Changes

In June 2005, 2,000 more licenses were revoked from self-employed workers as a means to reassert government control over the economy and to stem growing inequalities associated with self-employment. The licenses for self-employed workers were typically for service-oriented work, allowing the Cuban people to eke out a small living in an otherwise impoverished state. Moreover, workers in Cuba’s tourist sector--at resorts where native Cubans are prohibited unless they are on the job--have been prohibited by a Ministry of Tourism regulation from accepting gifts, tips, or even food from foreigners, in a further attempt at increasing the tourist apartheid that exists on the island.  

In June 2005, 2,000 more licenses were revoked from self-employed workers as a means to reassert government control over the economy and to stem growing inequalities associated with self-employment. The licenses for self-employed workers were typically for service-oriented work, allowing the Cuban people to eke out a small living in an otherwise impoverished state. Moreover, workers in Cuba’s tourist sector--at resorts where native Cubans are prohibited unless they are on the job--have been prohibited by a Ministry of Tourism regulation from accepting gifts, tips, or even food from foreigners, in a further attempt at increasing the tourist apartheid that exists on the island.  

 

A 2004 UN Economic Commission on Latin America and the Caribbean (ECLAC) report recommends that Cuba "redesign the parameters of competition in the public, private and cooperative sectors [and] redefine the role of the state in the economy." It recommends more flexibility in self-employment regulations, property diversification, economic decentralization, and a role for the market. The Cuban Government, however, is today reversing the economic liberalization of the 90s and re-centralizing its economy. Evidence of this is found in the decline in the number of firms participating in the perfeccionamiento empresarial, or entrepreneurial improvement (EI), program, which is based on capitalist management techniques. EI was instituted in the 1980s as a military-led pilot project, and in 1998, the Cuban Government extended it from military to civilian "parastatals," reportedly to foster capitalist competitiveness. At first, the government highlighted participating companies' achievements in cutting costs and boosting profitability and quality and suggested that the increased autonomy of state managers under EI was producing an efficient form of socialism with a strong link between pay and performance. However, many in the Communist Party, even Castro himself, resisted EI. Many of the original participants have since left the program and participating firms have seen little growth in revenue. The EI program has fallen far short of expectations and the Cuban Government no longer heralds its successes or its future prospects. In 2003 the Cuban Government also tightened foreign exchange controls, requiring that state companies hold money in convertible pesos and obtain special authorization from the central bank before making hard currency transactions. Practically speaking, this restricted companies from using the dollar for internal trade. Following this, in 2004 the government announced that all state entities must stop charging in U.S. dollars and charge only in pesos for any products and services not considered a part of a company’s "fundamental social objective." It also recently implemented new requirements to channel imports through monopolistic Soviet-style wholesale distribution companies.  

A 2004 UN Economic Commission on Latin America and the Caribbean (ECLAC) report recommends that Cuba "redesign the parameters of competition in the public, private and cooperative sectors [and] redefine the role of the state in the economy." It recommends more flexibility in self-employment regulations, property diversification, economic decentralization, and a role for the market. The Cuban Government, however, is today reversing the economic liberalization of the 90s and re-centralizing its economy. Evidence of this is found in the decline in the number of firms participating in the perfeccionamiento empresarial, or entrepreneurial improvement (EI), program, which is based on capitalist management techniques. EI was instituted in the 1980s as a military-led pilot project, and in 1998, the Cuban Government extended it from military to civilian "parastatals," reportedly to foster capitalist competitiveness. At first, the government highlighted participating companies' achievements in cutting costs and boosting profitability and quality and suggested that the increased autonomy of state managers under EI was producing an efficient form of socialism with a strong link between pay and performance. However, many in the Communist Party, even Castro himself, resisted EI. Many of the original participants have since left the program and participating firms have seen little growth in revenue. The EI program has fallen far short of expectations and the Cuban Government no longer heralds its successes or its future prospects. In 2003 the Cuban Government also tightened foreign exchange controls, requiring that state companies hold money in convertible pesos and obtain special authorization from the central bank before making hard currency transactions. Practically speaking, this restricted companies from using the dollar for internal trade. Following this, in 2004 the government announced that all state entities must stop charging in U.S. dollars and charge only in pesos for any products and services not considered a part of a company’s "fundamental social objective." It also recently implemented new requirements to channel imports through monopolistic Soviet-style wholesale distribution companies.