban economy sorely needs an environment in which business and individuals feel confident to invest.”

State hiring and wages

Pavel Vidal Alejandro, Universidad Javeriana, Colombia

Currency unification, in the mid term, will turn state control over hiring and payment of labor obsolete.

Monetary issues

Pavel Vidal

“Foreign investors must monitor the impact of devaluation on the state corporate system at large, its monetary-financial stability and fiscal balance. These are factors in which they are indirectly involved.”

Mariel Special Development Zone

Pedro M. Monreal González

“In the mid- and long term, Mariel could have the best conditions to establish itself as the best mega-port in the Caribbean. Its great disadvantage is the absence of commercial relations between Cuba and the U.S. (… This) is, above all, the biggest impediment for Cuba to make the best out of an unusual conjuncture that would allow this nation to modify its international insertion profile for the purpose of development.”

José Luis Rodríguez

The Mariel Zone is an intent to “ relaunch foreign direct investment in Cuba with the additional advantages of its special rules.”

Sustainable growth

Pavel Vidal

“It seems far better for sustainable growth, and to obtain productivity gains, to extend the opening to the non-state sector on a larger scale, including more opening to foreign direct investment.”

Pavel Vidal

According to a study by the Implementation Commission of the Party Guidelines, 70% of the overall profits in Cuba are generated by just 4% of companies, of which almost all are joint ventures in association with foreigners.

What Cuba needs

Juan Triana

“If we do not receive big investments, we are not going to grow. With a 10% rate of domestic savings or less, there will be no growth; countries that have developed their economies in recent decades have had a rate of 27 to 32% of domestic savings. Cuba needs no less than $3 billion a year of foreign direct investment to be able to develop its economy.” 

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*Former Cuban intelligence officer Domingo Amuchastegui has lived in Miami since 1994. He writes regularly for Cuba Standard and CubaNews on the Communist Party, Cuba’s internal politics, economic reform, and South Florida’s Cuban community.