From semiconductors to electric vehicles, governments are identifying the strategic industries of the future and intervening to support them – abandoning decades of neoliberal orthodoxy in the process. Are industrial policies the key to tackling twenty-first-century economic challenges or a recipe for market distortions and lower efficiency?
BRASILIA – Raúl Castro has begun a gradual process of changing Cuba’s economy and international relations. Within Cuba, he hopes to legitimize his government by improving standards of living. Outside of Cuba, he does not want to be held captive by Cuba’s one international supporter: Venezuelan President Hugo Chávez.
Castro believes in giving farm workers greater incentives. He has authorized the sale of farm machinery and tools – centralized until now – directly to farmers, as well as handing over idle land to private cooperatives and other organizations that request them. He also cancelled the debts of some small producers and raised the prices paid by the state for milk and meat. In another measure intended to improve the lives of ordinary Cubans, he has removed restrictions on acquiring computers, microwave ovens, and other appliances.
Cuban officials stress that the purpose of these changes is to increase efficiency, “not to alter the socialist model.” But, like China and Vietnam, the government will have to embrace the market more openly if it is really to improve living conditions. Only with foreign investment and economic liberalization – a process that has already begun in some measure – can Cuba hope to offer its 11.2 million people more consumer goods and comfort, improve the social welfare system, and rehabilitate the country’s infrastructure.
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