Introduction
The Cuban state enterprise has long been in the public limelight, subjected to questioning and evaluation from different perspectives. In our development model, as is known, this form of enterprise has been explicitly proclaimed as the main economic actor, whose performance is decisive in the generation of wealth, a sustainable dynamic of growth, and the welfare of the population.
With such goals, various approaches and systems of economic management have been applied in state enterprises over six decades. Since 1998, we have made a series of unsuccessful attempts to prescribe a single way of managing these enterprises, regardless of their cultural, technological, branch, and contextual particularities. Since 2010 as part of the process of updating the economic model, a very significant number of new and different measures have been adopted, but the intended take-off has not taken place. The continued calls by the country’s top leadership to “shake up the socialist state enterprise” corroborate this evaluation. The accumulated problems have not found an adequate response, neither from the older nor from the recently proposed solutions.
The present work assesses this economic actor in the programmatic documents of the last three Party Congresses. The first section after the introduction looks at some data that characterise the Cuban entrepreneurial system at the end of 2023. As background for all the considerations that follow, the next section very briefly looks at the document the Economic and Social Guidelines of the Party and the Revolution (hereafter, Guidelines) that came out of the VI Party Congress, the foundational document of the so-called process of updating the economic model.
The two sections that constitute the bulk of this work open with a balance of the contributions and limitations of the Conceptualization of the Cuban Economic and Social Model of Socialist Development (hereafter Conceptualization), in which problems referenced in the theory on state-owned enterprises are addressed. Subsequently, other documents related to the “implementation” of the Conceptualization are discussed: the Bases of the 2030 Economic and Social Development Plan, the 2020 Economic and Social Strategy, as well as measures adopted in more recent years to dynamise the state-owned enterprise. The final section of this work then presents some ideas, the result of collective work, to transform the management and the results of this economic actor, in the midst of a critical situation that requires increasing the country’s entrepreneurial capacity, stabilising the macroeconomy, and embarking on the necessary and difficult path towards a productive reconstruction.
The protagonist and the cast: A look
The state-owned enterprise plays the leading role in the Cuban economic model as part of a business fabric – let us say a “cast of actors” – very different from the role it played before the 2010s. In this regard, suffice it to say that:
The State holds approximately 80 per cent of, but only manages a little more than 30 per cent of, the country’s agricultural surface.
According to figures disclosed by the Minister of Foreign Trade in the July 2023 sessions of the Cuban Parliament, there were 327 businesses with foreign capital (of which 106 were joint ventures), in activities such as tourism, mining, production and marketing of rums, toiletries, hygiene products, and the food industry, among others. Although no details were disclosed regarding their contributions to the country’s main economic indicators, it is presumable that they are relevant ( OnCuba 2023).
Private and cooperative actors are predominant in crops such as sugar cane, beans, root vegetables, and other vegetables.
The emergence of interface entities between the productive and knowledge sectors, in addition to local development projects, constitute spaces where non-state entrepreneurial initiatives are being deployed in various sectors, including technology-based enterprises.
The tourism sector and the presence of private activity with accommodation, restaurant and recreational offers.
The change of focus with respect to the activities authorised for self-employment (Trabajo por Cuenta Propia, or TCP) and the subsequent approval of Micro, Small, and Medium Enterprises (hereafter MSMEs) have diversified the participation of the private economic actor in sectors where the hegemony of the state-owned enterprise had been almost absolute.
At the end of 2023, according to official data, the composition of business entities in the state and non-state sectors was as follows (Table 1):
State and Non-State Business Entities by Form of Ownership and Organisation, 2021 and 2023
| 2021 | 2023 | 2023/2021 | |
|---|---|---|---|
| State sector | 2131 | 2497 | 1.17 |
| State enterprises | 1867 | 1934 | 1.03 |
| Mercantile Societies (*) | 258 | 275 | 1.06 |
| Affiliated Enterprises (**) | 4 | 175 | 43.75 |
| State MSMEs (***) | 2 | 113 | 56.5 |
| Non-state sector | 5572 | 13678 | 2.5 |
| Cooperatives | 5310 | 5132 | 0.97 |
| – of those, non-agricultural Coops | 426 | 481 | 1.13 |
| Private MSMEs (***) | 262 | 8066 | 30.8 |
A mercantile society (sociedades mercantiles) in Cuba is a legally defined legal personality created to initiate an economic activity for profit. There are several types of enterprises, depending on the organisation of the economic activity, the relationship between the partners, the liability, the risk assumed and the corporate purpose (Everleny 2022).
