IT in Cuba

Telecommunication Infrastructure

Liberalization and Deregulation

Internet Diffusion

Electronic Commerce

Hardware Manufacturing

Software Manufacturing

Who Uses IT?

IT Labor Market

IT Geographics

IT Financing

Government Policies

Legal Environment

Transborder Data Flows

Analysis: IT Strengths and Weaknesses

Analysis: Impacts on the Business

Sources and Links

About the Authors

Information Technology in Cuba

Government Policies

Introduction

The Cuban government represents one of the last bastions of Communism. The chief of state continues to be Fidel Castro, who has served as the head of state since February 1959. Castro serves not only as the chief of state but also as the head of government, operating as the president of the Council of State and the president of the Council of Ministers. The legislative branch is comprised of the unicameral National Assembly of People's Power (Asemblea Nacional del Poder Popular), represented by 601 members approved by state-sponsored election commissions. The National Assembly legislates matters for Cuba's fourteen provinces and one special municipality, Isla de la Juventud. Only one political party exists: the Cuban Communist Party (PCC), represented by First Secretary Fidel Castro (74). How Cuba's governmental structure relates to its IT policy is this: the state plays the primary role in the Cuban economy and controls nearly all foreign trade as well as internal development.

Cuban Government Funding of IT Development

The Cuban government does not have substantial economic resources with which to fund IT investments. Cuba defaulted on most of its international debt payments in the 1990s. To finance imports, the government relies heavily on short-term loans. However, it must contend with a poor credit rating, an $11 billion hard currency debt, and high domestic interest rates, reported at 22%. Subsequently, the Cuban government seeks to create as much of an internal IT infrastructure as possible while actively soliciting foreign direct investment (75).

With the collapse of the Soviet Union in 1991, Cuba lost its financial aid estimated at $5.6 billion annually, which maintained its economy (76). Cuba thus began to seek additional sources of foreign aid to bolster its flailing economy, as it does have international relations with over 160 countries. The Cuban government decided to focus on actively soliciting foreign direct investment (FDI). The Cuban government allows foreign entities to own 100% of the equity in FDI ventures. Estimates of FDI in Cuba range between $1.1 billion to $1.4 billion (77).

In 1993, the Cuban government made it legal for Cuban citizens to possess the U.S. dollar. This measure helped attract FDI, as many Cuban businesses, including state-run businesses, do not accept Cuban pesos. Those with access to dollars can purchase imported goods at government-run or privately-owned stores that are not accessible to most Cubans with pesos, who must shop in poorly-supplied peso stores (78).

However, foreign investors are constrained by the Cuban Liberty and Democratic Solidarity Act (also known as the Helms-Burton Libertad Act), which provides for sanctions for those who "traffic" goods expropriated from U.S. citizens. As of March 1998, fifteen foreign companies have been exclude from entry into the United States for conducting business with Cuba in violation of international trade sanctions (79). Foreign investors must be aware that conducting business with Cuba may prevent any business dealings with the United States, and companies considering Cuban investment must weigh the benefits and consequences of Cuban investment on a global scale.

The Cuban Ministry of Foreign Investment and Economic Cooperation (MINVEC) publishes a listing of the 20 main economic sectors in which FDI is welcomed. The list is created by ministries and other official organizations of the Cuban government. These sectors include tourism, communications, science and technology, construction, and agriculture (80). In addition, Cuba joined the International Chamber of Commerce and sponsored the 2000 annual meeting in Havana. Cuba has full ICC privileges to utilize all ICC resources to promote international trade and investment (81).

However, without encouragement for private sector activity and the creation of capital and labor markets, the Cuban government will have great difficulty attracting FDI and creating a Cuban information society.

