Transcript assessing cuba`s economy current and future capacity to

ASSESSING CUBA’S ECONOMY CURRENT AND
FUTURE CAPACITY TO PROVIDE SOCIAL JUSTICE
Carmelo Mesa-Lago
Governance and Social Justice in Cuba
CRI
Ottawa, June 9, 2006
SOCIAL JUSTICE: RISE AND DECLINE
Social Justice includes a set of policies to reduce poverty, inequality and
unemployment, as well as to provide social services such as education,
healthcare, social security pensions and housing.
Social justice in Cuba improved notably under the revolution until 1989.
The severe crisis resulting from both the collapse of the socialist camp
and ill-conceived economic policies for four decades reversed most of
those improvements.
The deterioration of social justice in Cuba under “The Special Period of
Time of Peace” is showed in the Table, contrasting the situation in 1989
with that in 2002-2005:
•
Poverty increased 217% it was 20% in Havana in 2002 and 31% of its
population perceived they were poor.
•
Inequality measured by the Gini coefficient rose 81%, the ratio
between the wealthier and poorest 25% of the population jumped from
3.3 to 13.5 times.
•
Open unemployment declined 24% but including as employed 765,000
people who are not, when that group is excluded unemployment
actually increased by 16%. A major problem is underemployment:
people employed that are not really needed or have low productivity.
•
Higher education declined 52% in 1989-99 but increased 50% by 2005;
disaggregated by careers rose 60% in humanities, social sciences,
education & medicine in 1989-2005, but fell 13% in technical careers,
natural & exact sciences crucial for development.
•
Infant mortality has steadily declined becoming the 2nd lowest in the
hemisphere, but maternal mortality has increased 42%, mortality
among the elderly increased significantly and after a recent
improvement is still 3% higher, and the immunized population in 5
vaccines decreased by 54%
•
The deficit in social security pensions (paid by the state) rose almost
twice and as a percentage of GDP by 77% and will continue growing
as Cuba’s population becomes the oldest in the region; the average
real monthly pension decreased 41% and the 2005 increase has not
compensated for that decline.
•
Housing is the worst social problem in Cuba, the number of dwellings
built per 1,000 inhabitants decreased from 6.1 in 1980s to 2.2 in 2004.
The housing deficit exceeds 1 million units.
The Deterioration of Social Justice in Cuba in the Special Period: 1989-2005
Indicators
1989
2002/2005
Difference (%)
“Population at risk” (% of urban population)
6.3
20.0
+217
Perception of poverty (% population Havana)
n.a.
31.0
n.a.
0.225
0.407
+81
7.9
1.9/16.0
-24/+100
242
362
+50
164
263
+60
47
41
-13
Infant mortality (per 1,000 born alive)
11.1
5.9
-47
Maternal mortality (per 100,000 born alive)
29.2
41.7
+42
Mortality population 65+ (per 1,000)
48.4
49.7
+3
Immunized population 5 vaccines (millions)
2.3
1.0
-54
Pension deficit (million pesos)
233
696
198
Deficit financed by the state (% of GDP)
1.3
2.3
+77
Average real monthly pension (pesos 1989)
56
33
-41
6.1
2.2
-64
POVERTY
INEQUALITY
Gini coefficient
EMPLOYMENT
Open unemployment (% of EAP)
EDUCATION
Enrollment higher education (thousands)
Humanities, social sciences, education, medicine
Technical careers, natural and exact sciences
HEALTH
SOCIAL SECURITY PENSIONS
HOUSING
Dwellings built (per 1,000 inhabitants)
CURRENT AND FUTURE CAPACITY OF THE ECONOMY TO
CONFRONT THE DETERIORATION IN SOCIAL JUSTICE
CURRENT SITUATION: ADVERSE FACTORS
•
GDP in 1990-2000 decreased at an annual rate of -1%, the lowest in
Latin America; in 2005 GDP per capital was still below the 1989 level.
•
Capital formation essential for economic growth decreased by 59% in
1989-2004.
•
Output of 12 key agricultural and manufacturing products (both for
domestic consumption and export) decreased between 20% and 94%
•
Exports were still last year 68% below the 1989 level but imports only
28% lower, hence the merchandise trade deficit reached a record $4
billion and increased 52% over the 1989 deficit.
•
The external debt doubled.

Average foreign direct investment (disbursed) averaged about $180
million annually, has declined in recent years and several joint
ventures has been shut down by the government.
CURRENT AND FUTURE SITUATION: POSITIVE FACTORS
• Production of oil has increased 390% and output of gas has
also risen significantly. There is considerable potential for
further expansion of oil if large deposits with crude of fair
quality are found, a probability that could be enlarged with a
further opening to foreign investment.
• Venezuela provides a pipeline for oil and investment in key
lines with generous price subsidies; China also but to
considerably less extend. A political change in Cuba and/or
Venezuela could eliminate or reduce this advantage (an
opposition government in Venezuela could ask debt payments).
China could still might be interested in Cuban nickel.
• Tourism generated $2.2 billion last year and according to
official data (albeit incomplete) compensated for the
merchandise trade deficit. An opening of the US market would
enormously increased investment in tourism, the number of
visitors and revenue. The multiplying effect of tourism, little
realized so far, could be expanded.
• Foreign remittances are an important source of hard currency
but affected by recent monetary policies and they cannot be
invested in small and medium businesses. Political and
economic changes in Cuba allowing the private operation of
those businesses would expand foreign remittances and their
multiplying effect on the economy.
• Cuba has heavily invested in human resources and education
although technical careers have been neglected. These
resources could be important in future domestic developments
as well as export of services in hard currency.
• Some countries like Chile and Costa Rica has based their
development largely on agriculture. Cuba has enormous
potential to provide winter fruits and vegetables to North
America and Europe. Private or quasi-private ownership in
agriculture, as in China and Vietnam, combined with foreign
investment could achieve that end.