MSMEs (Micro, Small, and Medium Enterprises) are registered with the National Statistics and Information Office once they are registered with the Commercial Registry and the National Tax Administration Office, processes subsequent to their approval by the Ministry of Economy and Planning. Their creation began as of September 2021.
Source: ONEI (2024).
The figures show a much greater increase in the non-state business sector than the state sector, driven by the explosion in the number of private MSMEs, which increased almost 3,000 per cent between 2021 and 2023. The number of cooperatives, on the other hand, decreased by 3 per cent as a result of their decrease in agriculture, which was not compensated by the increase of cooperatives in other branches. In total, the number of entities in the non-state sector more than doubled, reflecting the growing weight that these actors are gaining and their impact on output and employment.
In the case of the state business fabric, in the last four months of 2021 two new legal entities were incorporated, the state MSMEs and the Affiliated Enterprises. 1 Although the number of these entities is small in comparison with the other components of the state sector the “traditional figures” of the state enterprises and mercantile societies), they showed significant growth in a relatively short period of time. The traditional figures in the state sector showed more discrete growth, of three and six per cent respectively. This new business fabric reflects a much more diverse and heterogeneous panorama than that which existed when the so-called updating of the Cuban economic model began, but still one in which the state enterprise continues to be the fundamental actor.
The state enterprise and the guidelines of the VI Congress
At the end of 2010, the first version of the foundational document of the updating process was published: the Economic and Social Guidelines of the Party and the Revolution (Lineamientos de la Política Económica y Social del Partido y la Revolución). Subjected to a broad popular consultation for several months and approved with the corresponding modifications in April 2011 by the VI Congress of the Communist Party of Cuba (Partido Comunista de Cuba, PCC), the Guidelines (PCC 2011) set out a series of strategies related to the management model, macroeconomics, external economic relations, investments, science, technology, innovation, the environment, and social and sectoral policies. In its first section, entitled “Economic Management Model” (PCC 2011: 10–13), some of the issues that are taken up again in 2017 in the Conceptualization, to be discussed below, are stated.
This section of the Guidelines ratifies the role of the state-owned enterprise as the main form of the Cuban economy, while recognising the existence of other actors, such as self-employed workers, cooperatives, forms of association with foreign capital, etc. It also discusses, among many other issues, the separation of state and business functions, the creation of enterprise groupings for a better organisation of the state of the business system, and the role of contracts in inter-enterprise relations and with other forms of management.
It is worth noting the mention in this section of the “Enterprise Improvement” system (“Perfeccionamiento Empresarial,” whose formal name is the “System of Direction and Management of the Socialist State Enterprise”), as endorsed in Decree Law 252 and Decree 281 of 2007. It was only mentioned very briefly stating that such a system of enterprise improvement would be integrated into the policies of the Economic Model, without further details (PCC 2011: 12, point 15).
By that time it was already evident that the state-owned enterprise system, despite all the attempts to renovate it including successive modifications to the legal framework, exhibited significant limitations and was languishing. Nor did the changes made as part of the updating process yield significant results (Blanco 2020).
The financial treatment of state-owned enterprises deserves a separate comment. In addition to the reiterated proclamation of the efficiency and competitiveness that should characterise these enterprises, the section on finance states that those that show continual losses, or are unable to honour their obligations, will not be allowed to continue, which would imply their liquidation or transformation into non-state forms (PCC 2011: 12, point 17).
