Growth capabilities and development: Implications for transition processes in Cuba

Economic Development and Cultural Change

Volumn 44, Issue 2, 1996, Pages 315-331

  Betancourt, Roger R ^a  

^a UNIVERSITY OF MARYLAND   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ECONOMIC DEVELOPMENT; ECONOMIC GROWTH; STANDARD OF LIVING; TRANSITIONAL ECONOMY;

CUBA;

EID: 0029730437     PISSN: 00130079     EISSN: None     Source Type: Journal    
DOI: 10.1086/452215     Document Type: Article

References (55)

1. An introduction to these issues is available in A. Sen, "The Concept of Development," in Handbook of Development Economics, ed. H. Chenery and T. N. Srinivasan (Amsterdam: North-Holland, 1988).
2. P. Dasgupta, An Inquiry into Well Being and Destitution (Oxford: Clarendon, 1993).
3. S. Anand and M. Ravallion, "Human Development in Poor Countries: On the Role of Private Incomes and Public Services," Journal of Economic Perspectives 7 (Winter 1993): 133-50.
4. World Bank, World Development Report 1990: Poverty (New York: Oxford University Press, 1990).
5. United Nations Development Programme, Human Development Report (New York: Oxford University Press, 1990, 1991, 1993).
6. With either concept one can also make a distinction between the level of living or what is actually attained and the standard of living or what is a desired state or objective. Unless stated otherwise in the text I will be ignoring this distinction and using the standard of living as synonym for the level of living, which is a common practice in the literature.
7. H. Arndt, "Economic Development: A Semantic History," Economic Development and Cultural Change 32 (April 1981): 457-66.
8. For example, see D. North and R. Thomas, The Rise of the Western World (Cambridge: Cambridge University Press, 1973); or D. North, Institutions, Institutional Change and Economic Performance (Cambridge: Cambridge University Press, 1990).
9. For example, see D. North and R. Thomas, The Rise of the Western World (Cambridge: Cambridge University Press, 1973); or D. North, Institutions, Institutional Change and Economic Performance (Cambridge: Cambridge University Press, 1990).
10. For example, see R. Lucas, "On the Mechanics of Economic Development," Journal of Monetary Economics (January 1988), pp. 3-42.
11. A process characterized by hysteresis is one where the evolution of the process depends on the actual path or history of the process as opposed to just initial conditions and a principle underlying its evolution. This view of economic processes has been put forth by N. Georgescu-Roegen, The Entropy Law and the Economic Process (Cambridge, Mass.: Harvard University Press, 1971).
12. In Sen's view a "functioning" is an achievement, a capability is the ability to achieve, and the standard of living is a set of capabilities; see A. Sen, "The Standard of Living: Lecture I, II," in The Standard of Living, ed. G. Hawthorn (Cambridge: Cambridge University Press, 1987). In practice the applied literature views the standard of living as a set of realized capabilities or functionings.
13. See J. Muellbauer, "Professor Sen on the Standard of Living," in Hawthorn, ed.
14. See G. Stigler and G. Becker, "De Gustibus non est Disputandum," American Economic Review 67 (March 1977): 76-90.
15. See R. Betancourt and D. Gautschi, "The Demand for Retail Products and the Household Production Model: New Views on Complementarity and Substitutability," Journal of Economic Behavior and Organization 17 (March 1992): 257-75.
16. For an analysis of this characteristic of retail systems see R. Betancourt and D. Gautschi, "Two Essential Characteristics of Retail Markets and Their Economic Consequences," Journal of Economic Behavior and Organization 21 (August 1993): 277-94.
17. See K. Hart, "Commoditisation and the Standard of Living," in Hawthorn, ed.
18. Emphasis on the household production model as a useful analytical tool in this context does not necessarily mean that it is appropriate in all contexts. If one wants to consider issues of intrahousehold inequality, it has to be supplemented or set aside to accommodate bargaining issues (e.g., see Dasgupta [n. 2 above]).
