Dr.C Juan Triana Cordoví

Dr.C Juan Triana Cordoví

Eusebio of Old Havana: putting soul into the stones

Eusebio of Old Havana: putting soul into the stones

This will not be an article on economics, although it will inexorably be related to it. Cities have become one of the leading actresses of economic development in the world. I heard a colleague, Ricardo Núñez, say a long time ago (2010) that “cities are revitalizing entities of national and even regional economies.” Perhaps today, Singapore with 719 km2 of surface, is the most evident proof of this assertion. That small city state is decisive in an entire region, in one of the most dynamic markets in the world and its extension is less than that of Havana! As Havanans that we all Cubans are, since Havana is the capital of all, we have been partying because our city turned 500 and we have celebrated it as it should, among other things, because none of us will be present when the city’s millennium is celebrated. And if it has been possible, in addition to the passion and dedication of many men and women who devoted hours and hours to that purpose, it has also been possible because of the seed that was planted and that germinated since long before, ever since around 1925 when Don Emilio Roig de Leuchsenring was...

The obstacles that hinder state enterprises in Cuba

The obstacles that hinder state enterprises in Cuba

Twice this week I’ve heard this idea in two different contexts, although always referring to the state enterprise. “Doing away with the mechanisms that tie down the autonomy of the state enterprise” was one of them; “Our duty is to do away with the mechanisms that hinder the efficiency of the state enterprise” was the other. They were not said in any particular context, which forces me to think that there is sufficient conviction among decision makers that there are “mechanisms”―institutional and organizational arrangements―that are, at least in part, responsible for state-owned enterprises not meeting expectations. In fact, we could say that there are institutional ―regulations and incentives― and organizational―administrative structures― arrangements which are part of all those obstacles that make our enterprises―not only the state ones, but also those other non-state―not as efficient as they should be. We can also say that many of these obstacles are not new, they date back many decades and even today, because of that fabulous ownership of bureaucracy so similar to that of matter (neither created nor destroyed, only transformed), they remain not only alive, but enjoy good health. Just a few months ago, in the Congress of the Association of Economists of...

Those who sell serve, those who buy order

Those who sell serve, those who buy order

While this week almost all Cubans discussed this exciting matter of imagining how we are going to be able to buy (import) what we want, without having to go to any other country or depend on someone who does so (some “cubanicio”: Cuban with Phoenician). And as always with these measures, suddenly several groups are created that move within the space that exists between total detractors and outright defenders. But in recent days something else also happened of tremendous importance but which the press did not give, according to my opinion, the relevance it has, and it was President Díaz-Canel’s meeting where the issue of exports, which is one of those we depend on as a lifesaver, was once again dealt with. That meeting should be broadcast three or four times on television and should be studied in detail by the entire Cuban state business system and also, why not, that other one that we call non-state, but also Cuban and which also produces wealth. https://youtu.be/DACP1ejj5yI From what I could catch from this broadcast, some ideas stayed with me that I will try to reproduce and which President Díaz-Canel highlighted: The plan depends on what we export, and on those...

Cuba beyond the energy situation: look at the Sun

Cuba beyond the energy situation: look at the Sun

There was a time when the inhabitants of the township of San Cristóbal de la Habana recognized the times of bonanza or hardship according to the number of sailboats anchored in the bay. That time, even though the main maritime commercial activities in the country have moved to the port of Mariel, isn’t yet a thing of the past. Today the times of bonanza or hardship can be somehow diagnosed by the entrance or not of an oil tanker in the bay of Havana or in the bays of Cienfuegos or Matanzas. Thus, our secular dependence on oil once again brings back that same image to us, this time modernized with ships without sails and with much greater bearing. But the ship in the bay is still the icon of our dependence, whether it is carrying cooking oil, chicken, wheat flour or oil. It would also have to be recognized that all citizens’ access to energy is an element of unquestionable social equity and at the same time it must also be recognized that it was a concern of the country's leadership since the beginning of the 1959 Cuban Revolution to facilitate that the majority of the population could have...

