1-To strengthen production systems in the private sector through legal structures that promote the right to property
In contemporary Cuba’s private sector development it has gone through two basic steps. The first was after the fall of the socialist camp when the self-employment (with certain restrictions) and the formation of UBPCs formalized. The second arrives in recent times with the exemption of many restrictions on self-employment and the creation of non-agricultural cooperatives. Is palpable noted that the development of new entities of the latter type remains completely frozen and that there are high chances that the amount of cuentapropistas be reduced in 2016, after the significant slowdown in growth in 2015.
Something very interesting that could be highlighted are several popular questions among the masses. Why the scope of the Cuban private sector is so primitive compared to other nations? Why the activities do not go beyond dedicated services sectors (food, catering, transport and others) and do not cover industrial or agricultural skills level? Why much of the business seem destined to die even before they were born?
It should start with the origin of the activity itself and this is done by analyzing the legal structures involved. The cuentapropismo corresponds to an emulation of what in Spain is called self-employed or sole proprietorship in countries like Peru. Not exactly an activity of this nature because the tax system in our case is structured to impose taxes that vary depending not only on personal income, but also in terms of assets. We can use the example of a hostel that should not only pay tax on the operating profit of its activity (as in Spain or Peru), but it should do well as the number of rooms to rent. This type of tax encourages individual businesses to grow and is not therefore an error.
Non-agricultural cooperatives are similar to what is known as partnership in countries such as Argentina. This type of entity as owners to members who contribute labor and not capital, but in the case of Cuba training is the product of a government decision in each case and not as a result of the initiative of a group of people with an interest in specific. In fact there is no way in which Cuban workers of small state enterprises decide to settle in this type of entity and the unions maintain an autistic position in this and other cases. This is not correct.
But there are other forms of private sector production in Cuba is not implemented. I want to illustrate the case of limited liability companies, limited partnerships and corporations.
The LLCs are set according to the available capital of its founders, so they can acquire more assets from its formation through investments and better financing to have greater payment guarantees. Thus beyond the scope of OPEs to own more owners (called partners in this case) that allow a productive base from which overcomes certain barriers to entry. In countries like China, sole proprietorships and partnerships are large, but only usually only provide small services like shops or restaurants. At the time of manufacture industrial goods in bulk, dominated by limited liability companies. Cuba should bet on this form of production in the private sector.
The limited partnerships have owners who bring capital and others who provide work, being a hybridization between partnerships and limited liability companies. Usually they have a shorter range than the latter, because its capital base is relatively minor compared to the distribution of its benefits. But they are a very interesting alternative that our country should not be neglected, it also amplifies the talent and creativity of the nation.
Corporations are the summit of all forms of production. The owners (also known as shareholders) fluctuate through the purchase and sale of shares in an organized securities market. Thus the connection between investment and financing reaches the last level and through the market capitalization increase corporate assets and opportunities to generate higher profits. This production system placed the UK and the Netherlands at the head of the Industrial Revolution in its time. Only the largest companies traded in this way but, does Cuba could not have a stock exchange?
If you liked this article,don´t forget to share it on Facebook and Twitter