Download Understanding developments in Cuba May 2011

Understanding developments in Cuba
RATB educational, 22 May 2011
1990s: Special Period
GDP collapses 35%. US blockade intensified
Critical scarcities in most sectors, industries closed, infrastructure
ground down
Employment protected - enterprise loses subsidised, salaries maintained
Fiscal deficit reaches 30% of GDP. Real salaries & pensions fall 70%
The correlation between salaries and productivity lost - low salaries &
low productivity
2009 unemployment rate was 1.7%
20% of the state sector workforce surplus to requirements: Can be
productively employed in other sectors
Cuba: unemployment & real GDP growth
1994-2000 GDP growth average 4%
2001-2006 GDP growth average 6.3%
Defending socialist development
Surviving the ‘Special Period’ from 1991
Maintained welfare provision, state planning, predominance of state
ownership and internationalist solidarity
Economic reforms introduced - small concessions to market forces
reversed as conditions improve
Organic farming, crop rotation techniques, urban agriculture, bicycle
transport, car-pooling, solar-energy, and eco-tourism
Investments in healthcare, education, biotechnology - socioeconomic
benefits domestically (offsetting inequalities) and in international trade
Medical and educational internationalism
Cuba’s welfare priorities
1990s share of Cuba’s GDP spent on social programs increased 34%
1990-2003:
Cuban doctors increased by 76%,
Dentists 46%
Nurses 16%
Maternity homes 86%
Day-care centres for older people 107%
Homes for people with disabilities 47%
Infant mortality: 1989 = 11.1/1,000 falls to 1999 = 6.4 (2010 = 4.5)
Education exp rose from 8.5% of GDP in 1990 to 11.7% in 1999 and
12.8% by 2007 (20% of government spending)
1992-1996: 1.5% GNP invested in scientific poles (biotech & pharma
industries). Produces 80% of domestically consumed medicines
Social spending in Cuba & Latin America
Social spending in Cuba & Latin America
Cuba’s internationalism
Medical internationalism 100,000 doctors abroad in five decades
2010: 30,000 health care professionals in Venezuela (295,000 lives)
Serving in 75 countries. 24% Cuban physicians outside Cuba
Medical brigades in 27 countries, training locals to replace them (2008)
ELAM 2,000 graduates from 28 countries (2005), including from US
Operacion Milagro 1.5m people from 35 countries (2009)
International School of Sports 2005 - 1,300 students from 72 countries
Cuba literacy campaigns Yo Si Puedo in 28 countries
3,600,000 people from 23 countries made literate (2008)
Recovery & Rectification from 2005
2005 GNP reaches pre-crisis levels. Structural rectification
initiated. Measures to improve efficiency, raise salaries and productivity
Recentralisation of finances & de-dollarisation
Raising of salaries and pensions
Energy efficiency campaign
Enterprise Perfection System
Distribution of idle land in usufruct (rent-free loan)
Reduction in imports
Tightening of regulatory and auditing controls
Changes in the employment structure
Aim to raise productivity (precondition to raise salaries and standard of
living), reduce imports, rationalise production, obtain capital for
infrastructural investments
Restore macroeconomic efficiency and fiscal balances
Recovery & Rectification from 2005
Fidel: ‘the dream of everyone being able to live on their salary or on
their adequate pension’ (2005)
Marx: ‘the individual producer receives back from society – after
deductions have been made – exactly what he gives to it’ (1875)
Raul: ‘Wages…have thus ceased to play a role in ensuring the socialist
principle that each should contribute according to their capacity and
receive according to their work’ (2007)
2007: initiated a nationwide debate. Key complaint was dual currency,
low salaries and high prices:
‘any increase in wages or decrease in prices, to be real, can only stem
from greater and more efficient production and services offered, which
will increase the country’s incomes… To have more, we have to begin
by producing more, with a sense of rationality and efficiency.’ (2007)
2007-8 global crisis & natural disasters
Global food and fuel price raises: import prices of oil, milk and
chicken increase 200-300%
80% of Cuban ‘ration’ imported (50% of agricultural land idle following
contraction of sugar industry)
Global financial/economic crisis disrupts access to external
financing, income from tourism, export earnings (Nickel prices fall
75%), increase in oil prices
2008 hurricanes cost $10bn damage (20% GDP) – revenue needed
for emergency imports and reparations (1998-2008 = $20.5bn)
Nov 2008-Jul 2010 Severe drought affects food production, leading to
price rises
World price fluctuations
Fall in nickel prices and fluctuations in oil prices Jan 2007 – April 2010
Cuban Development:
Inspiration to the Bolivarian Alliance for the Americas
Helen Yaffe, 10 April 2011
[email protected]
