And it’s posing a major new threat to Cuba, Bellinger says. “Cubans are deciding that they’ll have a higher quality of life if they enter the travel and service industry.”
To be sure, some highly skilled Cubans – doctors, lawyers, professors and others – are leaving the country in search of opportunity. But many more who are staying in Cuba are opting to leave their jobs because of low state salaries or are taking on second jobs, becoming taxi drivers, waiters and bellhops – jobs involving regular interaction with foreign visitors and their hard currency. The government is experiencing a sort of “drain” as well, as state workers flee their jobs for the more lucrative private sector.
“These are people who are leaving the jobs for which they have been trained,” Bellinger says. “Last year, we met an English teacher who left his rural school position to become a tour guide, both to use the language he had learned and to gain access to hard currency.”
Cuba’s universities have long been regarded as the best in Latin America, but in recent years, gross enrollment has been plummeting, sparking additional worries.
The country maintains two forms of legal tender: the Cuban peso (CUP) and the Cuban convertible peso (CUC). The CUC is pegged to the U.S. dollar, and is many times more valuable than the CUP. Neither trades on the global forex market. Most Cubans are paid in the weaker peso (CUP), limiting their buying power. Visitors to the country use the CUC and leave tips, and that’s helping to fuel Cuba’s internal brain drain.
Bellinger has been traveling to Cuba since 2010, studying what’s happening there as she forges experiential learning opportunities for students and collaborative partnerships with the University of Havana and its associated research centers. As part of her work with NAFSA, the Association of International Educators, she has worked with the Office of Foreign Assets Control, a Treasury Department unit that manages sanctions, to educate the higher education community in the U.S. on regulations that govern legal travel to Cuba. She also leads the CIBER Faculty Development in International Business (FDIB) Program to Cuba for faculty from across the U.S.
She has seen an uneven upturn in travel, steep in Havana, but shallow everywhere else.
“Last year, we were told by a hotel manager that Havana has 100 percent capacity in hotels all year long,” she says. The capital city is so full of foreign travelers today that it’s scarcely recognizable from even a year ago.
Travel to Cuba’s secondary cities, meanwhile, has been generally missing the boom. That’s in large part because U.S. travelers have faced highly restrictive travel conditions in the past and may not be aware of what the island has to offer outside of Havana.
To be approved for travel to Cuba, Americans must have an itinerary that aligns with one of 12 approved purposes, which include religious activities, journalism, humanitarian projects and people-to-people outreach. “And tourism is not one of them. This is not a destination that U.S. citizens can just explore for sun and sand,” Bellinger says. That has kept most U.S. travelers in Havana for now, but gradually that will change, Bellinger says, as U.S. relations with Cuba continue to evolve.
As Cuba looks to its future, Bellinger says, it must focus on these eight things.
Support economic reforms: This has already begun, Bellinger notes, but much work remains. The economic reforms announced in 2010 have encouraged development and job creation in the non-state sector, which has eased the financial burden on the state. Over 500,000 Cubans are now self-employed in their own microenterprises and private cooperatives, but the regulations that govern these businesses are still constraining. For example, private restaurants are able to have only 50 seats, and private companies are not permitted to import any goods or foodstuff to support their business.
Address the dual currency issue: Rebuild the country around a single currency, to level the playing field for Cubans and increase consumer confidence.
Address salary issue: Traditionally esteemed, high-skilled work should be appropriately compensated, to counter brain drain tendencies in the country.
Invest in innovative capacity: “Because of Cuba’s history,” Bellinger says, “it does not lack the ability to innovate. Just think about the old jalopies.” Closed off from much global trade, Cubans have long found ways to maintain and retrofit 50-year-old automobiles. “That type of innovation exists,” she says, “but so do impressive global innovations in health, biomedical and pharmaceutical fields.
Ease access to information: Access to the internet has increased in Cuba, with about 2,000 homes in Havana authorized to receive the internet directly and with the number of Wi-Fi hotspots growing virtually every day. “It is fantastic,” Bellinger says, “that the government is no longer afraid of giving people access to information.” The country should encourage the democratization of the internet, allowing greater accessibility at a fair and level price, she adds. In most countries, internet prices are determined based on the amount of data used. In Cuba, users are charged based on the types of websites visited, with domestic websites costing less than foreign ones. Some foreign websites are still blocked in Cuba.
Educate a generation of business leaders: For a half-century beginning around 1960, the economy was generally controlled by the Cuban government. Now, the country faces a crisis in business education: Who will educate the next generation of business leaders, job creators and entrepreneurs? The reforms that have allowed for the creation of private business have not been supported with education, meaning that the individuals starting and running small businesses do not have access to the formal training they need to be successful. The Catholic Church has begun a program that’s similar to a masters of business program, and a Miami-based nonprofit is doing some startup business training on what Bellinger describes as “a very small scale.” But education remains an area where Cuba prohibits joint ventures with foreign entities, so prospects for business education remain murky.
Improve transportation and infrastructure: Cuba has infrastructure problems, “first and foremost,” Bellinger says, making travel cumbersome between Havana and the country’s secondary cities. Addressing those problem would spread economic development across the island.
Choose democracy: Elections are planned for 2018, when Cuban President Raul Castro plans to step down. “But if there’s going to be an election, is it going to be fair? Who will be the key players? We don’t know,” Bellinger says. “It’s as important as ever that Cuba listen to its citizens.”
Central to her suggestions is the notion of investing in human capital. “At the end of the day,” Bellinger says, “if you don’t invest in human capital – if you don’t invest in your workforce – nothing is going to change in Cuba.”
Visit Smith Brain Trust for related content at http://www.rhsmith.umd.edu/faculty-research/smithbraintrust and follow on Twitter @SmithBrainTrust.
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SOURCE Robert H. Smith School of Business