Cuba’s economic independence and Mr. Trump

Cuba’s economic independence and Mr. Trump

Almost everything, even the worst of the worst, has something positive. It even happens with what used to be our hobby and national sport, our dear and beloved baseball. But I’m not going to talk about baseball, because we would have to have a lot of space to develop theses and test hypotheses. Although our baseball has also suffered the onslaught of the Trump team, which by the way is not at all the dream team that the Americans themselves or at least a great deal of them would have wanted. Right now and in relation to this specific issue I don’t know whether to rejoice or be saddened by the decision of that team to cancel the agreement reached with the MLB. Undoubtedly, those contradictory feelings of mine on this very specific topic have to do with my status as Professor of Economics and having dedicated myself to issues regarding Cuba’s development and economy and having had to explain to my students again and again the evolution of the Cuban economy’s dependence since the times of the colony, when we still depended on the crown of Castile. That dependence imposed by a back-to-front blockade always found resistance among the...

Less tourists vs more income per tourist

Less tourists vs more income per tourist

Tourism, I have no doubt, will have to remain one of those great engines that drive the country forward. (1) There are at least three ways to do it: by encouraging an extensive expansion in terms of hotel and non-hotel capacities, or reaching levels of exploitation of existing ones that allow extracting higher income per tourist or by a combination of both. The first variant depends a lot on new investments and new facilities, the second one depends more on the intensive and efficient use of the facilities and on a business concept where prices are more associated with the real quality of the product/service; the third would be to grow in those segments that generate higher income per tourists and strictly invest in the necessary ones. Improving the occupancy rate and tourist income seem to be two of the most important goals of the Cuban tourism sector today. Although the occupancy rate remains low, we continue to grow in hotel capacities and promote the "all-inclusive" modality in sun and beach tourism. A few weeks ago the minister of economy explained that one of the decisive issues is the return on investment funds. If practically most of the new hotel...

Encourage, promote, facilitate

Encourage, promote, facilitate

No, I am not at all promoting the idea of ​​creating another ministry in Cuba, the Ministry of Development or the development promotion agency. There are already too many, in my opinion. But the word control continues preceding any debate about the national economy. Actually, it’s not a whim. The work of the Comptroller General of the Republic has shown how ineffective many of our so-called control systems are. It is also true that when the cost of the control exceeds the cost of what is controlled then it ceases to make sense, at least from the economic point of view, and is pointing out the need to review these “incentives.” That is why I believe that the words of the day are those that are included in the title of this article. Export, attract foreign investment, replace imports, make the investment process efficient, achieve a good return on investment funds, produce food, are all these words or phrases that we hear every day, from the speeches of the country’s main leaders to any of the national media stories. All are great purposes, all cannot be postponed, if we wish at some time, sooner rather than later, to get out...

Wages and productivity: the egg and the hen

Wages and productivity: the egg and the hen

Wage increases can only be possible if work productivity can be increased. This idea, repeated over and over again for several years, has been one of the essential arguments for postponing what a decisive part of all Cubans has needed. Maintaining low wages in general, but especially in the budgeted sector, has been one of the reasons for many public employees’ emigration to other sectors. Even though the love for the profession and commitment can be great and weigh tremendously, daily life, and the multiple of needs these Cubans have had to face, has also been a factor of great weight in making that decision to "emigrate" towards better paid sectors or "emigrate" to other places with better salary offers for the degree of qualification of those Cubans. The example that I have closest at hand is that of the high rate of emigration of university professors to some countries of "our south." A recent work by Pedro Monreal published on his blog saves me a part of what I had structured for this article, but there are always issues to deal with this controversial issue of wages, demand and prices versus productivity, efficiency and growth. First a bit of...