The Conceptualization and the treatment of the state-owned enterprise: A balance
The dynamics and challenges derived from the transformations initiated with the update of the economy, coupled with the need to provide them with programmatic support, brought about that in May 2017, as a result of the VII Congress, the Conceptualization was released in its final first version (PCC 2017: 7). 2 In relation to the state enterprise, it stated the following:
The “business entities” (entidades empresariales), which together with the “budgeted units” (unidades presupuestadas”) constitute “the socialist property of all the people” with the state as the representative of the interests of the owner (the Cuban people), are “charged with effectively playing the leading role in the production of goods and services of a commercial nature” (PCC 2017: 7).
It is established as a general principle for these enterprises that they must obtain profits (being able to retain a part for the development of the enterprise and the stimulation of its workers), and also that they must comply with their social responsibilities.
They fulfil functions inherent to their nature as enterprises, are endowed with management autonomy, and apply management models that correspond to their particularities.
The state, as the owner’s (the people) representative, reserves the role of selecting and replacing the main managers of these enterprises, and of adopting the main and strategic decisions that are within its jurisdiction, without interfering with the enterprise’s autonomy.
In addition, the state and the government make decisions concerning those inefficient enterprises that show losses, considering the causes of such a situation, and respecting the rights and protection of their workers. In this document, unlike the 2011 Guidelines, it is not specified what these decisions will be.
Likewise, by recognising the existence of various forms of ownership, in the section corresponding to the general system of business entities (PCC 2017: 8, section 2.2) the coexistence and interaction of various economic actors is ratified: state, mixed, private, cooperative, and civil society entities, all of which must contribute to Cuba’s development and perform under similar conditions within the regulatory framework in force.
The update of the Conceptualization that took place in 2021 as a result of the VIII Party Congress introduced three changes that reinforce -at least in theory- the intention to make the functioning of the state enterprises more flexible (PCC 2021: 28–29).
The idea that each enterprise must have its own management model is reiterated, and it is added that state-owned enterprises may adopt different legal and organisational regimes according to their development needs, within the stipulated legal framework.
The statement in the first version that it is up to the state to adopt the main and strategic decisions of the enterprises is eliminated.
In addition to reaffirming that the state does not interfere in the management of state enterprises, the idea that the state must facilitate their access to markets for inputs, goods and services appears, without explicitly mentioning the mechanism of centralised allocation of resources that has characterised the planning system of the Cuban economy.
By way of synthesis, both versions reiterate statements regarding the state enterprise from previous Party Congresses and from the normative documents of the process of enterprise improvement from different times, such as its leading role in the economy, management autonomy, and the imperative for achieving greater efficiency and productivity, among others.
The Conceptualization’s contributions can be summarised as follows:
the recognition of other forms of ownership and, therefore, of economic actors that coexist and interact with the state-owned enterprise
proclaiming the flexibility of organisational forms and business management models, as opposed to the position (defended for more than 20 years) of prescribing a single management model for all state-owned enterprises
the non-interference of the state in business management and the recognition of the difference between its state and business functions, preserving the state’s leading role in the conduct of the economy
The following should be mentioned on the side of the Conceptualization’s limitations:
First, the concept continues that the top business managers are appointed by the state, without making any mention of the role of workers and their representative organisations in the decision. This closes – or at least does not explicitly open - a space for the participation of the labour collective in the management of matters that concern them directly, such as by formulating their own proposals or submitting external proposals for their opinion.
Second, the Conceptualization makes no reference to problems accumulated in the management of state-owned enterprises throughout their evolution for more than 60 years, as a necessary antecedent to formulate the basis for transformations in this main economic agent.
Third, not only does the Conceptualization avoid referring to the specific problems of the management of Cuban state-owned enterprises over the last 60 years, it also does not deal with general problems of the operation of state enterprises in centrally planned economies, and therefore gives no indication of how these would be addressed within the framework of the proposed Socialist Model of Socialist Development.