Cuba's Vision for its Information Society

On a global front, the Cuban government believes its expertise in telemedicine, biotechnology, and multimedia will guide the Cuban IT future. Outsourcing of software professionals will provide hard currency for the Cuban government, additional technical training opportunities for its high-tech labor force, and industry recognition for the Cuban IT program. The Cuban government boasts of a nearly universally literate population with a high percentage of university graduates. It also entices foreign employers with the prospect of inexpensive labor, as most Cuban workers receive $15 US in monthly income, on average (82).

The Cuban government has begun to sponsor international IT events as a showcase for its IT talent. The Ministry of Science, Technology and Environment sponsors an annual International Network and telecommunications Event in Havana. This conference discusses e-commerce opportunities, new Internet technologies, utilization and security of networks, information services, and an exhibition of modern networking products. Few Cuban citizens attend these conferences, as the targeted attendants are representatives from foreign companies (83).

On the domestic front, the Cuban government plans on restricting Internet access to the general population, stating that access must be restricted or subversive threats to the government could jeopardize the Cuban way of life. The expansion of the high-tech industry will be encouraged, primarily through the continued development of university programs.

Government Plans/Focus in IT Policies

The Cuban government formed a Ministry of Informatics and Communications in May 2000, removing IT from the control of the Ministry of Steel, Mechanics and Electronics. It also formed an e-commerce commission, which was given the task of removing regulatory barriers as quickly as possible to form the foundation for a thriving e-commerce market (84).

Thirteen Cuban state agencies are working on overseeing IT policies and development. In addition to the Interministerial Commission on Internet Access, an Interministerial Commission on Networking was formed in 1997 to oversee and control Cuban networking and produce a strategic plan for information. However, its efficacy has yet to be determined. The commission was to have published a strategic plan for information in November 1997; to date, this plan remains unpublished. The Ministry of Science, Technology and the Environment (CITMA) has taken the lead in networking and related computing and publishing activities. The Ministry of Steel, Mechanical and Electrical Industries (SIME) also plays a key role in presiding over the Interministerial Commission and operates Web servers in North America through the Teledatos network, which supports Cuba's tourism industry. The Ministry of Communications is involved in communications through ETECSA, but is not yet involved with Internet services (85). Numerous other agencies are involved in developing the Cuban IT system; however, it remains unclear which agency supervises what.

What is clear is that the Cuban government does recognize the importance of developing the next generation of Cuban youth to be technologically proficient. The government has pledged its support to expanding the Youth Computer Club program. The YCCs are located throughout the island to provide computer literacy training. They offer unstructured access to computers and software as well as training classes. The Cuban government is also planning on sponsoring a program to provide Internet access to more than 2,000 post offices island-wide (86).

The Cuban government also believes the American government maintains a monopoly in the global software market through its Windows domination. Therefore, it encourages the development of LINUX to promote IT development without dependence on American software (87).

Major Cuban Government R&D Initiatives

What funds the Cuban government has spent on IT development has focused on the creation of IT departments at Cuba's 47 universities. Each university has a dedicated IT department, with the most developed program at Cuba's technical school, ISPAJE University. No financial statistics are available outlining the total expenditures spent on educational development. The only available statistic is that the Cuban government spends 1.17% of its GDP to technological research and development (88). However, to date, approximately 13,000 students have graduated from Cuban computer engineering and computer science programs. Educational development will continue to dominate Cuban IT development, as it complies with the Communist ideology of universal education (89).

The Cuban government has accepted international aid to boost its IT development. It recently agreed to a special ITU development initiative on electronic commerce for developing countries (EC-DC), in which member countries work with the ITU on the deployment of internal e-business infrastructures (90). The Cuban government is engaging in preliminary negotiations with the United Nations to participate in its Sustainable Development Networking Program. The SDNP seeks to reduce the gap between developing and wealthy nations in terms of developing an effective e-commerce infrastructure, both for B2B and B2C operations. Participating members in the Latin America and Caribbean region are receiving SDNP global funds and/or equipment from Hewlett Packard under an HP/SDNP agreement (91).

 

Country Menu