Silicon Island

Article excerpt

Cuba's Digital Revolution

A new revolution is happening unnoticed in one of the world's last communist strongholds. In the land of salsa, rum, and Fidel Castro, a significant shift in economic ideology is transforming the future of the island: Cuba is rapidly diversifying its economy and giving priority to developing a world-class information technology (IT) sector Considering the island's competitive advantages--proximity to the United States, a highly literate population, and the lowest wages for skilled labor in the Western Hemisphere--Cuba could become the digital hub between North and South America.

With 11 million people and more land area than any other Caribbean island, Cuba has been economically and politically isolated from its giant neighbor just 90 miles to the north for the past half-century. However, under the leadership of one of the staunchest communists of the 20th century; Fidel Castro, Cuba is beginning to subtly reorient its economy for the 21st century. The 74-year-old leader and his still officially communist government have adopted a program called "Entrepreneurial Upgrading" that aims to center the country's economic regeneration on technology, markets, and new capital.

Within the past few years, Castro has quietly retired the old revolutionaries who followed Moscow's defunct economic model, replacing them with a new generation of cabinet ministers and senior government officials who seem to have swapped Karl Marx for Adam Smith. The average age of the members of the Cuban National Assembly is 40; the Foreign Minister is 35 years old, and the Minister of Foreign Investment and Economic Cooperation is a 50-year-old woman. These leaders of a new generation read The Wall Street Journal and The Economist and roll their eyes at stilted Marxist dialectic.

"Entrepreneurial Upgrading is the most in-depth, extensive, and transcendent change that has taken place in the Cuban economy," says Cuban Vice President Carlos Lage, architect of the economic reforms. The program requires State-Owned Enterprises (SOEs) to be self-supporting, capable of creating their own production plans and administering their own financial, material, and human resources. These policies represent a truly revolutionary departure from the old socialist command economy, where decisions always came from above. Granting autonomy to SOEs may be the first step toward privatization, a move that is still considered heresy by the old guard. Yet all indications are that the Cuban government has begun to privatize the telecommunications industry.

In January 2000, the Cuban government established a Ministry of Information Technology and Communications (MINIT) with a mandate to make Cuba an "information society" and to quickly develop trade and e-business using IT. MINIT has various subordinate enterprises functioning like corporate subsidiaries, each run by different presidents and focusing on separate IT industries such as telecommunications, software, hardware, wireless internet, business training, and e-commerce.

The Paradoxical Island

More than the average developing country, much of Cuba makes little sense to the Western observer. It has been described as a Third World country with First World people. Although the country is a one-party communist dictatorship, small-scale private enterprise is encouraged. Cubans watch CNN and listen to Miami radio stations, and every type of US and European publication is easily found on newsstands and in bookstores. Che Guevara's passionate visage is ubiquitous, but what would this revolutionary icon think if he saw how the regime he helped to create is commercializing his image? Posters, calendars, books, pins, T-shirts, caps, and even comic books featuring Guevara are sold in every state-owned tourist gift shop--for US dollars, the de facto currency of 21st century Cuba.

Yet outside of Havana, even in major cities like Cienfuegos, horse-drawn vehicles outnumber gasoline-powered ones. …