The Cuban Economy. Cuba is the largest island in the Caribbean. Its area of 42,828 square miles is just 20% smaller than the state of Florida.
The Island has a population of 11.4 million people, and a Gross Domestic Product (GDP) of $77,148 million according to data from the World Bank for 2013.
One of the main sectors contributing to Cuba's GDP is services, which is equivalent to 73.9%, absorbing 63.2% of the labor force. It is followed by industrial activity that includes hydrocarbons, pharmaceuticals, tobacco, construction and machinery for agriculture, with 22.3% of GDP.
Agriculture, with 3.8% of GDP, is also another key sector, producing high-demand goods such as sugar, tobacco, coffee, and rice.
According to the Human Development Report of the United Nations (UN), Cuba's international trade represents 38.5% of its GDP and its exports reach a value of $6,252 million, according to 2013 data.
The Caribbean island mainly exports oil, nickel, medical products, sugar, tobacco, fish and coffee. Its main partners in both foreign transactions and imports are Canada, China, Venezuela, Holland, Spain and Brazil.
Reforms to the Economic Model
From the moment in which Raúl Castro replaced his brother Fidel in 2008 as President of Cuba, the new president dedicated himself to seeking formulas to sublimate the prevailing rigid economic system, with the aim of improving the social conditions of the workers and the balance of payments of the Island. Thus, the Congress of the Communist Party of Cuba in April 2011 approved a plan to stimulate important economic changes.
Since then, the Cuban government has gradually put in place some reforms economic including the one that allows Cubans to buy electronic devices and cell phones, and to buy and sell used cars.
Likewise, the Cuban government has opened some retail services to independent workers called “cuentapropistas” or small private entrepreneurs. Approximately 500,000 Cuban workers are currently registered as self-employed.
The State has recently admitted the existence of forms of private property in certain sectors such as real estate; the purchase and sale of new vehicles; food services in small restaurants; non-agricultural cooperatives in the trade and repair of personal effects, hotels and restaurants, and construction sectors; and the sale of agricultural products to hotels. Currently the share of non-state employment in total employment is 26%.
The launch of the "Special Development Zone of the Port of Mariel" in January 2014 and the promulgation of the new Law for Foreign Investment in March 2014 show the government's desire for openness
Despite these reforms, the average standard of living for Cubans has remained even lower than it was before the collapse of the Soviet Union and the resulting crisis of the 1990s. Since the late 2000s, Venezuela has been providing 160.000 barrels per day of oil and derivatives under preferential conditions. Cuba, for its part, has been partially paying Venezuela with the services of Cuban personnel in Venezuela, including some 30.000 medical professionals.
However, in 2013, economic problems in Venezuela forced a downward revision of oil exports to Cuba.
While this process of slowdown harassed the cuban economy, President Castro and the White House began a process of negotiations promoted by Pope Francis that would lead to the reopening of relations between Cuba and the United States.
Thus, on December 17, 2014, Presidents Barak Obama and Raúl Castro announced the beginning of the regularization process that would culminate on July 20, 2015 with the opening of the US embassies in Havana and of Cuba in Washington, DC.
And the latest advances on the US side occurred in mid-January 2016 when the US Department of Commerce expanded the range of authorized exports to Cuban government agencies only in areas that ostensibly benefit the local population. Included in this measure are the agricultural sector, historic preservation, education, food processing, public health, and infrastructure.
Likewise, the new measures extend the scope of travel authorizations to North Americans who wish to film movies and television programs, carry out market and marketing studies, and organize professional meetings and sporting events. Although tourism "per se" is prohibited by the Blockade regulations, the exceptions established to the prohibition allow the bulk of travelers who wish to travel to the Island to fall under one of them.
Lastly, the recent executive measures include some technical modifications that will allow commercial airlines to be authorized to establish regular flights between the US and Cuba.
It is good to see that while the Blockade is being lifted, important steps are being taken towards the revitalization of the activity economic for the benefit of the two countries and the two peoples.
Article taken from www.business-cuba.com