The Cuba Fieldcourse

Until relatively recently, the economy of Cuba was centrally planned whereby the State administered the economy according to policy guidelines laid down by the Communist Party of Cuba. All economic activities (except small scale farming) were controlled by the government and all employees worked for the state. The State guaranteed full employment and state enterprises were not required to make a profit (although this is beginning to change). Today, the state plays the primary role in the domestic economy and controls practically all foreign trade. [Economic Statistics].

Foreign investment and the legalisation of the US dollar established a dual-economy with stark differences in wealth between those with access to US dollars and those who continue to be paid by the Cuban peso. Living standards for the average (dollarless) Cuban remain at a depressed level compared with 1990. The growth of dollar economy and dollar only stores allows the government to access remittances sent to Cubans from relatives abroad (estimated to be $800-$1billion). Similarly, dollars allow Cubans to purchase food that is unavailable through the ration book as well as other products such as clothes, consumer durables and other household goods. Access to this dollar economy has resulted in the emergence of a new social class many of whom ‘display’ their wealth in the public spaces of Mirimar while peso shops remain under utilised or closed in parts of Centro Habana.

Foreign Investment

In the early 1990s, direct foreign investment in joint ventures and other forms of economic associations with state enterprises became easier and, today, there are over 350 joint ventures operating in Cuba mainly with companies from Spain, Canada, Italy, France, UK and Mexico. These ventures are growing rapidly (from 20 in 1991) and are currently worth approximately $2.6billion to the Cuban economy (see Spadoni 2002).

In 1995, a number of alternatives to joint ventures were legalised providing new opportunities for foreign investment in Cuba including international economic associations and completely foreign capital firms. As a result, the number of foreign companies operating in Cuba has increased. [Foreign investment in Cuba: prospects and perils (2002)].

Links to the world economy

Main exports: sugar (LINK TO RUM), tobacco (LINK TO TOBACCO), and fruits and importing mainly foodstuffs, cotton, and machinery and technical equipment worth $1.8 billion (2000); Partners: Russia 23%, Netherlands 23%, Canada 13% (1999).

Imports include petroleum, food, machinery, chemicals, semi-finished goods, transport equipment, consumer goods worth $3.4 billion (2000 est.); Partners: Spain 16%; Venezuela 15%; Mexico 7%, Canada 8% (1999).

Industries include petroleum, tobacco, chemicals, construction, services, nickel, steel, cement, agricultural machinery, rum distilleries, sugar refineries. Industrial production growth rate: 5% (2000 est.)

Tourism has been greatly revived in the 1990s as Cuba redirects its economic model from central planning toward a mixed economy.

TOBACCO

Pinar del Rio is the source of 80% of Cuba's tobacco. The first tobacco factory opened in 1760 and since then it has remained as the region's main industry. Today, private farms account for the majority of the crop and some technological advances have changed production methods (including irrigation). Nonetheless, harvesting is still largely done by hand. When the leaves have been harvested, they are left to dry in special huts (Vegas) which you will see as we drive around the area. Once dried, the leaves are transported to the cigar factories, many of which are now located in Havana (e.g. Real Fåbrica de Tabacos la Corona near the Capitolo in Centro Habana).

The government is keen to increase tobacco production and has encouraged growth in the industry by turning state farms into co-operatives and by giving land to farming families.

RUM

The Ministry of Sugar Industries (MINAZ) runs all sugar and related operations in Cuba. The agricultural segment of the sugar industry is composed of private and state farms while the industrial segment consists of 156 mills, 16 sugar refineries and 13 distilleries producing rum.

TOURISM

The international tourist industry is one of the few industries not to have suffered during the economic crises of the early 1980s although it did suffer after September 11th 2001 (Crespo and Charles Suddaby, 2002) . Today, it is seen as a key sector and is prioritised as part of the Cuban economic readjustment programme. In 2003, 1.9million visitors came to Cuba, a 12% increase on the previous year's total. In 2004, plans have been made for further hotel construction, nautical and theme parks.

History of Tourism to Cuba

Prior to 1959, tourism was a major industry within Cuba providing numerous jobs as well as hard currency. In the early years of the Revolution, international tourism largely disappeared from the island as a result of the US Embargo and a sense that tourism was too closely associated with the evils of capitalism - most notably, prostitution, organised crime, gambling and drugs. At this time, much of the pre-1959 tourist infrastructure was left for Cuban citizens (and some socialist visitors) but there was no additional investment within the sector. As a result, there were few foreign tourists arriving in Cuba and those who did come were largely sympathisers who came on working trips. Cubans were encouraged to be wary of visitors and were largely unaware of the world beyond their shores.

From the mid-1970s onwards, Cuba once again began to see the arrival of some foreign visitors. In 1976, the Cuban government began to recognise the potential economic benefits of increased tourism and established INTUR (Instituto Nacional de Turismo) to develop national and international tourism. Today, visitors mainly come from Canada (approximately 75000 visitors pa), Germany (60000), Mexico (35000) and Spain (34000). Despite these figures, it seems unlikely that Cuba's share of the Caribbean tourist industry will increase significantly while the US embargo remains in force.

Increasingly, the Cuban tourist industry has achieved some success in attracting foreign investment from countries other than the US - particularly Spain and Germany. Under laws introduced in 1982, joint ventures in tourism can be set up so long as foreign ownership does not exceed 49%. One example of such a venture is the Sol Meliá hotel venture (see Godínez, 1998).

In 1990, following the collapse of the Soviet Union, Cuba had to explore new ways of attracting foreign currency into its stagnant economy. In 1993, the legalisation of the US dollar resulted in a significant growth in tourism and an informal service sector developed to cater to the needs of tourists. Today, the Ministry of Tourism oversees the tourist industry in Cuba.