ECONOMY-CUBA: ECLAC Recommends Stronger Role for Market

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Nov 26 2000 (IPS) - The process of economic reforms initiated in Cuba in the 1990s should be “gradually, but systematically” consolidated and completed, with the market granted a more important role, recommend Economic Commission for Latin America and the Caribbean (ECLAC) experts.

Cuba is immersed in a profound economic and institutional transition that will only be gradually consolidated over a lengthy period of time, and from which no aspect of its social life escapes, states the book “The Cuban Economy: Structural Reforms and Performance in the 1990s”, published by the regional UN agency.

The book, which evaluates the gains made by Cuba’s economic stabilisation programme, as well as the nature and reach of the reforms that began to be implemented in the Caribbean island nation in the early 1990s, was described as “honest and pragmatic” by Cuban authorities.

Cuba’s Economy and Planning Minister José Luis Rodríguez said the book made an unbiased and candid analysis of the Cuban reality, even though it did not necessarily coincide with the optic of the government of Fidel Castro.

The strides made by Cuba’s transition indicate the need to continue coming up with new economic instruments and policies, says David Ibarra, the author of the chapter on “A Global Vision of the Cuban Economy”, and the coordinator of the book, along with Jorge Máttar.

The market should take on a stronger role in the area of economic coordination, and gradually displace the quantitative planning predominant in the past with new state mechanisms of macroeconomic control and distribution, Ibarra maintains.

He suggests that the first step would be to build a kind of socialist economy with market elements that the Cuban government does not identify with the traditional concept of a market economy.

However, Ibarra clarifies that Cuba’s future will not be limited by “the traditional dichotomies of capitalism or classic socialism,” or the free market and centralised planning.

The balance between efficiency, equity and growth achieved by countries like Sweden, China, Vietnam, Costa Rica and Chile point out alternative routes, said Ibarra at the presentation of the second edition of the book, published with financial support from the Swedish government.

He stressed that there were clearly differences from country to country with respect to the rate of adaptation to the conditions of today’s globalised markets, and the rate at which economic and political reforms were adopted.

He considered, however, that under the current circumstances, Cuba had little maneuvering room, which meant it had to come up with its own solutions.

The book’s 13 authors recommend outlining priorities and timetables in five specific areas for the gradual and systematic consolidation and completion of the process of institutional and structural reforms.

In that sense, the experts recommend putting emphasis on a programme that began to be implemented in some 100 Cuban enterprises in 1999, aimed at boosting efficiency in the use of available resources, granting autonomy to business management, and providing incentives to the most productive workers.

Given the low levels of agricultural productivity, one priority must be achieving recovery in that sector, including the sugar cane industry, by expanding and strengthening the structural reforms that began to be adopted in 1993, they add.

Changes in that area have included modifications of the property-owning regime, with 75 percent of arable land parcelled out to cooperatives and individual farmers.

The authors also point out that the parallel circulation of the US dollar and the Cuban peso and the dual system of subsidised and fluctuating prices provided emergency solutions to the sharp external shocks suffered by the economy in the late 1980s.

They say, however, that those solutions are now hindering the smooth functioning of the economy, creating distortions in terms of incentives and equity, making it indispensable to gradually bring about convergence of the exchange regimes.

Other challenges for Cuba, according to the regional UN agency, consist of achieving a trade balance, reducing the rationing of products, and tightening the money supply, all of which would help boost growth.

Finally, the experts recommend loosening the restrictions on personal initiative and privately-owned businesses and services, which today provide livelihoods for three percent of the workforce. That would help reduce tax evasion and bolster formal employment, they say.

Expanding private initiative through authorisation for groups of self-employed workers to join together in small service companies is also recommended.