All of the above constitute important absences in the document. To illustrate further the nature of these problems that are not being discussed or are being discussed only minimally and very inadequately, four of them are listed here: 3
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Decisions of a business nature taken outside the enterprise: Among other restrictions that still remain in force, the centralised allocation of critical resources, the obligation imposed at times to interact with only certain suppliers and customers, and the restrictions to access to foreign trade, cause decoupling with the operational needs of the value-creation process in the enterprise, as well as with other needs more related to its development, including among others investments, R&D&I (research, development, and innovation) projects, and the penetration of new markets. This means that, ultimately, a large part of the final results of these enterprises – even today, after several decades of pronouncements on autonomy – does not depend on the effectiveness of their management.
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The state enterprise’s functional responsibilities and its subordination to several different government entities: the ambiguity in the delimitation of state and corporate functions – closely related to the previous problem – brings with it a practice: the exhaustive and detailed mandates to be complied with by the enterprise, coming from different entities, and in an insufficiently articulated manner.
This parallel intervention of various government entities, each with its own interests and different poorly articulated controls for the fulfilment of their specific functions, affects the internal coherence of the enterprise system. It creates roadblocks, significantly limits the time available to management for managing the enterprise, and often causes the latter to concentrate on demonstrating compliance with rules and procedures, rather than on the effective improvement of its processes and implementing an agenda for the enterprise’s development.
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Soft budget constraints: these are manifested through the financial treatment of loss-making state-owned enterprises. In practice, beyond statements announcing the intention not to continue such treatment, these enterprises have continued to be subsidised over time. In 2022, a total of 446 enterprises with losses were reported and in 2021, by way of subsidies to the state business sector, the state budget delivered a total of 10,730 million pesos (Reyes 2022). In 2023, according to official data, the number of subsidised enterprises was reduced to about 300.
The need to subsidise some enterprises in certain circumstances cannot be ruled out, nor can an unfavourable result be blamed entirely on the enterprise in all cases. Regarding the latter, suffice it to point out variations in the prices of imported inputs, and the usual practice in our economy of adopting centralised pricing decisions that contradict the purposes of enterprise autonomy and negatively affect certain links in the value chain by benefiting other preceding links. Maintaining the approach of constantly subsidising inefficient enterprises, however, instead of developing and applying other solutions, is a disincentive to the continuous improvement of their management, given that it guarantees that they will survive anyway. It also discourages efficient enterprises, which in practice end up subsidising those that are not. And it originates from an unsustainable expenditure from the state coffers, with the consequent negative effect on the availability of financial resources to be used for other social, scientific-technological, and environmental purposes, which are also decisive for development.
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The ‘ratchet effect’: the planning system based on the centralised allocation of critical resources and mandatory goals for an annual time horizon, which reinforces the short-term approach in the management of the enterprise, has harmful effects on the projection of the enterprise’s development, since issues such as those mentioned in the first problem, by their nature, exceed this annual horizon. Thus, a more far-reaching strategic planning, oriented to enterprise development, is relegated to a secondary level.
This system also conditions patterns of behaviour in which state-owned enterprises seek to obtain more resources to meet annual goals to try to ensure that their goals are not taut, in direct contradiction to the tendency of their superiors to provide them with fewer resources, demand more taut goals, and extract more earnings from them.
The paradox of the rachet effect lies in the fact that the better the performance of an enterprise, the greater the demands on that enterprise will become in all these respects – resources, goals, and earnings – for the following year. This discourages additional efforts to improve enterprise performance by its management, and instead motivates management to devote effort to assuring that the plan assigned to them has goals as low as possible.