Change the mentality and all those that must be changed

Change the mentality and all those that must be changed

It’s true, almost always, that when something new is undertaken it’s necessary to change our old ways of thinking: to forget what was learned and start learning again. When human beings are born, they have all the advantages in the world. Every time everything is new! As people grow up, their system of knowledge, the tacit and the explicit, is shaped according to what they’ve learned and the circumstances in which they’ve learned it; it becomes a complex system of signs, alerts, prejudices, which constantly tend to go backwards while driving forward. There are people who’ve totally unbalanced this complex system: either they stay stuck in what they learned, or they simply forget what they already know and they throw themselves forward almost in a suicidal way. Those entrenched in what they’ve already learned, in their lived experiences, ignore the present and deny the future. At the opposite pole are those who deny all previous learning and pretend that the present is disconnected from the past or the future. Forgetting what was learned is a somewhat voluntary process, since it means consciously renouncing already appropriated knowledge and experiences, in the same way that learning is, whenever it’s really desired. For...

Foreign investment: the long and winding road to your door

Foreign investment: the long and winding road to your door

A combination of several factors has made investment, in particular the direct foreign one, return to the news and in the different social networks where time and neurons are dedicated to the problems of the Cuban economy. Undoubtedly, the measures against Cuba that every so often Mr. Trump is responsible for enacting following the agenda of the "dauphin" Marco Rubio, has much to do with this. But it’s also true that Cuba already had its own agenda in relation to these matters. Repeated speeches by Miguel Díaz-Canel and almost all his team in different places, an interview on Cubadebate with the Director for Foreign Investment of the Ministry of Foreign Trade and Investment (MINCEX), and a well-publicized speech by the ambassador of the European Union in Cuba in which, in addition to emphasizing that organization’s support for Cuba in its fight against the Helms-Burton Act, suggested a group of ideas quite close to those that many Cuban economists have repeated for years. From the Keynesian perspective it’s assumed that there is a positive relationship between the investment rate and the economy’s growth. The concept of the investment multiplier summed up this relationship quite clearly. Then there has been a lot...

“Well let’s use technology on the cow”

“Well let’s use technology on the cow”

Sitting in that comfortable chair, Pedro watched the sunrise and tasted his so special coffee, totally organic, that could only be obtained in that place, also so special, far from mundane noises, totally exclusive. Suddenly he was startled by the sound of a bell that insistently came out of his pocket, puts his left hand inside it, takes out the cell phone and found that one of his applications was notifying him of a decisive event. He opened the application, there on the map was what generated the notification: Campana, his most beloved cow, his vanguard cow, was in heat. The application also told him that Campana was just 200 meters north of his position, grazing near the edge of his farm. From his cell phone he sent a message to the inseminator and received delivery and reading confirmation. Everything resolved. He brought the cup to his lips, finished his coffee and smiled. Today in almost all countries of the world it is very common for all pets to carry a remote tracking device. It is very probable that in some it is the owners’ legal obligation. It is purchased at any pet store. Taking advantage of a cow being...

Photo: Kaloian

What’s special about this period

I'm not going to talk about the chicken that can’t be found anywhere, nor the famous Brazilian rice so demanded and that has almost disappeared, nor the packages of mincemeat, before a second-choice recourse and now pursued from shopping center to shopping center, nor the possible power cuts. Even less those who opportunistically will now try to obtain capital gains from scarcity. Temporarily regulating the supply of products can be an effective palliative for specific situations and you have to use it, but always with the understanding that it has to be temporary. And yes, in the end I'll have to talk about chicken. Much has already been written about this so-called new special period, from the perspective of harsh news and also from others, which are closer to its causes and possible consequences. I only intend to address some issues related to this new situation of economic crisis in the country. The name of the special period "in times of peace" was assumed by the political leadership in Cuba to describe the economic crisis that became fully evident in the early 1990s. It assumed that name that had already been used to define the situation that Cuba could face...

Photo: Kaloian

The inexorable passage of time, the one that went by…

I reread the comments to an article that appeared in Cubadebate and I remembered that magnificent song by Pablo Milanés, because in a great deal of them it was possible to detect the sadness of a group of people who feel that that tireless traveler that is time is dwindling through their fingers. Then, my friend and colleague Pedro Monreal reminded me of the importance of time in macroeconomic management. As I'm not going to do better it than him, I will reproduce, with his permission, his comments about it: There are at least three macroeconomic management concepts related to the "time" variable that should be taken into account:  The "inside lag": the time elapsed between the economic shock and the economic policy response.  The "outside lag": the time elapsed between the economic policy response and its impact on the economy.  And perhaps the most important of all, "time inconsistency": certain policies that seem "optimal" when announced, stop being the appropriate policies when some time goes by.  In fact, one of the possible causes of "time inconsistency" is that the announcement of future policies may affect the progress of the economy in the present, that is, prior to the application...

