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CUBA: REFORMING THE POWER, TELECOMMUNICATIONS AND WATER SECTORS DURING A TRANSITION

The first section of the paper discusses the importance of infrastructure. It concludes that adequate infrastructure is necessary for economic growth and that it can contribute to reduction in inequality. The second section of the paper summarizes the lessons learned from infrastructure reform in Latin America and in the “transition” economies of Eastern Europe and the former Soviet Union. The lessons from Latin America show the importance of introducing competition where feasible, regulating where monopoly power exists and encouraging private participation. An important lesson from the “transition” economies is that it is necessary to introduce mechanisms to avoid asset stripping and tunneling. While lessons from other countries can be useful, the specific reforms in Cuba or any other country must be modified to fit the local conditions.