The long run of the economy | OnCubaNews English

The Economic and social orientations opened this new stage of economic reforms 11 long years ago. Later, the approval of the Conceptualization and the National Economic and Social Development Plan became another point of reference. Later, after March 2020, it was the update of the strategy.

During this eleven-year period, we have seen an American president publicly declare that he was convinced of the failure of the policy towards Cuba that the administrations which preceded him had put into practice for the years 1960. Meanwhile, the other two presidents who followed him did their utmost to achieve what the administrations before Obama failed to achieve. The last of them, in that fledgling style of politics which characterized him, eliminated some of all the restrictions imposed by his predecessor.

Coinciding in time, the pandemic that disrupted the global economy taught us that we had enough strength to create vaccines that others, more powerful, could not produce. Today we have a vaccination coverage that no country in the Americas, North and South included, has reached.

Meanwhile, tourism disappeared and with it, but thanks to the “monetary reorganization“, the CUC and the stores in foreign currencies disappeared, to appear later “transformed into freely convertible currency and stores in freely convertible currency”. In the meantime, CADECA exchange houses have become a thing of the past. The physical dollars, those that come “from outside”, do not find a place in the banks and those that are in the banks do not find a way out of there and reach the population. Euros are preferred by the public because they can be converted into freely convertible plastic currency. In the end, by trying to have a single currency, we have at least three; trying to achieve a single exchange rate, we now have at least two; convertibility from one currency to another is not possible, at least for the public. Have we reached situations as extreme as that in a cafeteria in Terminal 3 of Havana International Airport where you have to pay in euros and change is given in Cuban pesos, which does nothing to contribute to this aspiration to recover tourism?

Shop products have also disappeared, of all. And also for quite some time and thanks to the innovation of capped prices, sweet potato has become invisible and almost all other higher ranked foods as well. The one that was the “national mammal” will take time to be within reach of most pockets because the sacrifice of breeding mothers for lack of food has caused us to lose what was one of the rare successes of Cuban breeding. Bottled water, in plastic bottles, is a rarity, so tourists will have to get used to “tap water” if they leave the hotel.

money matters

Debt to suppliers has reappeared, which has become heavier and does not contribute to the necessary attraction of foreign investors.

The society in which we live today presents notable differences with the one in which the Economic and Social Guidelines were discussed, enriched, modified and finally approved. It is more segmented in terms of income and interests, it has aged, its members are declining due to emigration which is difficult to control and which compromises the future if we look at the number of young people leaving.

Socialist state enterprise and development aspirations

Meanwhile, repeated attempts to transform/improve/the socialist state enterprise have yet to yield results, some end in losses, some are lost, and some with excess profits not always related to their effectiveness and compliance with the plan. This situation brings us to the same questions from more than four decades ago, who should be run by the state? How many should be left? How should this process be done? So many questions that are difficult to answer when for more than fifty years it has been understood, even if no scientifically proven argument proves it, that the number of public companies is decisive for the economic strength of socialism.

The trading system

Without a strong, dynamic and efficient public affairs sector, with adequate levels of productivity, it will be impossible to grow and without sustainable economic growth, the task of development will be very difficult.

And it’s not that what happened with MSMEs isn’t important; today there are nearly 4,000 companies. But like in other economies, MSMEs need these other major drivers to become their ‘customers’ and ‘suppliers’, which is not happening in our country with the necessary scale or complexity.

For this year 2022, the growth target is 4% compared to the previous year. This growth, clearly, intends to be achieved more by its own efforts, in a way breaking this old relationship of strong dependence that existed between GDP growth and export growth.

The orange line represents the GDP, the growth rate and the blue line the import coefficient.

I don’t think there is much evidence of steady and sustained growth of national economies with weak trading systems. I also don’t know of much evidence showing that economic growth can be achieved without corporations making a profit.

If making profit is not one of the goals of business, even of a socialist state enterprise, and indeed a goal upon which life must depend, then how does it grow, reproduce, invest, innovate, modernize your technology, join global trends, for example Industry 4.0? How to conquer national and foreign markets? How do you improve jobs and pay higher wages to those who contribute to its profits, to its workers, which is one of the ways to preserve “the most valuable asset a company has”?

What would he do if he didn’t make a profit? Continue according to the state budget? From this same budget that in 2020 transferred to the “non-budgeted sector” 14.065 billion pesos, this represents 35% of total expenditure.

It is not possible to claim to have strong trading systems without an adequate institutional framework.

By dint of detecting obstacles, we have become specialists. We seem to be less adept at structuring the “rules of the game” that keep obstacles from perpetuating themselves.

Dr C Juan Triana Cordovi

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