Photo: Christopher P. Baker.

Opportunity to export vs export capacity

In a previous work I tried to expose how complex it was to achieve good economic policy designs, with the necessary coherence and consistency, capable of opening the paths of growth and development. Exports are one of those issues that require these policies and urgently need them. An article on the export of coconut in Baracoa and another, a few months ago, on the exports of the Ceballos enterprise have moved me to write about one of the biggest problems the national economy is facing today, the increase in exports. Let's go first to the numbers. Cuba’s exports in 2017 were barely 2.402 billion dollars, half of what was exported in 2014, imports reached 10.172 billion dollars, while the trade balance of goods was negative in 7.770 billion dollars. The Cuban export of services has made it possible to compensate for this situation, but each time in a more restricted way. In 2018, this situation did not change to positive and in 2019, achieving a better balance between exports and imports will rest on the cut in imports. In addition, the "quality" of these exports of goods, in terms of their structure due to technological complexity, is concentrated in exports...

Photo: Osbel Concepción.

Marches and countermarches: the economic policy’s back-and-forths

I have written this column driven by the discussions around the papers presented at the Annual Seminar of the Center for Cuban Economy Studies of the University of Havana, which that center has held year after year for more than 20 years and this time with the additional motivation of celebrating its 30 years of being founded. It also coincides with the first 30 years of the beginning of the crisis we call the Special Period. Cuba survived that crisis, heightened by that "small obstacle" that is the U.S. blockade. But surviving the crisis is not developing. They have been 30 tremendous years, of transcendental events, of almost constant marches and countermarches. At the beginning of that Period... changes were introduced that promoted greater decentralization in the state business sector in search of greater efficiency. Foreign investment was identified as a positive ―though unwanted― element for our battered economy; self-employment was given greater openness ―it is true that reluctantly; and the dollar was introduced into the national circulation of currencies, to de facto create the exchange and monetary duality in which a generation of Cubans has already been born and lived. Then we witnessed a first countermarch that led to...

Without innovation, many of the bright-color "vintage cars" could barely have reached the title of "jalopy." Photo: pxhere.com

Cuba: Without innovation there is no economic takeoff

Homo sapiens had achieved it. After much observation, and maybe some luck, they had not only managed to produce fire: they had also managed to keep it lit and could even move it. No other related species had been able to do it. I discovered, thanks to a documentary, that there is a kind of monkey in Costa Rica that is able to use stones to open oysters. They have been doing it for centuries, but they have not achieved the "means" that would allow them to make it easier. Century after century, they continue beating the oysters with a stone. In a region of northeastern India, elephants have learned to knock down the posts of electric fences to get to people's crops and feed themselves (it is a terrible conflict that costs the lives of dozens of human beings every year as well as of elephants). However, despite their ancestral intelligence, elephants have not been able to "produce their own food," and what could be said about beavers and that natural ability to create, for thousands of years, dykes, always with their teeth and legs. But neither have they been able to innovate and get some kind of utensil...

Photo: Roberto Ruiz

The list and the money don’t tally

An old recourse to express the strangeness in a contradictory situation is the phrase: "The list and the money don’t tally." That’s what a good friend said to me after reading what was posted on the Cubadebate site about the situation of the country's enterprises. Let's start with what most caught his attention: In the 2011-2017 period, enterprise indicators show positive numbers, most of them on the upswing: net sales (35% increase), profit before taxes (72%), gross added value (51%) and productivity (57%). In addition to the above, there has been a decrease in the number of unprofitable enterprises, which has allowed a considerable reduction in the subsidies due to losses (91%). However, the improvement of the performance of the socialist state enterprise draws attention, compared to the performance of our economy during that same period. It is an obvious contradiction, it can be translated into academic language as a scientific problem, which could lead to many new doctoral theses. From 2011 to 2018, the Cuban economy shows a growth rate that barely reaches an annual average of 2%. Caption: GDP growth rates (1997 prices) Annual rates Average  ----------------------------------------------------------------------------------------------------------------------------- The question is obvious: How is it possible that given that...

