Jorge I. Dominguez served as the chair of Harvard Academy for International and Area Studies. He was also Harvard’s first provost for international affairs. In 2015, Jorge Dominguez wrote an article for the Harvard Business Review about the Cuban economy.
The output of the Cuban economy contracted 10.8 percent in 2020, and figures show that it fell again by about 2 percent in the first half of 2021. Also, imports have fallen by 40 percent since the beginning of 2020. One of the factors restricting the growth of the Cuban economy is the system of taxation. The country does not have a VAT, personal income tax, or corporate tax. Instead, it taxes small private businesses based on how many employees they have. This is an outmoded taxation system that does not accurately represent how much money flows through a business.
Also, Cuba is a bureaucratic and highly regulated country. This makes it very difficult for businesses to thrive. This problem is also a result of the rigid communism practiced in the state. Reuters reported a case of a state-owned farm in Cuba where pigs were dying because government permission is needed to buy feed. If the Cuban economy is to improve, it’s likely that many of the restrictions keeping private businesses from thriving will have to be removed.
Formerly the Antonio Madero Professor for the Study of Mexico at Harvard University, Dr. Jorge I. Dominguez recently retired from academia. Throughout his career, he taught undergraduate and graduate students about international relations and politics in both Mexico and Cuba. Dr. Jorge Dominguez also authored several books relating to Cuba and Latin America, such as “Economic Issues and Political Conflict: U.S.-Latin America Relations.”
The economy in Cuba is a planned-socialist economy. This type of economy is like what was seen in the Soviet Union and was used by roughly one-third of the world following World War II. Along with North Korea, Cuba is one of the only examples of a planned-socialist economy that seeks to greatly constrain the role of markets left in the world.
In Cuba, the economy is mostly state-run. There is a government-sponsored education program that provides free education to citizens at all levels, along with a national healthcare program. Cuba also has subsidized utilities, entertainment, food, and housing programs in place that compensate for the low salaries of workers in the country. All of these programs have suffered from insufficient economic growth during the past decade.
Planned socialism focuses on state ownership of all resources and the central allocation of labor, unlike capitalism that focuses on private ownership of resources.
A planned-socialist economy has a great deal of control over labor. In fact, nearly 80 percent of Cuba’s workers are employed by a government-owned enterprise. The country also does not have a stock exchange. During the COVID-19 pandemic, Cuba started reducing its restrictions on economic activities. Most notably it announced that it would allow for small- and medium-sized private businesses in most sectors instead of relying solely on state-owned operations.
Having served as Harvard University’s first vice provost for international affairs, former professor Dr. Jorge Dominguez has undertaken extensive research on Latin American economies. Among Dr. Jorge Dominguez’s responsibilities was as the institution’s Antonio Madero Professor for the Study of Mexico.
A recent Forbes article drew attention to the potential of Mexico’s Paris Agreement pledge to reduce greenhouse gas (GHG) emissions by as much as 36 percent by 2030, as having the potential for a significant economic impact as well. This reflects World Resources Institute (WRI) quantitative analysis that points to a strong decarbonization path as saving $5 billion in cumulative costs and helping prevent 26,000 premature deaths.
A majority of the proposed decarbonization efforts are centered on Mexico’s transportation, electricity, and industrial sectors. Unfortunately, there is at present no clear decarbonization plan, and emissions in the world’s 10th leading GHG emitter are forecast to rise by 75 percent over the next three decades under business-as-usual scenarios.
Within a WRI-recommended renewable portfolio standard, Mexico will need to increase distributed solar and wind energy sources exponentially to attain its goals. Fortunately, the installation and maintenance of such large scale systems will also be a significant economic driver.
A Harvard University professor emeritus, Jorge Dominguez, PhD, has a research focus on Latin America. Speaking on his edited volume The Cuban Economy in a New Era: An Agenda for Change toward Durable Development, Dr. Jorge Dominguez brought focus to one potential pathway of growth for Cuba in boosting exports of agricultural products worldwide.
As part of a foreign direct investment (FDI)-centered effort led by President Miguel Diaz-Canel, this could bypass the trade embargo placed on it by the United States by centering on high-value Canadian and European markets. In addition, there are stateside efforts, led by organizations such as the U.S. Agriculture Coalition for Cuba, underway to change the status quo.
With one-third of the island nation currently operated by private farmers, areas of Cuban export expansion potential include tropical fruits and the tobacco used in its top-quality cigars. Unfortunately, the state-owned agricultural enterprises that are a legacy of communism are not modern or efficient enough to allow major export growth to happen. For this reason, FDI needs to be sought to finance the major upgrade in equipment necessary to achieve a competitive international Cuban market presence.