Why Cuba’s Brain Drain Looks Different

Why Cuba's Brain Drain Looks Different
MAY 15, 2017 BY MONIKA DONIMIRSKA

COLLEGE PARK, Md., May 15, 2017 /PRNewswire-USNewswire/ — Cuba is
experiencing a brain drain, though it's not the kind that forecasters
were predicting when the long-closed country began opening its borders.
It's internal brain drain, says Rebecca Bellinger, managing director of
the University of Maryland Robert H. Smith School of Business Office of
Global Initiatives and Center for International Business Education and
Research.

The small island nation's doctors and other highly skilled workers
aren't emigrating for more lucrative jobs in Miami and elsewhere. In
fact, they aren't emigrating at all. They're staying in Cuba, but moving
toward the burgeoning hospitality sector.

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.

About the University of Maryland's Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized
leader in management education and research. One of 12 colleges and
schools at the University of Maryland, College Park, the Smith School
offers undergraduate, full-time and part-time MBA, executive MBA, online
MBA, specialty masters, PhD and executive education programs, as well as
outreach services to the corporate community. The school offers its
degree, custom and certification programs in learning locations in North
America and Asia.

Contact: Greg Muraski at 301-892-0973 or gmuraski@rhsmith.umd.edu

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