By Fulton Armstrong
Photo Credit: PBS NewsHour / Flickr / Creative Commons
As the U.S. embargo – the main obstacle to expanding U.S.-Cuban economic ties – is relaxed by presidential regulatory action and eventually lifted by Congress, limits on Cuba’s own willingness and ability to conduct trade, absorb investment, utilize information technology, and even accommodate tourists risk putting a brake on the normalization of economic relations. Five decades of embargo and failed socialist models have rendered key sectors in Cuba ill-equipped to take advantage of the surge in U.S. business interest in the island. In some areas, the political will to open up and reform is crucial. These problems do not translate into a rejection of normalization but rather into a slower timeline than many on and off the island would hope for.
The advantages of economic engagement are well known. Foreign investment will help provide the $8.7 billion Cuba wants for its “Portfolio of Foreign Investment Opportunities” – some 246 projects in energy, tourism, agriculture, and industry. Havana also wants growth rates to rise to 4-5 percent per year (from an estimated 1.5 percent in 2014), fueled by at least $2 billion in annual foreign investment. Trade, investment, and tourism are all potentially powerful engines for growth and employment in Cuba. Private farmers have long out-produced their state competitors and many cooperatives, making them ideal for engagement under current U.S. regulations if the Cuban government facilitates it. The small private sector, currently employing over a million people, could – with a more supportive infrastructure – provide many more vital goods, services, and employment that the Cuban government years ago admitted it could not provide. Sectors utilizing Cuba’s specialized and skilled human capital, such as biotechnology, could also benefit quickly and generously from the new U.S. relationship.
Cuba has a lot going for it – such as its deep reserve of potential human capital – but it is also is held back by a variety of problems, many of which are prolonged by political caution.
- Cuba is updating laws governing investments, property, and labor – a new foreign investment law in March 2014 and related regulations are steps in the new direction – but the multi-year, incremental process has been too slow to keep ahead of burgeoning opportunities. Regulations on how foreign firms select, pay and release Cuban employees are also antiquated. Paperwork for approving foreign direct investment remains formidable and must pass through multiple levels. The country lacks the basic institutions necessary to license import and export transactions for beneficiaries outside government ministries. Much of the bureaucracy – chronically underpaid and, during periods of party dominance, neglected – has yet to grow into a new, more professional role.
- Unifying Cuba’s two national currencies is absolutely essential but, despite the government’s repeated declarations of intent, it has still not been done. The existence of a different, lower exchange rate for state enterprises creates distortions that will worsen as demand for imports rises. The financial system, moreover, is too over-burdened, secretive, and lacking in agility, and continued blocks to Cuba’s access to IMF, World Bank, and Inter-American Development Bank (IDB) funds deny it important breathing room to reform.
- Cuba lacks an information and communications technology (ICT) framework capable of harnessing and nurturing its human capital and driving growth and efficiency – which will retard progress in a number of priority areas.
- De-industrialization over the past 25 years has further reduced Cuba’s absorptive capacity. Many key sectors – including textiles, clothing, metals, machinery, transportation equipment, and more – have contracted between 50 and 100 percent. Much of the infrastructure is dilapidated. The transportation sector is in dire need of repair and modernization; and the construction industry is inefficient and poorly resourced.
Cuba’s challenges in taking advantage of new opportunities are not insurmountable – with political will and time. The pace of reform and corresponding expansion of Cuba’s absorptive capacity may be maddeningly slow for many Cubans and Americans alike. But insofar as the U.S.-Cuba normalization process is irreversible, so too is the conviction in Cuba on the need to “update” the system through reform in order to take advantage of the opportunities it brings. Cuban national pride and the Communist Party’s fear of losing control could very well be assuaged as the island experiences the benefits of engagement. Foreigners, especially the United States, who push too hard, too fast, and too haughtily could fail and even delay this aspect of normalization, just as Cubans who move too passively, too slowly, and too skeptically could stymie the process as well.
October 27, 2015
*This blog post is excerpted from the third in a series of policy briefs from the CLALS Cuba Initiative, supported by the Christopher Reynolds Foundation. Read the full brief here.
Posted by clalsstaff on October 26, 2015
By Christina Ewig*
Nathan Gibbs / Flickr / Creative Commons
Recent pension reforms in Latin America show promise for greater gender equity across the region, but progress remains uneven in coverage and generosity. Since 2007, 13 countries have either introduced or expanded some form of non-contributory pension, offered to defined groups as a social right, while others have made reforms to their existing pension systems that specifically compensate for gender inequalities. These reforms in several instances were conceived with the participation of gender equity advocates.
- The introduction of non-contributory pensions has equalized pension coverage between women and men in the region, according to a comprehensive study by the Organización Iberoamericana de Seguridad Social.
