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Cuba's microeconomy: it's not just about street vendors.

Cuba's latest economic reforms extend far beyond cuentapropistas and street vendors, even though they clearly benefit those two highly visible groups.

In fact, the reforms encompass a variety of activities that, in many cases, are already conducted not individually but by embryonic "entrepreneurial groups" or small companies.

These are concentrated in the transport and construction sectors, though they also include agriculture and land tenure, not to mention the proliferation of small and medium-size industrial activities like carpentry shops (doors, frames, furniture), steel shops (fences, doors, frames) and mattress production.

These firms clearly employ many more people than any cuentapropista or street vendor.

Recent legislation allowing the buying and selling of houses and vehicles--with total flexibility--will boost business activities in many ways. Private restaurants or paladares may now seat up to 50 people, and they're making thousands of pesos every day, boosting the ranks of Cuba's newly rich.

Likewise, Cuba now has more than 2,500 small and medium-size state industries, workshops and service firms that have been, one way or another, an enormous burden on the state economy for years. The lineamientos [guidelines] are absolutely clear on this issue: those entities which cannot perform successfully will be shut down.

In coming months, decisions will have to be made. In some cases, leaders may want to sponsor state solutions, but in most other cases, these inefficient entities will be sold or leased to individuals or cooperatives at fire-sale prices. Alternatively, they may be turned into productive entities of some sort.

Cubans often ask why, if more tourists are visiting the island, state income isn't growing at the same rate. One reason is that most of the hundreds of thousands of Cubans visiting their homeland stay with relatives. In addition, between 25% and 30% of all foreign tourists stay in casas particulares or private homes.

That represents a big chunk of hard currency and an additional source of employment--a fact that so far has escaped the reach of Cuba's Oficina Nacional de Estadisticas.


In the process of moving from chaos to market socialism, building a microeconomy is fundamental. This is the view of successful Miami banker Carlos Saladrigas, who emphasizes the need for rapid and expanded growth.

Consistent with this view, Saladrigas stresses the importance of financial know-how, as well as contributions from overseas Cubans who could help the island achieve prosperity. The early experiences of China, Vietnam and India tend to prove Saladrigas' views.


Interestingly, this is one important issue not even mentioned in the lineamientos--even though everyone was expecting some crucial discussion on this subject.

When Saladrigas insisted on such ideas in an interview with Palabra Nueva--a journal that largely represents the views of the Catholic hierarchy--the response from journalists and experts was largely respectful, though they disagreed with him, particularly on political topics.

But there was an underlying consensus among these people (academics Jesus Arboleya and Arturo Lopez-Levy; journalist Manuel A. Ram, and Ramon de la Cruz Ochoa, a former attorney-general and member of the National Assembly) that his contributions were legitimate and should be a component of the reforms, especially in providing microcredits for small startup firms.

These experts differ on whether Cubans abroad should enjoy full and equal rights as Cuban citizens, but their contributions are not questioned. The issue remains open for discussion and policy decisions.

Many "experts" with short-term memory tend to forget that in the early 1990s, Cuba's National Assembly extensively debated two issues. One was double citizenship, an idea finally dismissed by a majority vote.

The other--discussed during debate over the 1995 Investment Law--was the potential role of overseas Cubans in contributing financially and otherwise to the process of change that was beginning to unfold in Cuba.

The debate was inconclusive because at that time, the predominant view was that the U.S. embargo would preclude any such possibility. But since those days, money has started to flow back to the island in the form of land and housing purchases.

In any case, both issues will certainly return to the agenda sooner than later--before, during or after the new legislation on foreign investments now under consideration.

It's not only the Cuban government that's concerned with building this microeconomy. The Catholic Church now sponsors a successful and much-publicized training course on microeconomy (small/medium-sized business, microcredits, cooperatives, etc.) and both the Italian Committee for Microcredits and the Spanish Agency for International Cooperation have sent delegations to Cuba.

Recent accords with France and Great Britain have also highlighted the interest of both countries in helping Cuba's reform process.
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Author:Amuchastegui, Domingo
Date:Aug 1, 2011
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