The “post-Conceptualization”: National Development Plan 2030, Economic and Social Strategy 2020, the 43 measures for state-owned enterprises
Between the first version of the Conceptualization and the present, other documents have been published that could be considered to be supported for its implementation. They contain a vision of the nation, the strategic axes, understood as referents where development is built and sustained in its multidimensionality, and the eleven pivotal sectors that would drive it. Among them, the Bases of the 2030 Economic and Social Development Plan (Bases del Plan Nacional de Desarrollo Económico y Social hasta el 2030, hereafter Bases), also from 2017, stands out. Due to its content and time horizon, the Bases (PCC 2017: 14–22) is a guiding document for the implementation of the Conceptualization, which would serve as a background for the policies, more operative plans, measurement indicators, and corresponding resources. 4
The Bases focus on addressing development in the macroeconomic, sectoral, social, environmental and territorial dimensions. And here we see a limitation: the non-inclusion of development in its business dimension. There is no need to reiterate a truism: wealth creation and development are directly linked to the presence of a robust, resilient, and dynamic business fabric, supported by a favourable macroeconomic and institutional context. Only under these conditions can the well-being of their workforces and the population be guaranteed as the ultimate goal of the enterprises. The omission of an agenda of development and transformation of the state-owned enterprise as a fundamental actor – together with the other actors – leaves progress in the remaining dimensions unsupported.
Subsequently, in July 2020 the Ministry of Economy and Planning (MEP) published an Economic and Social Strategy for Stimulating the Economy and Confronting the Global Crisis Caused by COVID-19 hereafter Strategy) (Estrategia Económico-Social para el impulso de la economía y el enfrentamiento a la crisis mundial provocada por la COVID-19) (MEP 2020a). 5 The Strategy proclaims among its principles – once again – to provide the business sector with greater management autonomy. It includes measures to be applied in 16 key areas that absorb the 11 strategic sectors of the Bases and incorporate other activities, and five other sections related to non-state actors, territorial and urban planning, and the direction of the economy.
The main references to state-owned enterprises appear in the section dedicated to the financial system (MEP 2020a: 25). Here, once again, statements are repeated such as the need to transform the state-owned enterprise and provide it with greater autonomy and responsibility for its results, to favour greater participation of labour collectives, to establish incentives for the generation and saving of foreign currency, to boost productivity and efficiency, and to prioritise resources for the enterprises with the greatest impact on the economy.
An important and positive mention in this section is the proposal to make the social objectives of the state-owned enterprises more flexible, which was also endorsed with Resolution 28 of the MEP of 2021 (MEP 2021). The restrictions imposed previously in their formulation, derived from the recentralisation in the 2000s, had an unfavourable impact on the insufficient autonomy. They only reinforced the culture of waiting, and significantly reduced the entrepreneurial initiative to seek new options in products, services, and customers, according to their potential and business opportunities.
The goal of eliminating the existing obstacles to allow a more fluid relationship between state-owned enterprises and the non-state sector was also announced. The need to declare this constituted an explicit recognition of the presence of institutional obstacles for this relationship, and which ultimately reflected the resistance that has existed for the promotion of the private sector, which has been being transformed since September 2021 with the approval of the new economic actors. A major demonisation of the private MSMEs, for example, is the effort to blame them for the galloping inflation and the loss of purchasing power of salaries and pensions.
On the other hand, the section dedicated to the direction and management of the economy (MEP 2020a: 31) only mentions the state enterprise system to refer that a management structure for it should be evaluated, and that the ministries should concentrate on the exercise of their functions. This section, whose content is limited to the governmental level, should have included the references to the state enterprise that appear in the section already commented on the financial system. In addition it should have included, even in general terms, the basis for a programme of decisions to promote the state enterprise.
The Strategy contains an excess of areas declared as prioritised (16) and the reiteration of many intentions that have not been put into practice. Its content seems to be the result of the sum of different sections drafted separately without a common approach, and not of a systematic document. 6 It is striking that there is no specific section devoted to the key economic actor, something that is done, very briefly, for the other economic actors.
Finally, this Strategy mentions the subsequent enactment of 43 measures 7 for the improvement of the state-owned enterprise which were made public between September 2020 and 2021, and were categorised as “a set of immediate measures” to accelerate the transformations in these enterprises. There are several reasons why the expectations surrounding their impact have not materialised to the extent necessary, a result which is evidenced by the results of the economy in 2023 (which will be discussed below):
The very adverse context in which the Cuban economy is operating, marked by the impacts of the pandemic, catastrophes such as the one that occurred at the Matanzas Supertanker Base, inflation, the functioning of supply chains at a global level, and the effects of the tightening of the US blockade.
