Foreign investment in Cuba and the government's deplorable policy in this regard are recurrently analyzed. Solutions are even proposed, ones successfully tested in other countries that have financed their development with foreign capital – including ideologically akin sates, such as China and Vietnam - that could be imitated on the island.
The notion that foreign investment is an important, even essential, element is usually taken for granted, being implicit in every analysis, but it is rarely explained, which leads to a lack of understanding of the country’s current situation and, above all, of how wrongheaded - or ill-intentioned - its economic management has been.
It is essential to understand Cuba's need for foreign investment in order to be able to gauge how errantly, or with how much malice, the government is handling the issue.
The first thing is to be clear on the fact that the only path to development —without alternatives or shortcuts— is through an accumulation of fixed investment: machinery, infrastructure, technology and the coordination of socially distributed knowledge.
The difference between a rich and a poor nation hinges on the productivity of its work force, which depends entirely on the cumulative level of its fixed investment. Switzerland is richer than Tanzania because its workers use better tools, not because they are more industrious, or blonder.
Fixed investment, however, is not a manna that rains down from the heavens. To accumulate infrastructure and technologies, they must be created, or purchased. In both cases, a prior accumulation of capital is required, i.e., savings, something that only arises when less is consumed than is produced.
Obviously, Cuba has no savings, the very little it consumes exceeds the pittance it produces, this being partially reflected in its foreign debt - which would be even greater but for the fact that, at this point, few lend to it, and much has been forgiven. Mainly, then, it is obvious from the widespread physical deterioration afflicting the country.
Dilapidated cities, mucky, ramshackle towns; Chernobyl-like factories, technologies as obsolete as the ideology of the PCC, antiquated means of transportation, streets and highways with more potholes than in Kabul, and obese bureaucrats with two mistresses while they feign to be businessmen and governors.
Since the very outset, the Castro system has been devouring the nation. Only commitments undertaken by Soviet and Venezuelan dictators kept this anti-economic system from utter collapse, in a country where, in the 1960s Sergio Corrieri could order a Dry Martini at the Mandarin while seducing Daisy Granados in Memories of Underdevelopment.
As long as there is Castroism the major international institutions —IMF, WB, IBRD— will not open their financial faucets for Cuba. And, as it has already been established that Cuba has no savings of its own, it is simple to understand that the only option available to pay for the fixed capital the nation requires, a sine qua non to bolster the productivity of its workers, is to use the savings generated by other societies.
The healthiest mechanism - preferable to state indebtedness - for those foreign savings to reach Cuba is through direct foreign investment, which is blocked, not by the Yankees, but by Castroism.
Indeed, the impoverishment in which Cuba is mired means that its only possibility for development is, inescapably, foreign investment. A very similar situation was suffered in the first decades of the twentieth century, after 30 years of wars and "reconcentrations," a situation that was being overcome thanks to strong American investments, which had been generating fixed capital on the island since the mid-nineteenth century, and that were giving rise to, in a natural evolutionary process, savings and more Cuban entrepreneurship ... before El Comandante arrived and ordered a stop to this.
From the economic point of view, the innumerable barriers that still obstruct foreign direct investment in Cuba are incomprehensible, because nothing, absolutely nothing will increase the productivity of Cuban workers if does not endow them with better technology, infrastructure and knowledge.
However, instead of tackling reform from this angle, the Government is fiddling around with its "Ordering Task," squandering valuable time and scarce resources in a futile effort to resuscitate a dead horse that it has been beating for years, the Socialist State Enterprise, as, in its callousness, Castroism does not want any competition. Who would work for the State if foreign entrepreneurs, starting with Cuban expatriates, could open modern industries and services in Cuba?
Instead, the Government has opted for the concoction of its Tarea Ordenamiento, stirring up the same ingredients it has been cooking with for 60 years … when what Cuba needs is a Red Bull.