19. United Nations Development Programme, 1993 (n. 5 above), p. 104.
20. For thoughtful theoretical arguments on the role of these factors in well-being as well as an attempt at measurement in poor countries, see Dasgupta, chaps. 2, 3, and 5.
21. N. Kakwani, "Performance in Living Standards: An International Comparison," Journal of Development Economics 41 (August 1993): 307-29, quote on 312.
22. This evidence is suggestive but not conclusive on the existence of a threshold due to this factor, because at the beginning of the period there were countries with high ratios of literacy to GDP or GNP that did not grow rapidly. Thus overcoming a threshold for a highly qualified labor force would be necessary but not sufficient for rapid growth in average GDP. Incidentally, a regression of a monotonic transformation of GDP growth on literacy, controlling for average GDP, does show a positive and statistically significant relationship over the 71 low- and medium-income countries in their sample (see C. Azariadis and A. Drazen, "Threshold Externalities in Economic Development," Quarterly Journal of Economics 105 [May 1990]: 501-26).
23. J. Dreze and A. Sen, Hunger and Public Action (Oxford: Clarendon, 1989).
24. Anand and Ravallion (n. 3 above).
25. Ibid., p. 144.
26. Kakwani.
27. As for the consequences of the switch in policies for capability expansion, Kakwani's results suggest that Sri Lanka's role as an outlier decreased for life expectancy and increased for infant mortality; that is, there was an increase in the ratio of Sri Lanka's achievement index to South Asia's for infant mortality from 1.45 during 1971-80 to 1.58 during 1981-90 and a decrease in the same ratio for life expectancy from 1.45 to 1.40.
28. For instance, Dasgupta (n. 2 above) concludes his treatise by pointing out the areas of public provision that are more likely to be successful in poor societies.
29. Both sets of figures are from United Nations Development Programme, 1993 (n. 5 above), table 31.
30. Discussion of some alternatives is available in ibid., 1991, and in Dasgupta.
31. A discussion of these issues is available in L. Summers, "The Next Decade in Central and Eastern Europe"; and D. Newbery, "The Safety Net during Transformation: Hungary," both in The Emergence of Market Economies in Eastern Europe, ed. C. Clague and G. Rausser (Oxford: Blackwell, 1992).
32. A discussion of these issues is available in L. Summers, "The Next Decade in Central and Eastern Europe"; and D. Newbery, "The Safety Net during Transformation: Hungary," both in The Emergence of Market Economies in Eastern Europe, ed. C. Clague and G. Rausser (Oxford: Blackwell, 1992).
33. Dreze and Sen (n. 22 above) identify South Korea as engaged in growth-mediated security and Chile as engaged in support-led security.
34. For instance, a recent theoretical argument establishing a positive link between democracy and economic performance is provided by M. McGuire and M. Olson, "Optimization by Autocrats and Majorities" (University of Maryland, 1993, mimeographed). An overview of causal mechanisms and available evidence is provided by P. Bardhan, "Symposium on Democracy and Development," Journal of Economic Perspectives 7 (Summer 1993): 45-50.
35. For instance, a recent theoretical argument establishing a positive link between democracy and economic performance is provided by M. McGuire and M. Olson, "Optimization by Autocrats and Majorities" (University of Maryland, 1993, mimeographed). An overview of causal mechanisms and available evidence is provided by P. Bardhan, "Symposium on Democracy and Development," Journal of Economic Perspectives 7 (Summer 1993): 45-50.
36. These figures are from United Nations Development Programme, 1993, table 4.
37. Dreze and Sen.
38. For instance, even a critic of the ancient regime and sympathetic observer of the Cuban revolution writes about the situation in 1958: "Only Venezuela and Argentina, of the larger Latin American countries, had a higher average income" (see D. Seers, "Economic and Social Problems of Twentieth Century Cuba," in Background to Revolution, ed. R. Freeman Smith [New York: Knopf, 1966], p. 212).