Photo: EFE

Cuba 2019: the economy’s most important challenges are not economic

As expected, 2019 will be a very tense year in terms of the economy and will also be difficult in political terms. In economic terms, the announced growth target, 1.5 percent as recognized, is more than insufficient for our development aspirations, because Cuba has been dragging very low growth rates for almost five years and the average growth of the last five years is barely an annual average of around 2 percent. There is a kind of vicious circle that needs to be broken. Producing requires resources. As our economy has not been and is not very complementary, a decisive part of those resources comes from imports, to import we need to export, but as we do not export enough we cannot import what is necessary, and therefore we produce little and since we produce little, well, we cannot accumulate enough and this way national investment is barely enough and therefore the levels of production are again low, like exports. Thus, the cycle repeats itself again and again as has happened in recent years. It is what in economists' jargon would be called GDP and exports highly depend on imports, something that has been studied and demonstrated by more than...

Beyond the 50 Chairs

Beyond the 50 Chairs

At the beginning only 12 chairs were allowed in what according to popular saying was called a “paladar,” taking the name from a restaurant in a famous Brazilian soap opera everyone watched on TV in Cuba and turning it into a generic word that served – and is still used – to call any private restaurant. At the time they were almost clandestine, they couldn’t offer on their menus lobster or shrimps or beef. Later they were allowed to have 24 chairs. They were all “paladares,” from the most famous and most expensive to the most elementary and cheapest; from those born with a certain “gastronomic service know-how and some good chef” to those selling homemade food and with the same “home” treatment, or at times with service know-how that had a genetic combination of state-run restaurant and home dining room. At that time few – or almost none – were born with a business plan, a strategy of positioning in the market, a marketing plan, a “brand” culture, a publicity plan and a studied menu according to their market segment. They were “paladares,” they were the pioneers in bringing to life the “new gastronomic culture,” first in Havana, the...

El Biky Restaurant. Photo: Alain Gutiérrez.

Beyond the 50 chairs

At the beginning 12 chairs were allowed in what according to popular saying was called a “paladar,” taking the name from a restaurant in a famous Brazilian soap opera everyone watched on TV in Cuba and turning it into a generic word that served – and is still used – to call any private restaurant. At the time they were almost clandestine, they couldn’t offer on their menus lobster or shrimps or beef. Later they were allowed to have 24 chairs. They were all paladares, from the most famous and most expensive to the most elementary and cheapest; from those born with a certain “gastronomic service know-how and some good chef” to those selling homemade food and with the same “home” treatment, or at times with service know-how that had a genetic combination of state-run restaurant and home dining room. At that time few – or almost none – were born with a business plan, a strategy of positioning in the market, a marketing plan, a “brand” culture, a publicity plan and a studied menu according to their market segment. They were “paladares,” they were the pioneers in bringing to life the “new gastronomic culture,” first in Havana, the capital...

Photo: pxhere.com

Learning from tourism without having to go to China

It is true that there is a great deal to learn about the economy, not just from China but also from Vietnam and other many countries, including some from our region. But it is also true that we still have a great deal to learn from our own experience. Tourism is perhaps one of those sectors of the national economy from where we can learn the most. Rescued practically from zero since the mid-1980s, without conditions to compete with the major destinations of the region, having lost the “tourist culture,” far from the quality standards of the region and the world, blockaded by the U.S. administrations, with no infrastructure for the sector, without adequate airports (still without them), facing great ideological-political prejudices and with not very friendly migration regulations, tourism “was born with forceps” and grew in a very hostile environment. But today it allows us to reach some valid conclusions for other sectors. 1 – Natural resources are not a curse, they are a great strength Photo: pxhere.com Climate, sun and good beaches, plus a certain territorial diversity, are some of the attributes given by nature. Well-used they can be a great strength for the...

