Entrepreneurship in Cuba

Writing of socialism, fascism, and other forms of government intervention in the economy, Ludwig von Mises (Human Action, 1949, p. 291) describes the struggle of business owners to operate in deteriorating political circumstances. Despite the threat of expropriation and other hazards, entrepreneurs will continue to act:

In the market economy there will always be entrepreneurs. Policies hostile to capitalism may deprive the consumer of the greater part of the benefits they would have reaped from unhampered entrepreneurial activities. But they cannot eliminate the entrepreneurs as such if they do not entirely destroy the market economy.

I thought of this quote when reading today about the emerging entrepreneurial sector in Cuba, which recently took thousands of state employees off the public payroll:

“Cubans are entrepreneurial people and to the extent they are allowed to work and make some money, they will,” said Lorenzo Perez, a former IMF economist and member of the Association of the Study of the Cuban Economy, a nonpartisan Washington, D.C.-based think tank.

But he added the new enterprises face stiff challenges in a country where few have business acumen, raw materials are hard to find, tax rates can be exorbitant and myriad government regulations still restrict basic activities.

“All over the world, the percentage of small businesses that succeed is very small, even in the United States,” Perez said. “In Cuba, the difficulties are enormous, because the environment is not very conducive yet to business … but that doesn’t mean it can’t be done.”

I’ll have more to say about this soon, thanks to an upcoming research project on Cuban entrepreneurship led by Juanamaria Cordones-Cook.

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