Socioeconomic Models And The Impacts Of A Small Socialist Economy On An Industrialized Society: The Cases Of Cuba And The Ussr In Historical Perspective (soviet Union, International Trade)

Abstract

This dissertation represents a first attempt to combine an empirical socio-economic input-output analysis with a historical approach to determine the impacts of the Cuban economy on the USSR economy. Static input-output models of the Cuban and Soviet economies are blended with dialectical interpretations of their socio-economic relationship. A multiplier approach is used to measure the role of different sectors in each economy. Also, the direct, indirect and induced effects per unit of currency of final demand are considered.These computations reflect that the total cost to the USSR of supporting the Cuban economy is much larger than the available data suggests. In other words, the total requirements of resources in terms of output, income and employment are larger than the direct costs involved. The use of input-output models allows to measure the indirect impacts that normally are omitted in other approaches that underestimate real costs because they only consider the direct impacts. However, the USSR saves resources by exporting capital intensive products and by importing labor intensive goods. This complementarity evidences the applicability of the law of comparative advantage, that is, the overall efficiency in the area of international trade increases when each country allocates its resources in those sectors in which each one is more efficient or less inefficient. This situation also validates the Heckscher-Ohlin theorem, which states that each country tends to export goods and services that use intensively its abundant resources.The existence of USSR subsidies for sugar imports from Cuba makes sugar production in Cuba a more profitable activity in comparison with many other exportable goods. These subsidies affect many investment decisions in the sense of favoring the concentration and expansion of economic activity in the sugar sector. Similar impacts could be related to subsidies for imported oil and cereals or exports of minerals and fruits. Although from a purely economic point of view these subsidies constitute a very unorthodox inducer of the law of comparative advantage, from a socio-economic and political Marxist-Leninist perspective they can be dialectically rationalized: International socialist solidarity in helping developing economies is a powerful tool to achieve the necessary convergence of objective and subjective conditions.The use of the most recent Cuban (1981) and Soviet (1977) Input-Output tables would allow us to operationalize the model and analyze the evolution of the terms of trade.