1. MBA Study Tour 2012:
Changes and Challenges
in Cuba’s Economy
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. Cuban Export by Product Shares (1990)
Total: 5,658 Million Cuban Pesos
Citrus: 145.1
Tobacco: 111.6
Sugar: 4,313.80 Nickel: 388.1
Pharmaceutical:
84.6
Fish: 97.4
Other
Merchandise: 274
Tourism: 243.4
A snapshot of Cuba’s exports around the time when the USSR was dissolved.
9. 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: 2,359
Economic reforms went from being a “necessary evil” to a matter of survival.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.