State Capitalism in Cuba: The Lessons of the Literature on State Owned Enterprises and Market Liberalization

Abstract

This article outlines core concerns for Cuba in its market liberalization process. First it explores from the agency cost perspective the limitations of SOEs versus private (publicly traded) firms. Then, it examines the empirical literature on SOEs and SOE reforms and privatizations. Next, the article offers a number of possible policies going forward that will allow Cuba to reform its state capitalism to benefit Cuba’s consumers. Such reforms include SOE corporatization, SOE privatization, and the introduction of a competition policy system to Cuba (as effective corporate governance and competition may be substitutes).