Cuban economy

Cuba’s economic reforms debated at Miami conference

 

mwhitefield@MiamiHerald.com

As Cuba struggles to reform its faltering economy, it has engaged in a delicate balancing act of trying to spur growth while maintaining control and keeping market forces from getting out of hand.

That was the quandary under discussion Thursday as economists, political scientists, business executives, lawyers and scholars from the United States, Latin America, and Europe came together in Miami to discuss the theme “Reforming Cuba?” at the 23rd annual meeting of the Association for the Study of the Cuban Economy.

“The Cuban government functions like a broken enterprise,’’ propped up by support from Venezuela and remittances from Cubans living abroad, said Emilio Morales, president of The Havana Consulting Group during the opening session of the three-day meeting.

A recent study by the Havana Consulting Group estimates that 600,000 American citizens and Cuban-Americans are expected to travel to Cuba this year — carrying with them an estimated $2.2 billion in cash.

That’s in addition to the clothing, food, medicine and household items that Cuban-Americans send or take to their families, said Morales, who now lives in Miami but is the former marketing director of CIMEX, Cuba’s largest commercial corporation.

Meanwhile, he said emigration from Cuba reached a peak last year with more than 56,000 Cubans leaving the country.

This year’s conference at the Hilton Miami Downtown Hotel also includes 10 speakers from Cuba and five other participants from Cuba, said Ted Henken, a professor at Baruch College and ASCE president.

In past years, Cuban scholars have sometimes been unable to obtain exit visas from the Cuban government to participate in the event or haven’t been able to get visas from the U.S. government. Cuba did away with the exit visa requirement in January.

“This year no one got turned down,’’ said Henken, although he said that some Cuban scholars who had expressed a desire to attend were unable to get permission from their universities.

There was a consensus among many conference participants that the pace of reforms in Cuba is too slow and they are not far-reaching enough, but speakers said the jury is still out on the impact of the reforms.

Among the reforms announced so far are allowing self-employment as the government seeks to remove workers from bloated government payrolls, allowing Cubans to buy and sell homes and cars, increased private and cooperative farming, and allowing workers at formerly state-run hair salons, barber shops and restaurants to run them independently and rent the facilities from the state.

Economist Carmelo Mesa-Lago, professor emeritus at the University of Pittsburgh, said there are still some missing ingredients if the goal is to transform the Cuban economy. Cuba, he said, needs banking reform, the unification of its dual-currency system, a realistic exchange rate and tax system and more far-reaching agricultural reform.

“The success of the reforms is made more difficult by excessive regulation and control,’’ he said. But Mesa-Lago added, “The biggest obstacle for reform is the Cuban model itself.’’

Among other reasons that creation of small businesses and self-employment hasn’t produced the desired advances, said Morales, is the lack of financing and loans for private enterprises, no system for home mortgages and the failure to include professionals in self-employment initiatives.

Marino Murillo, Cuba’s economic czar, said in July that the most complex part of President Raúl Castro’s reform program will come over the next 18 months. Among the changes that will be implemented will be the decentralization of state-run businesses, allowing them to keep 50 percent of their revenue to reinvest instead of sending it all to the government.

At this point 124 non-farm cooperatives — most former state-run produce markets — are operating and 71 others in areas ranging from light manufacturing to food services have been approved.

The non-agricultural cooperatives have potential and could lead to a “hybrid mixed economy’’ if they come to fruition, said Archibald Ritter, an expert on the Cuban economy who teaches at Carleton University in Ottawa.

When the decree law that established the legal framework for the cooperatives was announced last December, there were no restrictions placed on the number of employees a cooperative could have or on what activities it could engage in, Ritter said. In theory, he said, there could be manufacturing cooperatives, a cooperative of building tradesmen, or even a group of accountants.

It remains to be seen whether cooperatives of professionals will be permitted, how the initiative will be implemented and whether the Communist Party will try to control or influence the governance of the cooperatives. But, he said, if the cooperative system is “implemented fully,’’ it could lead to a significant degree of “economy democracy for Cuba.”

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