The collapse of the Soviet Union in 1991, had numerous implications for the former socialist countries and subsequently their trading partners(Cuba was conducting around 80% of its trade with countries under the Council of Mutual Economic Assistance, CMEA, which broke up with the retreat of the S.U). Cuba being depended on trade with CMEA countries, was then faced with shortages on consumer products, with primary problem being the shortage in necessary foodstuff. In addition, Cuba had to deal with the US embargo imposed in 1962 and successive hardships in trading with the rest of the world. The country operates a rationing system, Liberta, while different policies try to address the deterring effects of low production, despite its own large potentials (Carter, 2013). The challenges faced in Cuba are evident in many developing countries, despite the large differences in respect to public policies and socioeconomic structures. The portrayal of the difficulties in developing countries could, to a large extend, be understood through Amartya Sen’s capabilities and functionings approach to development. In addition, my aim is to look briefly at the Cuban Rationing system and productive potentials, and share some insights on how could it be useful in the process of development.
Changing Policy Orientation
How hard would it be for Cuban people, who have long been depended on rationing, to be successful in utilizing opportunities in a more market-oriented policies? An interesting position is set by Kate Eppinger, in her study on Cuba’s Rationing System, in 2014. What she is saying is that ”As Cuba transitions from a 52 year old paternalistic state into a more merit-based system, Cubans will have to face radical lifestyle shifts, learn how to navigate a partially privatized market, and adopt to unforeseen challenges brought about by a hybrid political and economic system”. In my opinion, this statement portrays comprehensively the behavioural aspect of the challenge of more market-oriented policies, in response to the tight boundaries within which the country has to trade and operate.
The Capabilities Approach
The capabilities approach, using Sen’s own words, refers to ”what people can positively achieve”, ”influenced by economic opportunities, political liberties, social powers, and the enabling conditions of good health, basic education and encouragement and cultivation of initiatives”. At the same time, ”the institutional arrangement for these opportunities are influenced by the exercise of people’s freedoms through liberty to participate in social choice and in the making of public decision that impel the progress of these opportunities.” (Clapp and Sen, 1999)
Obviously, the keyword here is <<Opportunities>>. The opportunity to access production, the opportunity to access education and health services (which are considered basic for building and sustaining a productive labour force) and the opportunity to pursue initiatives, innovate and accumulate technological advances and incentivize investment. All opportunities depend on the formal and informal institutional framework, including social norms and the ability to exercise political rights. Social or political freedom is therefore correlated positively to economic freedom and the reverse. (Sen, 2005). The role of institutions in measuring capabilities and functionings is of increasing importance. (Betancourt, 1996)
Practical Importance of ‘Aiding’ the Less developed world
I believe that a lot of economic development discussion, was based merely on economic growth than development, with no on-site, practical guidance offered to countries struggling to overcome major development difficulties (e.g. advisory services in poor villages). Added to that, it is quite clear that the relationship between the developed and the developing/less developed world is not one of mutual respect, cooperation, and fair trade. It ended up being a relationship between Multinational interests on one hand, and poor, vulnerable, unfree populations on the other hand, which are seen only as cheap human capital. MNCs operations do not help through the transfer of knowledge, technology and support, as many believe (Bogliacino, 2011). I would rather characterise this relationship as neo-colonialist.
The functioning of the Liberta
There are numerous practical issues in operating the rationing system. Examples include the ensuring of eligibility to receive products under ration, along with the large operational costs involved in running a universal distribution net. When combined with the huge underground economy (around 50%), the shortages in food products, the cutbacks on non-food stuff from rationing, and the geographical differences (mainly between Havana and the rest of Cuba), someone could understand that a favourable institutional framework and the ability to finance must be highly valued for such a system to operate effectively, in terms of universal, full coverage of everyone’s needs!
Cuba’s production potentials
Cuba’s imports are dominated by agricultural products, meaning that money is spend on imports rather than reforming agricultural production and utilizing potentials. Cuba has the productive potential to cover its own needs and even export its surplus (Eppinger, 2014, Carter 2013). Similar problems, in terms of lacking opportunities, to restructure basic sectors, are faced by least developed and developing countries today. Countries are stuck in a vicious cycle of low production, low incomes, high import dependency and even lower incomes and so on.
While it could be a solution to small scale allocation of functionings and increasing of capabilities for many poor people in less developed countries, it could, at the same time, pose a large financial burden, given the unequal opportunities on the world market (note: consider EU Common Agricultural Policy for example!).
Assuming such a ration system is set up in a poor, underdeveloped rural area in a developing country, there would be no easy way back. Once people will start being depended for their survival, on the rationing system, it would be hard to return to self-sustainment of their daily needs. Behavioural patterns will change, since production processes will be altered to respond to the needs for higher outputs and market structure will change as well. Therefore, I do not suggest that setting up a rationing system alone, could solve poor countries’ lack in basic needs and capabilities to develop, but could be considered as an option, which under favourable circumstances, could actually be effective.
Finally, if the developed world is actually eager in helping global development, opportunities for the less developed and developing world, either in the form of capabilities or functionings, should be increased, become more targeted, and implemented locally in cooperation with local people, rather than being issued miles away, based on mere statistical data, often biased or unrelated to everyday life of the poor.
- Betancourt, R. (1996). Growth Capabilities and Development: Implications for Transition Processes in Cuba.Economic Development and Cultural Change, 44(2), pp.315-331.
- Clapp, J. and Sen, A. (1999). Development as Freedom.International Journal, 55(1), p.160.
- Eppinger, K. (2014).Cuba’s Rationing System: Issues and Prospects. [online] Centre of Race and Social Problems – University of Pittsburgh. Available at: http://www.crsp.pitt.edu/sites/default/files/Paper%20-%20Cuba%20Rationing%20-%20Eppinger.pdf [Accessed 19 May 2016].
- Sen, A. (2005). Human Rights and Capabilities.Journal of Human Development, 6(2), pp.151-166.
- Andrea Carter (2013). Case Study #4-6, “Cuba’s Food-Rationing System and Alternatives”. In: Per Pinstrup – Andersen and Fuzhi Cheng (editors), “Food Policy for Developing Countries: Case Studies.” 15 pp. URL: http://cip.cornell.edu/dns.gfs/1358372032
- Bogliacino, F. (2011). Cimoli, M., Dosi, G. and Stiglitz, J. E. (eds.): Industrial policy and development. The political economy of capabilities accumulation. J Econ, 105(3), pp.285-287.