Cuba: the investment policy, between growth and development (III)

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By José Luis Rodríguez*

Among the elements that should be considered in order to design proper policy investor in current conditions, stands in what extent it contributes to a suitable structural transformation to ensure sustainable development. Adriano García – one of the most prominent Cuban specialists in the design of industrial policy-(1) stressed that the strategic sectors to achieve a structural transformation must meet a set of conditions. First, it must be in sectors that contribute to the development of the productive structure, as opposed to the enclave investments that have characterized much of the development in Cuba in sectors such as nickel and – largely – sugar. In addition, they must be sectors absorbing investment allowing you to take advantage of technologies and knowledge, ensuring its dissemination to the interior of the productive apparatus, and it should be dealt with in sectors where there is a critical mass of knowledge accumulated in the country. Also, increasingly, it’s businesses that ensure favorable environmental impacts. Finally, sectors that create jobs directly and indirectly, according to the level of qualification of more than 12 level degree of instruction that has the workforce in the country, but – on the other hand – must take the current demographic dynamics into account and the requirements of increased productivity of the work that same demand should be developed. Apply those requirements to the investor structure of the country to ensure a structural change in the short and medium terms; it is clear that not all sectors meet the terms. However, key sectors such as the agro-industrial and industry medical-pharmaceutical-biotechnology-based, they do them, together with the basic development of the energy industry on the basis of its preservation and generation from renewable sources, all of which offers a significant space to ensure investments to ensure the necessary structural changes, along with other priorities. The priority development of these strategic branches is to take into account other elements that make it possible to carry it out, particularly with regard to the final destination of the productions and infrastructure support services. In this sense, the size of the Cuban economy imposes for reproduction necessarily its linkage with the global market, which demands an export-oriented economy. This must be done obtaining a positive impact on the balance of payments of the country, which requires a policy that allows obtain external financing conditions, at the time that imports which ensure exports should be replaced. On the other hand, accelerated growth and more diversified external sales supposed to have services which are now deficient in the areas of transport, communications and specialized services to enterprises, ranging from financial services to the control of quality. In these areas it is essential – by way of example – to increase investments that ensure the lowering of the route of the railway and maritime coastal shipping transport, the streamlining of communications through increased use of ICTs, and greater efficiency in the development of designs and projects by specialized institutions that guarantee the fulfillment of investment schedules, and avoid the dispersion of the companies will try to address them with forces of their own. All the efforts that have been identified with strategy, it would have to add the need to continue to develop investments which will enable – after an analysis appropriate costs and benefits – recover part of the under-utilized industrial structure in the country to advance gradually in import substitution with destination to domestic consumption, in competitive conditions, or require ensure by its strategic nature for the security of the country. All previous analysis clearly derives the strategic role of foreign direct investment, taking into consideration that the domestic savings of the nation capacity is not sufficient for the required transformations. Cuba has thus recently given a step of utmost importance in the design of economic policy with the approval of the new law on foreign investment. An analysis of its impact in the short and medium-term result – so – very interesting to understand the environment of the major transformations the economy addresses, beyond the current situation.

*The author is an advisor of the center of research of the global economy (CIEM, Havana) 1 specialist of the National Institute of economic research (INIE) headed the Group of authors who prepared an indispensable book for studying the industrial policy in special period. See Adriano García et. Industrial policy, productive reconversion and competitiveness. The Cuban experience of the 1990s, La Habana, INIE, 2003.
– See more at: http://www.cubacontemporanea.com/en/news/cuba-investment-policy-between-growth-and-development-iii#sthash.vqz5itNV.dpuf

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