39. Dasgupta (n. 2 above), p. 127.
40. United Nations Development Programme, 1993 (n. 5 above), table 1. The figure for Cuba is a United Nations Development Programme estimate constructed with the help of L. Goldstone of World Statistics, Ltd.; the other figures are standard ones from the Penn project. While the figure for Cuba is less reliable than the others are, it is consistent with other estimates. For example, the Economist Intelligence Unit reports a GDP of $23.6 billion for 1991 (see M. Font, "The Cuban Structural Crisis," Cuban Affairs 1 [Spring 1994]: 7). Using the estimated population of 10.7 million for 1991 from the United Nations Development Programme, 1993, yields a per capita GDP of $2,220 in current dollars.
41. Dreze and Sen.
42. C. Mesa-Lago, "The Social Safety Net in the Two Cuban Transitions," in Transition in Cuba, ed. L. Perez (Miami: Florida International University Press, 1993).
43. For instance, imports of oil went from 13.3 million tons in 1989 to 6.1 million tons in 1992, and sugar output is reported to have decreased from 7.1 million tons in 1989 to 6.3 million tons in 1992 (see J. Carranza, "Cuba: Los Retos de la Economia," Cuadernos de Nuestra America [January-June 1993], pp. 131-59). The situation in 1993 was worse; e.g., a fall in sugar revenues from $1.1 billion to $0.65 billion was reported as one of the reasons for the legalization of the dollar by a Cuban economist (P. Monreal) during a public lecture at Georgetown University.
44. Of 31 countries showing a decline in GDP per capita between the decade of the 1970s and the decade of the 1980s, none showed a decline in life expectancy or infant mortality as measured by Kakwani (n. 20 above).
45. Mesa-Lago.
46. Two of the best-known cases are Maria Elena Cruz and Elisardo Sanchez (e.g., see J. Blight, B. Allyn, and D. Welch, Cuba on the Brink [New York: Pantheon, 1993], p. 398).
47. Dasgupta, chap. 2, sec. 3.
48. M. Rua and P. Monreal, "La Apertura Economica Cubana," Cuba Foreign Trade 1 (1993): 1-11.
49. See Carranza; and J. Perez-Lopez, "The Cuban Second Economy: Methodological and Practical Issues Related to Quantification," in Cuba in Transition, ed. G. P. Montalvan (Miami: Florida International University Press, 1993), vol. 2.
50. See R. Betancourt, "The Distribution Sector in a CPE: Cuba," in G. Montalvan, ed.
51. For mid-1989, see J. Clark, Cuba: Mito y Realidad (Miami: Saeta Ediciones, 1990); for 1991-92, see Mesa-Lago (n. 39 above).
52. Standard prescriptions for economies in transition suggest the avoidance of rationing systems (see, e.g., Newbery [n. 30 above]). Textbook analyses of developing countries point to the high costs of food subsidies when available for the entire population (see, e.g., M. Gillis et al., Economics of Development [New York: W. W. Norton, 1992]). Nonetheless, many variants exist in developing countries (see O. Knudsen and J. Nash, "Domestic Price Stabilization Schemes in Developing Countries," Economic Development and Cultural Change 38 [April 1990]: 539-58).
53. Standard prescriptions for economies in transition suggest the avoidance of rationing systems (see, e.g., Newbery [n. 30 above]). Textbook analyses of developing countries point to the high costs of food subsidies when available for the entire population (see, e.g., M. Gillis et al., Economics of Development [New York: W. W. Norton, 1992]). Nonetheless, many variants exist in developing countries (see O. Knudsen and J. Nash, "Domestic Price Stabilization Schemes in Developing Countries," Economic Development and Cultural Change 38 [April 1990]: 539-58).
54. See J. Behrman and A. Deolalikar, "Health and Nutrition," in Chenery and Srinivasan (n. 1 above).
55. See D. Sahn and N. Edirisinghe, "The Politics of Food Policy in Sri Lanka," in The Political Economy of Food and Nutrition Policies, ed. P. Pinstrup-Andersen (Baltimore: Johns Hopkins University Press, 1993).