Photo: pxhere.com

Mountaineering and exports

High risk sports (mountaineering, scuba diving, parachuting, all of them) require very clear, easy to understand rules that transmit simple signs and shape the individual and collective behavior of those who strive in those practices; rules that will allow for very wide-ranging margins of action to be able to react to the unexpected but, at the same time, sufficiently powerful to not give rise to fatal mistakes. Exporting, although not a sport, is also high risk and requires the same conditions. Exporting has not been part of the attributes that characterize the Cuban economy; neither is it a basic component of our culture, before or after the Revolution. The paradox is that, despite this, Cuba is a country that has lived off of its exports. The reality is that exporting would have to be “something natural” for Cuban producers since, given our market’s size, any activity that has relatively high production levels exhausts the national market, always small, and there is no other option but to seek foreign markets. It is true that before 1959, not taking into account the “golden triad” – sugar, rum and cigars – we could mention many examples of punctual export actions, without institutional support,...

Photo by Kaloian

The public, the private and wellbeing

The following story I’m going to tell was given to me by a good friend, who is already retired and who in the 1960s participated in that huge sociopolitical earthquake. It’s a story buried in his memories, about supposedly coming from nowhere, who made history. It is about events and decisions, perhaps not new, although at times not sufficiently explored. I haven’t asked for his permission to make it public. I’ve barely edited it. He told it to me from his heart, but also based on his concern. He told it to me because he is one of those who still believe that history exists to learn from it and not to live off of it. It is a privilege to have received it directly from him, as well as still also being able to exchange, once in a while, some ideas with one of those protagonists who almost always were anonymous or if not appeared briefly in some news. Here goes a part of his text, without my friend’s permission: “I understand that in our society there are some things that have to be rescued, like the old trades that were lost because of centralization and because of the...

Street vendor in Havana. Photo: EFE.

Improving the rules of the game

  Reuters’ news again submerged me in that so special relationship between our country and that other one: that during the last 60 years there have been governments set on making of Cuba what others, from Washington, have already designed. This time, private owners have decided to explain to Mr. Marco Rubio that the measures recommended by him are damaging this nascent private sector and in general the Cuban non-state sector. This is not new, others have already tried. In my opinion this is good, that new voices join in, although explaining something is just a part of the equation. The other part is the target. One can explain many times the same matter and have as an interlocutor someone who doesn’t want to listen or understand. Furthermore, I believe it would be good that one of his advisers gets to directly know this country of today, so different in many aspects to the one of some years ago and so much the same as in others. In any case I would like to affirm that thinking that Mr. Rubio recommend and order Mr. Trump to change what he had already decided at his behest is undoubtedly very optimistic. Personally,...

Photo by Kaloian Santos Cabrera

Foreign Direct Investment, Prosperity and Development

  Since the late 1980s, foreign direct investment (FDI) has been included among the potential resources Cuba has had to boost growth and development. One would have to affirm that FDI did its job and that it did it well in spite of everything and that during all these years it has demonstrated how positive its results can be. If we pay attention to the successive reports on foreign investments appearing in the Business Opportunities Portfolio that the Ministry of Foreign Trade has already been publishing for several years in each Havana International Trade Fair (FIHAV), it is possible to confirm what was previously stated. I call attention to the fact that the exports generated in the businesses with foreign direct investment represent an important amount in the total volume of Cuba’s exports of goods. For example, in 2014 total exports were 4.857 billion pesos (equivalent to US dollars) which is why the exports generated by the IEA represented 65.8{bb302c39ef77509544c7d3ea992cb94710211e0fa5985a4a3940706d9b0380de} of the total. In 2015, when the export of goods was reduced to 3.350 billion, the IEA’s participation in them went up to 68.6{bb302c39ef77509544c7d3ea992cb94710211e0fa5985a4a3940706d9b0380de}, which contributed to the country’s balance of goods. It would be necessary to add other unquestionable...

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