- The equalization of men’s and women’s retirement age in the Dominican Republic, Mexico, and Uruguay makes it easier for women to attain the minimum number of working years for eligibility for a minimum pension.
- The use of gender-neutral mortality tables in Bolivia and a return to the state-run defined-benefit system that treats men and women equally in Argentina, are also improvements.
- More innovatively, in the 2007 expansion of the non-contributory pension in Bolivia and the 2008 reforms of the traditional pension systems in Chile and Uruguay, women were given credit toward their pensions for children born or adopted, to compensate for time out of the labor market.
The need for such reforms is great globally and in Latin America. Women face much greater risks than men of poverty in old age due to workplace discrimination and gender imbalances in family carework responsibilities – the “motherhood wage gap” – during their working years. Women are employed in smaller numbers than men in the formal economy, and they are often concentrated in the lower-paid and less-stable informal sector. Domestic workers, primarily women, are in a sector notorious for employers’ evasion of pension payments. Women in Latin America are also more likely than men to be found among the ranks of the unemployed or partially employed. When employed full time in the formal sector, they face a diminishing but still substantial wage gap, earning 17 percent less on average than similarly educated men, according to the Inter-American Development Bank. While the original pay-as-you-go pension systems were based on a male-breadwinner model that envisioned women as “dependents,” the 1990s push toward pensions that relied entirely on individual earnings magnified the effects of these discriminatory employment contexts and carework imbalances. Moreover, in the individual capital account model, practices such as the use of differential mortality tables to determine monthly payments further reduced women’s income in old age, due to their greater expected longevity.
Despite the progress toward greater gender equity in pension policy, the issue deserves wider attention because advances have been uneven. For example, while most countries in the region have adopted some form of non-contributory pensions, the percentage of the population eligible for these varies dramatically – as does the monthly payment. Moreover, while the gap in pension coverage between men and women has narrowed, the compensation levels remain dramatically unequal. Reforms, like those of Bolivia, Uruguay and Chile, that build-in compensation for market and carework inequalities deserve wider replication.
February 26, 2015
*Dr. Ewig is Associate Professor of Gender and Women’s Studies and Political Science at the University of Wisconsin-Madison. She is the author of Second-Wave Neoliberalism: Gender, Race and Health Sector Reform in Peru.
Posted by clalsstaff on February 25, 2015
By Yazmín A. García Trejo
Javier Armas / Flickr / CC BY-NC 2.0
Mexico appears to be squandering a historic opportunity to take advantage of the “demographic bonus” represented by its surge in working-age citizens. The Mexican government estimates that about 32 percent of the Mexican population today is between the ages of 12 and 29 years. During this demographic bonus, a disproportionate percentage of the population enters the workforce—compared to those who are retired or nearing retirement—and drives economic growth. Workers passing through this demographic window of opportunity are supposed to generate wealth that will help support a soon-to-be-aging population. These opportunities don’t come around twice: age profiles in developing countries change quickly, and societies need to make the most of those few years during which the economically active population far surpasses that of the economically dependent. The portrayal of Mexico as a young country in the media and the adoption of labor reforms in 2012 brought an initial optimism about its ability to take advantage of this bonus, but the current state of affairs casts a shadow over the potential of its young population. According to a new report from the Organization for Economic Cooperation and Development (OECD), Education at a Glance 2014 Report, 22 percent of people between 15 and 29 years old in Mexico are neither employed nor in education or training. These “ni-ni’s” represent a demographic bust because of a lack of jobs.
The lack of employment also influences young Mexicans’ attitudes toward education. According to the OECD, even high educational attainment is not a guarantee of employment in Mexico. A 2012 report by the McKinsey Center for Government found that only half of educated young people in Mexico believe that their post-secondary education has improved their job prospects. According to a National Survey of High School Dropouts in 2012, moreover, many young men leave high school to contribute to their households’ finances, and young women quit to take on family responsibilities related to marriage and pregnancy. Once out of school, they have no option but to participate in low productivity niches of the informal economy—severely reducing the benefits that their entry into the labor market could bring to the national economy.
The fate of young people has profound implications for Mexico’s economic future. Without a comprehensive plan to expand employment opportunities and access to higher education that enables youth to flourish and lead Mexico into a new stage of development, Mexico will find itself a generation from now with the demographic profile of a developed country—with an aging population producing less but needing more care—but with a middle-income level of wealth. Budgets will be stretched, and social tensions could be great. Many of the most capable young people will leave the country for better opportunities. Young Mexicans appreciate what’s at stake and are using the tools at their disposal to make their voices heard. Lately, student movements have attracted international attention using social media, but it’s far from clear whether the Mexican government and political, economic, and social elites are listening and have the vision necessary to avoid a crisis.
November 4, 2014
Posted by clalsstaff on November 4, 2014