Accumulated structural problems in the economy that have not found a solution within the framework of the process of updating the model, and which have prevented the creation of internal capacities to more strongly confront the above-described context.
Failures in the design and implementation of the Tarea Ordenamiento (Reordering Task), and the absence of an effective programme to control the exchange market and inflation.
The partial and limited nature of some of these measures, which, based on an incremental approach, do not attack the business system and its environment as a whole, nor do they point towards integrated and in-depth solutions that would really make the state enterprises take off. In other words, there is still no fundamental solution to the previously mentioned problems of state-owned enterprises.
Allowing the enterprise to make relatively minor decisions, such as those concerning the hiring of retirees and other workers, adjusting the distribution of profits, and allowing the payment of profits to sanctioned workers, among others, will not produce major changes in the final results. Other measures, rather than being novel, repeat intentions already included in the Strategy, such as prioritising the allocation of resources to enterprises that export, or eliminating limitations on links between state-owned enterprises and the non-state sector. And although sometimes for meaningful reasons, many of these remain insufficiently or completely not implemented. Regarding exports, for example, the incentives determined for exporting state-owned enterprises in Resolution 115/2020 of the MEP (MEP 2020b) have not been applied, given the critical situation with the availability of foreign currency and because of that the need for the national economy to control of its allocation, and also the behaviour of the exchange rate which does not encourage exports. Still other measures adopted are not really measures, strictly speaking, at least in their wording, and only repeat purposes, such as “prioritising tourism”, “making planning more flexible”, etc.
Several of the measures were aimed at alleviating the effects of having launched a controversial conversion of enterprises into Base Business Units (Unidades Empresarial de Bases, UEBs) 8 in 2007, with the goal of restricting the management autonomy of these units and making the organisational management structures more complex. But the issues involved go beyond returning in some cases to the starting point and reconverting some UEBs back to the status of enterprises. And they go beyond creating new actors to try to achieve what the UEBs were intended to achieve such as the Affiliated Enterprises (Empresas Filiales) created by Decree Law 34 of 2021 (CE 2021), 9 even if one could create a new actor which unlike these did not suffer from serious doubts about their advantages, arguably being just the establishment of an additional level of management. What all these issues require, in fact, is to reformulate the entire organisation of state enterprises, from the so-called Superior Business Management Organisations (Organizaciones Superiores de Dirección Empresarial, OSDE) to the productive and service bases, taking into account the characteristics of each of the groupings of business. Starting at the highest of the state’s structures for operating its enterprises, the OSDEs, it must be determined that they really add value and foster positive synergies in the cluster, which is their raison d’être. It was announced that an evaluation of these business structures would be made in 2019, which did not take place (Izquierdo, Doimeadiós, and Albert 2018). It still remains pending.
The results of the Cuban economy in 2023 corroborate the statement that the measures adopted for the state enterprise in 2021 have not achieved their declared purpose. In 2023 – in a context marked by the continuation of the US government’s sanctions – a certain recovery of tourism did occur, but under pressure from the competition in our geographic area it fell below the expected three million visitors, and the resulting low hotel occupancy rate meant low profits for the important hotel industry. Overall the decline in industrial and agricultural production worsened, under an energy situation that exhibited an instability that has affected the entire economy, as well as society as a whole beyond that. There were also greater tensions in both macroeconomic aggregates and external finances. Exchange rate distortions, inflation, and the growing fiscal deficit continued to damage the country’s macroeconomic health. The external indebtedness pressures go hand in hand with an export performance that continued to fall short of expectations, reaching only 65 per cent of the expected figures. And the fall in imports not only reduces total supply to the population through the absence of some final consumer goods imports, but more importantly given our structural dependence on imports, immediately reduces the larger part of Cuba’s total supply from our domestic production – also in the basic standard food basket – through reduced productive inputs. On this last point the decreases in the domestic production of medicines and foodstuffs, highly dependent on imported inputs, are clear examples.
