Cuba After Castro - RAND Corporation

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96 Cuba After Castro: Legacies, Challenges, and Impediments The Effects of Soviet Assistance on the Cuban Economy Prior to the Revolution, Cuba’s economic fortunes were closely tied to the sugar industry. As Pérez-López (2004, Appendix E) puts it, Sugar was the engine that powered the Cuban economy. Sugar production was the main industrial activity, the main generator of foreign exchange, and the largest single employer in the nation. . . .When the international market price was high, the island experienced a period of economic prosperity referred to as vacas gordas; this was invariably followed by prolonged periods of low sugar prices and vacas flacas. By the end of the 1950s, Cuba had begun the process of industrialization and the development of its tourist industry. Most of Cuba’s trade, both in sugar and industrial inputs, was focused on the United States, which was also the primary source of investment capital (Economic Commission for Latin America and the Caribbean, 2001). Cuba’s development process after the Revolution became dependent instead on the Soviet Union and the other CMEA states. These ties to the CMEA, which insulated Cuba from the international market, also shaped its industrial development in ways that left it particularly unprepared for integrating into the world economy after the CMEA collapsed. The central feature of the Cuban-CMEA relationship was the exchange of Cuban sugar for CMEA investment, equipment, and technology. This exchange transformed the Cuban economy in a variety of ways. First, in response to the extremely favorable prices the CMEA states paid for Cuban sugar, 1 the Castro regime, rather than diversifying its industrial base, concentrated its resources on sugar production and sugar by-products. Indeed, for sugar production during the 1980s, Cuba devoted a third of its investment, about half of its total _____________ 1 At the end of the 1980s, the CMEA states were paying the equivalent of $690 per metric ton for raw sugar at the same time as the price in international markets was between $133 and $282 per metric ton (Economic Commission for Latin America and the Caribbean, 2001).
The Need for Industrial Restructuring 97 cultivated land, nearly half of its stock of agricultural tractors, about three-quarters of its railway system, and close to a third of its labor (Pérez-López, 2004, Appendix E). Second, after a disastrous effort to reach a record harvest in 1970 by mobilizing a vast array of temporary labor, Cuba’s sugar industry, as well as its agricultural sector more generally, became heavily dependent upon imported inputs (fertilizers, machinery, and energy). As a result of this concentration of resources in sugarcane production and related industries, Cuba has failed to diversify its agricultural production enough to reach self-sufficiency in agriculture. In turn, it has had to rely on imports to fill about half of the country’s nutritional requirements—a proportion that appears to have risen during the Special Period (Economic Commission for Latin America and the Caribbean, 2001). Third, investment in Cuba’s incipient industrial sector was concentrated on domestic production of inputs into the sugar industry, including fertilizers, pesticides, animal feeds, packaging, and machinery, and into the development of industries based on sugarcane byproducts. Thus, Cuba failed to reach the diversification of its industrial base needed to meet domestic needs, much less to begin to develop foreign markets in higher-value industrial goods. Fourth, Cuba imported its machinery from the CMEA. This practice not only produced a problem of compatibility with existing equipment that had been imported from the West, it also resulted in a reliance on technologically inferior equipment that further limited efficiency and productivity. Moreover, this equipment was designed for conditions in the Soviet Union, which were often vastly different than conditions in Cuba: Soviet equipment was designed for very large and highly specialized plants and was energy intensive (Economic Commission for Latin America and the Caribbean, 2001). This practice promoted extensive vertical integration of production and thus impeded the development of the industrial linkages necessary for the development of smaller-scale domestic suppliers. The United Nation’s Economic Commission on Latin America and the Caribbean (2001) has summarized the consequences of
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CUBA AFTER CASTRO Legacies, Challen
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Preface Cuba is nearing the end of
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The RAND Corporation Quality Assura
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Executive Summary Cuba’s economy
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Executive Summary xiii trate, contr
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Executive Summary xv An Alienated Y
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Executive Summary xvii from the mos
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Executive Summary xxi the island’
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Executive Summary xxiii measures--i
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Acknowledgments The authors wish to
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Page 75 and 76: CHAPTER FOUR Cuba’s Racial Divide
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Page 79 and 80: Cuba’s Racial Divide 51 new, more
Page 81 and 82: Cuba’s Racial Divide 53 Blas Roca
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Page 87 and 88: Cuba’s Racial Divide 59 compiled
Page 89 and 90: Cuba’s Racial Divide 61 • None
Page 91 and 92: Cuba’s Racial Divide 63 to ignore
Page 93 and 94: Cuba’s Racial Divide 65 region co
Page 95 and 96: Part II: The Structural Challenges
Page 97 and 98: The Structural Challenges Ahead 69
Page 99 and 100: CHAPTER FIVE Cuba’s Changing Demo
Page 101 and 102: Cuba’s Changing Demographic Struc
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Page 123: CHAPTER SEVEN The Need for Industri
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Page 133 and 134: CHAPTER EIGHT Conclusion Both Fidel
Page 135 and 136: Conclusion 107 the majority of the
Page 137 and 138: Conclusion 109 1988) were unsustain
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Page 141 and 142: Conclusion 113 As the experience in
Page 143 and 144: Conclusion 115 First, the governmen
Page 145 and 146: Conclusion 117 gime will be unwilli
Page 147: Conclusion 119 China. Still, the Un
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Cuba After Castro - RAND Corporation

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