The Internet and the future of Cuba’s economy

HAVANA — The Internet has carried important implications for economies and societies in the past 20 years. This network has complemented the major developments that began to occur in electronics after World War Two.

The advances in computers, advanced data processing, and the personal computer in the 1980s permitted the expansion of this network, which has transformed the lives of people and the activity of businesses. Today, it has become the sector that expands technical changes in the economy and the rest of society.

The Internet and other similar developments are considered to be technologies of general and multidimensional use, a definition in social sciences that is reserved for platforms that radically change the organization of production and its location.

For example, the growing internationalization of services is based on an accelerated reshaping of its structure in favor of intensive technical services in knowledge and the modes of capability that utilize such technologies.

In Cuba, at a minimum, we can say that important steps have been taken for more than a decade to ensure a broad use of the technologies of information and communication (TIC). Such steps include the foundation of the University of Information Sciences, the construction of several Young People’s Clubs, the possibility of accessing mobile telephony, the connection via fiberoptic cable to Venezuela, the installation of public zones of access to the Internet through WiFi technology, digital television and pilot tests to carry the Internet into homes.

All these are landmarks on the road. Nevertheless, the benefits described above depend on three simultaneous conditions: universality in access, quality of the infrastructure, and proper capability, both in terms of the human capital and the existence of organizations that are capable of taking advantage of these opportunities.

In this sense, are we advancing at the needed pace? In access to the Internet, Cuba has one of the world’s lowest rates of penetration, especially from homes. The International Telecommunication Union (ITU, a United Nations organization that Cuba belongs to) consistently places Cuba in the bottom steps of its Index of Development of TIC, which has three dimensions: access, utilization and capability.

In the index for 2015, which analyzed 167 countries, Cuba occupied 129th place, a lower spot even than five years earlier. By any criteria, it was a place far below the level of the expenditure or educational efforts invested.

Another problem: how much of that still-modest accomplishment benefits individuals or businesses of any type that need the Internet to improve their productivity? Probably not much. It is good that we have the chance to speak with friends and relatives everywhere else in the world, and that a growing number of Cubans overflow the social networks, but this by itself will not make the use of those new technologies sustainable. The networks of data transmission that facilitate payments online, or the use of magnetic cards are practical aspects of great importance.

To what degree do state-run businesses, cooperatives and private individuals have access to the Internet for commercial purposes? The transforming power of these platforms depends on the need for all of society to be connected. This supplies the scale and incentives necessary to redesign whole productive processes. Is there a correspondence between the formation of professionals in these branches and a slow development of the Worldwide Web and associated technologies? Very likely not.

How can we think of improving economic development without embracing these developments? If you asked Cuban executives today about “cloud computing,” many of them would be surprised.

The advances in the TIC have increased the transportability of services, enabling cross-border provision. The same advances have facilitated the coordination of internationally disperse activities, enabling investments abroad for service enterprises, which have also acquired greater control over their products and processes, making their commercial presence profitable beyond the domestic market.

As well, the TIC have markedly reduced the cost of the decentralized processing of data and their distribution. This favors the access to information and its use for productive results.

Another remarkable element is the high level of complementarity and horizontal impact demonstrated by the TIC, including the Internet. These technologies, by their characteristics, have proved to be very flexible at dovetailing with others, which has allowed the design of completely new ways to perform old processes.

In addition to being in itself a relatively important sector in many modern economies (TIC, software), the TIC’s horizontal penetration has persistently influenced the efficiency and productivity of other sectors, even by helping to create completely new branches. These platforms exhibit strong “network economies,” i.e., the more individuals use them, the more useful they become for all the users.

They work best when there are effective possibilities to complement with other activities, which requires both a physical infrastructure and the corresponding regulatory tools.

Entire sectors have redefined themselves in recent times; think of the effects (not always positive) of Uber and Airbnb. There is talk of a “sharing economy.” The world’s largest content enterprise, Facebook, creates no content by itself; the largest hotel chain, Airbnb, owns not a single hotel; the largest fleet of taxis, Uber, not a single vehicle.

Of course, these advances are not exempt from problems that need to be solved adequately, such as cyber security or the inappropriate use of the private date of persons and entities. Governments are faced with new challenges, while large segments of the population can be affected in multiple ways.

Cuba’s largest and best asset is its people, and this potential will not be released without the Internet. It is also a weighty element when attracting foreign investment. Certain aspects of national security are legitimate, but surely it is possible to achieve a better balance than what we have at present.

The massive use of these technologies is not a passing fancy in western consumerism of the 21st Century. The TIC constitute a technological platform that’s essential to this era, increasingly integrated in the economic and social structures, with growing horizontal impact.

The TIC have revolutionized the way people interact, the way in which companies identify their clients and communicate with them. To a certain point they have democratized visibility for a global public and reduced its cost. They constitute an essential ingredient for contemporary prosperity; any viable strategy for development in the 21st Century has to adopt them as such.

This would be one of the achievements of a country that looks ahead to its future. A result at the same level as providing universal education and public health in Cuba in the distant 1960s. And it would be an achievement made by this generation.

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