{"id":229326,"date":"2020-10-20T14:57:38","date_gmt":"2020-10-20T18:57:38","guid":{"rendered":"https:\/\/oncubanews.com\/en\/?p=229326"},"modified":"2020-10-20T14:57:38","modified_gmt":"2020-10-20T18:57:38","slug":"foreign-direct-investment-and-organization","status":"publish","type":"post","link":"https:\/\/oncubanews.com\/en\/opinion\/columns\/counterbalance\/foreign-direct-investment-and-organization\/","title":{"rendered":"Foreign Direct Investment and organization"},"content":{"rendered":"

The past week has been one of the most interesting in recent times, for everyone, but especially for economists. The <\/span>explanation offered <\/span><\/a>\u00a0about the \u201corganization\u201d task by the head of the Implementation Commission and the subsequent <\/span>clarification of doubts and comments on the subject<\/span><\/a>, was, in my opinion, one of the best public explanations I have heard, not only to understand the complexity of the task at hand of the present government, but also on how the national economy has functioned and functions, or rather, how much distortion of all kinds and institutional failures exist today in the functioning of the national economy. After listening to both programs, it is possible to express with amazement, rather than with certainty, <\/span>eppur si muove<\/span><\/i>.<\/span><\/p>\n

It is also true that if we don\u2019t carry out this task, if it isn\u2019t done correctly, or if we continue to delay it indefinitely\u2015with the risks that this implies and with the restrictions we have today\u2015, that even erratic movement of our economy can take us anywhere, except where we want.<\/span><\/p>\n

It is also true that despite the effort to foresee everything, or almost everything, because the economy implies communicating vessels, because it has a direct social and therefore political impact, and for that reason it has been repeated so many times that in economics one plus one is never two; new problems, challenges and mistakes will arise that must be assumed and corrected, as the case may be. Whoever renounces doing something for fear of erring, will die of paralysis or be stranded in the \u201cfurther back\u201d which is a much worse place than the \u201cbeyond.\u201d<\/span><\/p>\n

The deeply structural character of the ordering task was, from my perspective, very clear. Several of its possible positive effects: making the relations between state enterprises transparent, both among themselves and between them and the so-called non-state forms; shedding light on efficiency and productivity at the micro level; decreasing and as far as possible eliminating \u201carbitrage\u201d; improving the competitiveness of Cuban products, today affected by that overvalued exchange rate, compared to similar imported products; encouraging the propensity to work; and reducing the other one to not work, among others, add up in its favor.<\/span><\/p>\n

However, a lot of effort isn\u2019t necessary to verify that the resources are not enough and that is why much has to be done to multiply the results in attracting Foreign Direct Investment (FDI); First, because we won\u2019t be able to immediately generate with the <\/span>organization task<\/span><\/i> all the savings that we need to encourage the necessary economic growth, not even when the law on small and medium-sized enterprises is approved, which undoubtedly can help a lot; second, because the restructuring of the business system that must be derived from the <\/span>organization task<\/span><\/i> will force a resizing of this system as well as of the bureaucratic apparatus of the State and government, generating very strong pressures on employment, which, although they may be compensated in the short term with fiscal aid cannot be maintained for long, and although the expansion of the non-state sector may partially offset these pressures, it also doesn\u2019t seem plausible to think that its absorption capacity will reach 100% of the necessary adjustment. Third, because if our companies will need to obtain foreign exchange in order to complete their productive and reproductive cycle, the conquest of international markets will be a condition of life or death for them; fourth, because it is always of greater impact for the national economy to produce for the domestic market what we acquire abroad today and can, with a certain injection of fresh capital and good administrative practices, be produced domestically; fifth, because undertaking certain investments and industries with external resources would allow the use of national investment resources for other destinations of greater strategic importance for the country (hotels versus food, for example).<\/span><\/p>\n

La inversi\u00f3n extranjera: el largo y sinuoso camino hasta tu puerta<\/a><\/p><\/blockquote>\n