MBA Study Tour 2012:Changes and Challenges in Cuba’s Economy
Trip Purpose Havana is an enchanting city full of history, arts, and culture. The city/province has about 2.1 million inhabitants and is the largest city in Cuba and the second largest in the Caribbean. Matanzas is the second largest Cuban province and one of the most industrialized, with oil wells, refineries, and sugar mills. It is also famous for the Varadero beaches and resorts. The theme for the study trip is: Changes and Challenges in Cuba’s Economy. Subthemes include sustainability in the food, health, energy, and educational sectors, and advances in the biotech and traditional industries.
Why Cuba? Strategic geographic location, 90 miles “close” to the continental US. Yet, it remains a mystery to many or is quickly dismissed by some because of possible misconceptions. Cuba’s socioeconomic indicators rank the island in the top spots in comparison to the rest of L. America. Life expectancy at birth: 79 years (2nd in L.A.) Infant mortality rate: 4.4 for every 1,000 births (1st in L.A. and 2nd to Canada in the Americas) Adult literacy: 99.9% (1st in the Americas) Human Development Index (HDI): 0.760 (4th in L.A.) Ranked 1st in the Americas for preventive medicine. Free education and healthcare for all, plus other subsidies. One of the safest countries in the hemisphere to visit.
Why Cuba? Boasts a growing biotech industry, which includes dozens of registered patents in the US, despite the embargo. The Cuba “brand”: despite its relatively small size, limited population, and relative isolation, Cuba is known worldwide for its dynamic culture and history. Birthplace of salsa music and dance, of international appeal. Also son and cha-cha are important Cuban rhythms. Known for it’s achievements in baseball, boxing, volleyball, and other sports in international arenas. It’s beaches, Havana Club rums, sugar cane, and tobacco “puros” reinforce the island’s international image as a popular tourist destination. Why Cuba? Summary: Healthy, well-educated and developed population, eager for changes and opportunities, and capable of competing against more resourceful countries in key areas. Beautiful, historic cities and scenery.
Why now? Cuba recently approved economic reforms aiming to: Putting idle lands into productive use (cooperatives). Raising agricultural yields (thru organic and sustainable methods). Developing new mechanisms to reverse industrial and infrastructural de-capitalization (increase FDI). Undertaking studies in order to eliminate monetary dualism, which is creating social divide. Provide improved capacity for more decentralized regional development. Recover traditional exports, such as sugar (though centralized price determination will be maintained). Recover the place of work as the fundamental means of contributing to the development of society and the satisfaction of personal and family needs.
Why now? Goals will be achieved by: Modifying the structure of employment, reducing inflated state sector staffing and increasing employment in the non-state (“private”) sector. Eliminating the ration book, “la libreta”. Promoting export-oriented industries (biotech, human development, nickel mining, etc.) Developing new industries, such as tires, construction materials, metallurgy, etc. Restructuring retailing and wholesaling. Workers’ incomes in state enterprises to be linked to enterprise performance. Establishing wholesale markets for state, cooperative, and self-employment enterprises. Liquidating insolvent enterprises.
Why now? Summary of Cuba’s new strategy: First: Downsize the state sector. Layoff redundant workers (1.3 million employees, or about one-fifth of the country’s working population). Liquidate insolvent enterprises. Re-structure state control of main industries. Second: Re-absorb displaced workers. In cooperatives (private enterprises facilitated by the state) In strategic self-employment markets. Increase Foreign Direct Investment (FDI). Third: Adjust and control. To avoid a Russian-like implosion. Or a loss of social equality, as in China and Vietnam.
Cuban Export by Product Shares (1990) Total: 5,658 Million Cuban Pesos Citrus: 145.1 Tobacco: 111.6Sugar: 4,313.80 Nickel: 388.1 Pharmaceutical: 84.6 Fish: 97.4 Other Merchandise: 274 Tourism: 243.4A snapshot of Cuba’s exports around the time when the USSR was dissolved.
Cuban Exports by Product Shares (2008) Total: 12,506 Million Cuban Pesos Sugar: 233.4 Alcoholic Beverages (mostly rum): 244.6 Other Services Tobacco: 236.5(professional services in health, education, Fish: 73.7 sports, and other Nickel: 1,491.3 consulting): 6,146 Pharmaceutical and Biotech: 296.8 Manufactures:138.8 Transportation equipment: 167.1 Other Merchandise (mining, etc,): 797.4 Tourism: 2,359Economic reforms went from being a “necessary evil” to a matter of survival.
Why now? Because now we CAN! The Obama Administration has relaxed the travel requirements for legal visits to Cuba: For credited, academic trips a simple visa, arranged by a travel agency, is all that’s needed. Recently announced reforms are positive and encouraging. Today, there are 400+ joint ventures representing investment by 46 countries of more than $5 billion. Because visiting Cuba can be a lifelong memory and a unique opportunity to see something truly different, so close and yet so “far” from the US. Advertising is still mostly nonexistent in Cuba. Cubans are some of the most resourceful and inventive people in the hemisphere. They have a “repair it” mentality and seldom throw things away.
The Study Tour Facilitated by Global Exchange Reality Tours. With more than 20 years of experience, they are trusted by many university programs for arranging trips to Cuba. Price: About $2,500-$3,000 for 20-30 people. What does it include? Air transport from Mexico (Cancun) to Havana. Ground transportation to/from visits. Overnight accommodations in a 3-star hotel in Old Havana (double occup.) Two meals per day (excluding arrival and departure days). Pre-departure handouts. Lectures and related materials. Send-off reception. Interpreter, guide and agent fees. Admission and fees to included activities. Airport taxes and staff travel. 21st traveler is free.
The Study Tour Not included: Air travel from US to Mexico (Cancun). One meal a day and meals on the first and last days. Hotel fees beyond overnight accommodations. Personal expenses such as phone calls and internet usage. Travel insurance. Travel documents fees. Cuban airport taxes ($25 CUC) Health insurance and immunizations. Individual excursions and side trips.
Itinerary (tentative) When: From March 10th to March 24th, 2012. Visits will likely include: Meeting with expert economist for an overview of the Cuban economy, including the recent changes. Cuban Ministry of Foreign Trade and Investment for a talk about Cuba’s trading partners and trading opportunities. Visit with the Instituto Cubano para la Amistad entre los Pueblos (ICAP), our hosts in Cuba. Visit to Cuban Chamber of Commerce regarding the recent adjustments to the Cuban economy, the “new” self-employed sector, and the growth of cooperatives. Visit to a Biotech company. Visit one of the many city museums.
Itinerary (tentative) Visits will likely include (continued): Visit tobacco factory. Architectural tour of Havana. Visit to the Capitol. Attend a performance by a National Folkloric Group. Visit Varadero, Cuba’s most celebrated beach resort area. Visit joint venture hotels and tourism sites in Varadero. Meet with tourism officials regarding Cuba’s sun and sand tourism industry. Visit the Havana Club rum factory, producer of some of the world’s best rums. Visit a food preservation community development project. Visit Havana University and the Economics faculty.
Itinerary (tentative) Visits will likely include (continued): Visit the community art project Muraleando or Coloreando mi barrio. Visit Cojimar, the famed fishing village that inspired Hemingway’s The Old Man and The Sea. Visit Casa de La Música or Cuba’s Union of Artists and Writers. Visit a doctor and a polyclinic. Visit the Alamar urban garden for a view of Cuba’s efforts for growing sustainable, local, organic urban farms. Visit the famous Colón Cemetery.