Economic Focus – Cuba

Cuban citizens can finally enjoy the privilege of staying in their own local hotels. However, most Cubans cannot afford such luxuries as most the wide majority only earn less than $20 a month on average. The relaxed rules represent some of the reforms brought by Raul Castro that succeeded his brother Fidel Castro in February.

Cuba’s economic struggle began since the collapse of the Soviet Union in 1991. The fall of its ally caused Cuba billions of dollars in subsidies and ensured the economic ruin Cuba faces today. The Communist central planned economy and state controlled industries caused inefficient allocation of resources and underutilized human capital. Both of which signed an economic death warrant of the island’s inhabitants.

Nevertheless, the lifting of restrictions on consumer goods is a right step in the right direction. Cubans can now finally obtain items like computers, motorcycles, and pressure cookers. Furthermore, the government is now encouraging farmers to plant tobacco, coffee and other crops on unused state land.

The question now is how far the Cuban government is willing to let go of the state’s control on the economy. According to CNN, the government of Cuba controls well over 90% of the economy and the average state salary is just around 408 pesos a month, about $19.50. Privatization of state own businesses like those seen in China would benefit most of the people in Cuba. Hopefully Raul Castro will push reforms in that direction.

Source: CNN, Time Magazine

Facts – BBC

  • Full name: Republic of Cuba
  • Population: 11.3 million (UN, 2007)
  • Capital: Havana
  • Area: 110,860 sq km (42,803 sq miles)
  • Major language: Spanish
  • Major religion: Christianity
  • Life expectancy: 76 years (men), 80 years (women) (UN)
  • Monetary unit: 1 Cuban peso = 100 centavos
  • Main exports: Nickel, sugar, tobacco, shellfish, medical products, citrus, coffee
  • GNI per capita: n/a
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