Final reflections: The necessary transformation
The conceptual and methodological bases for a true transformation and development of the Cuban state enterprise have not been addressed in all their magnitude and intensity. From the Conceptualization in its two versions to the most recent measures, there are ambiguities, the omission of problems that from theory and practice need to be addressed, and statements reiterated for a long time on efficiency, autonomy, and other issues, without being accompanied by resolute actions to realise them. Measures passed have not been aimed at fully removing the determining obstacles to improve the performance of these enterprises and to unfold their potential. These limitations are also the reasons that the policies and decisions that have been adopted and their corresponding legal framework (for example, the measures to grant more powers to state-owned enterprises) have not had the results expected from them.
The state-owned enterprise requires a programme of complete transformations all the way from the regulatory and institutional context to the management of its internal processes. In other words, the call to ‘shake up the state-owned enterprise’ must not only be directed to within the enterprise. It must also be directed outside, of the whole framework that the state enterprises operate in. In this regard, a group of ideas for several important aspects of this necessary complete transformation, the result of the work of a group of university professors and other specialists, is shared below.
First, this transformation – marked by the conflict between the urgency of making it and the time needed to implement it and all in a very unfavourable context for Cuba – must address essential ‘external’ aspects, such as the legal framework for the state enterprise as an integral part of a legal framework for all the actors that make up the Cuban business fabric. Finally and after many postponements, as of the writing of this article this law is expected to be debated in Parliament in late 2024. A second aspect ‘external’ to the enterprises themselves is the necessary restructuring of the commercial banking system to facilitate support for business management. A third necessary aspect of the frame that enterprises will operate in is a clear determination of what the concept of ‘fundamental means of production’ implies about the structure of enterprises it relates to, for example, what proportions of such enterprises must be state-owned. Other aspects of the frame they operate in that must be clearly established include delimitation of the spaces where monopolies and their corresponding state enterprises must prevail, the legitimisation of competition among actors (whether state or not), the definition of which state enterprises for reasons of social interest should be subsidised, and the elimination of subsidies to inefficient state enterprises not in this last category.
Another crucial aspect of the external frame that a state enterprise operates in is the degree of autonomy it is allowed over various of its necessary activities, with different types of state enterprises having different amounts of autonomy in different dimensions. Especially for the ‘business entities’ part of ‘the socialist property of all the people’ (as opposed to the other part, the ‘budget units’), they must have (and up to and including now almost none have had) the necessary autonomy in matters such as access to foreign trade, selection of clients and suppliers, obtaining critical resources for their operational needs, labour and wage organisation, management of corporate finances, and investment decisions. Linked directly to this need, it must be legitimised once and for all that allocation based on centralised materials balances of critical resources must give way to a greater presence of market relations in allocation processes.
Issues such as corporate governance, functions, attributions and composition of the boards of directors, and the state’s relationship and control bodies for its enterprises in the different levels of government should also be addressed, replacing the overlapping that still exists between state and corporate functions. It is necessary to incorporate international experiences of corporate governance of state-owned enterprises, including the so-called publicly owned entities, such as the examples of China and Vietnam.
The organisational and financial restructuring of existing enterprises – first and foremost the unprofitable ones – should be undertaken, with clear and measurable improvement objectives in a short period of time, about two years, in those cases where revitalisation is feasible. In addition, the creation of new enterprises, and especially ones directed at unmet demand, should be encouraged.
All this restructuring must be accompanied by a broader development agenda. This agenda must promote the broad strategies of cooperation, competition, and growth. In addition it must address many specific issues such as digital transformation, innovation, intra-entrepreneurship, physical and technological infrastructure, human capital, and an integrated management system. Together these strategies and addressing these issues shape the interrelation of the enterprise with its environment, and their implementation supports the goals of the National Development Plan 2030.
In short, it is essential to resolutely, and without further delays, inconsistencies, or ambiguities, address the necessary comprehensive reform of the state business system. The viability of the Cuban economic and social development model depends on it.