Navigating the crisis
2008 Fiscal deficit = 6.9% of GDP
Deficit in balance of foreign trade in goods and services = $1.7 billion
2008 Cuban banks freeze accounts of foreign suppliers and investors.
Debt repayments not met. Liquidity crisis
US blockade punishes trade with Cuba. Costs $236 billion by 2010
2009 imports reduced by 37% on previous year (ISI) – but not
compensated by domestic production due to drought & other factors
2009 positive balance in foreign trade – 2/3 of frozen bank accounts paid
off and some foreign debt repayments renewed
2010 Cuba exports increase 21%. Trade deficit reduced by 7% on 2009
Cuba buffered by the Bolivarian Alliance for the Americas (2004)
Changes to the employment structure
The 1 million surplus workers to transfer to agriculture, construction
or industry, cooperatives or self-employment
State institutions must provide these alternatives. Cuban trade unions
delay restructuring to protect workers
Self-employment: 1980s max. 50,000
1993 law: 170,000 workers in 2005 falls to 144,000 in 2009
Cuban workforce 5.2 million. 15.4% work in the non-state sector –
mostly agricultural cooperatives. 2.7% are self-employed
200,000 new licenses issued since October 2010 = less than 7% selfemployed - non strategic or marginal occupations
Increase state tax receipts and decreases salary costs
Self-employment in the Cuban workforce
Evolution of self-employed work, 1994-2009 (thousands of workers)
Guidelines for updating the economic model
G1: socialist planning will continue to be the principal means to
direct the national economy
G3: In the new forms of non-state management, the concentration of
ownership shall not be permitted
Short-term aim:
Eliminate the BoP deficits, increase NY, ISI, improve economic
efficiency, work motivation and income distribution and improve
productive forces
Long term aim:
‘food and energy self-sufficiency, an efficient use of human potential, a
higher level of competitiveness in traditional production areas, and the
development of new forms of the production of goods and services of
higher added value’
Conclusion
Cannot be understood from purely ideological or political perspective
Pragmatic measures: challenge of building socialism in underdeveloped,
trade-dependent island, blockaded and attacked
Create the infrastructure in which all Cubans can contribute towards
socialist development
No one will be abandoned
Not an ideological preference for ‘liberalisation’
Not a rupture with the socialist revolution and Fidel Castro
Progress monitored and policies updated and adapted over 5 years
Progress with patience and resolution to improve the efficiency of the
system; maintaining the principles of socialism, while adapting, with
creativity and innovation to the challenging context of the global
capitalist crisis
Cuban imports & exports by destination, 2008
Source: Economic Intelligence Unit, 2009.
Cuba & ALBA
Bolivarian Alliance for the Americas: Antigua and Barbuda, Bolivia,
Dominica, Ecuador, Honduras (coup June 2009), Nicaragua, St Vincent
& the Grenadines. Pop. 70 million & GDP $440bn
Promotes non-market based exchanges between neighbouring
countries
Reciprocal cooperation and focus on endogenous development to
overcome structural inequalities
Barrier to US & European capital – protects radical governments,
example of the benefits of trade relations based on South-South
cooperation and welfare-based development
‘Of course the ALBA is largely inspired by the good things of the Cuban
model; like trade between peoples based on solidarity, not for profit,
cooperation for development…’
President Correa 2009
ALBA benefits to Cuba
Alternative to complete insertion into
capitalist world economy
International trade regional
distribution (%)
Export strategy consistent with
Cuba’s socialist principles, reaps the 100
benefits of the Revolution’s welfarebased development strategy, and not 80
obstructed by the US blockade
60
Provides capital for infrastructural
investment projects (PDVSA &
CUPET)
Political support against US blockade
Locates Cuba as a central axis of
pan-Latin American integration
América
Latina
Europa
Asia
40
20
América
Norte
0
Africa y
Oceanía
1989 2006
Distribution of Cuba’s international trade 1989 & 2006
Source: Angela Ferriol Muruaga, INIE, Cuba, 2008