Cuban Economy
Between 1989 and 1994, Cuba's trade with the Soviet Union fell by 89%, which led to a lack of domestic production and increased government control over the economy. The Cuban economy is still undiversified and relies heavily on commodities such as tobacco, sugar, and healthcare services. However, tourism is also a significant source of revenue, and the COVID-19 pandemic has hit the industry hard, causing a significant decline in foreign currency inflows. To deal with the loss of international reserves, the government was forced to unify Cuba's dual exchange rate system and devalue the Cuban peso, causing inflation and a scarcity of goods. This, along with the pandemic, led to social unrest and protests in 2021. The government introduced a second exchange rate for personal transactions in 2022, which eased import price pressures and decreased the demand for dollars. Cuba has also faced climate change-related shocks, including a lightning strike that caused a nationwide blackout and a hurricane that damaged infrastructure and agriculture. The government has attempted to expand private sector activity to boost output and relieve goods shortages. However, many Cubans are still leaving the country, with a record 220,000 caught at the US-Mexico border in 2022. The government is expected to maintain its policies while gradually opening up the economy in the future.
https://www.aljazeera.com/economy/2023/3/24/cubas-new-parliament-will-face-a-familiar-economic-hangover
3 comments:
In your opinion what could Cuba due to diversify their economy? I think that because of the small land area it is hard for them to diversify. Their climate is made for sugar and tobacco so finding a new industry to move into would be very difficult. I think the tourism industry would be a lot stronger and more beneficial if there was access from the US. There is a huge market but since relations are so poor its difficult to see that as a solution in the near future.
Cuba is a great example of a why a command economy will never work. The government fails to operate the economy in an efficient way because they do not know enough about the demands and interests of their own people. Cubans have been so advocative about their concerns not only because they are struggling, but also because they want the independence to make their own economic decisions and lead an economy in a way they see as the best fit method. I think Cuba should be more open to a more market based economy because it would allow them to improve the state of their economy. Will this happen? Probably not due to the political corruption and control the Cuban leaders have.
Hello Muhammad,
This is very unfortunate for Cuba. Trade was seen as one of the larger economic drivers in Cuba and they are reaping the effects. On top of that, they have seen a large decrease in tourism due to the COVID-19 pandemic. I am curious to see how the government handles this situation and I am hopeful they listen to the people and diversify their commodities.
Overall, good post.
Post a Comment