Cuban economic reform: Small businesses, household economic decision-making, informality, and networking

The objective of this research is to improve existing theory on Cuban adaptation to global economic integration by analyzing one of the most important internal reforms in Cuba's economic restructuring process, the expansion of the self-employment and small business sector. This paper uses theories of informality and the Household Negotiating Model to determine how entrepreneurs in Cuba utilize, negotiate and coordinate their formal and informal networks and family relationships for the purposes of business development and family economic security. Overall, the expansion of the self-employment and small business sector in Cuba is not antithetical to socialist economics, but rather, complementary. Results indicate that entrepreneurs and their families combine a variety of economic strategies utilizing both formal and informal networks, including holding multiple jobs in varying combinations of self-employment, state employment, and informal self-employment. They also utilize informal networks for general help and provision of referrals, while other informal exchanges of various forms of capital are frequently present. The stable salaries of state workers and the riskier, but potentially more lucrative self-employment activities, are complementary in the context of a single family or household, because they combine the security of stable state salaries with the potential for upward mobility through private enterprise. Expatriate family members from Cuba do not often contribute much in the way of human capital, but do contribute modest remittances, which serve as a safety-net, giving some families extra flexibility to diversify and experiment with informal or formal self-employment, especially when combined with state benefits and the modest wages of other family members with state sector employment.