Introduction
The current economic situation in Cuba cannot be attributed to the lack of natural resources or manpower. The cause can be traced back to their dependence on the USSR [1] and the other members of COMECON [2] between the 1970s and the 1980s. This enabled the country to receive preferential rates in trade, they exported raw materials in return for food, oil and capital goods. Unfortunately, the Cubans did not expect the fall of the USSR and so, did not use the funds and resources provided by the former Soviet bloc to build a strong and resilient economic structure. So, when the Soviet Union dissolved in 1991, it led to the complete ruin of the Cuban economy (the US had already imposed a trade embargo on Cuba in 1962 after the communist revolution of 1959)
The reforms adopted in 1992 enabled economic recovery to a certain degree but it seems insufficient as the Cubans are still unable to meet their basic needs.
Major reforms
The economic crisis of 1989 to 1993 was unprecedented and gave rise to an urgent need for economic reforms. The important reforms were as follows:
- Reducing the budget deficit in establishing a new law on taxes, reducing government spending, increasing the prices of some non-essential goods (such as alcohol, tobacco etc), by eliminating certain gratuities.
- Capturing foreign currency that circulates in the black market by creating a network of recovery divisions.
- Restructuring the public sector by simplifying the structure of state agencies and decentralizing state-owned enterprises.
Tags - Cuba, economy, crisis,reforms
[...] Cuba is one of the leading producers of sugar cane and tobacco despite the fact that hurricanes and storms frequently besiege the island, destroying thousands of acres of crops. Tourism: With the strengthening of the U.S. embargo and the collapse of the USSR, Cuba found itself being obliged to promote tourism. Cuba's geographical position encourages tourism and this is now becoming a vital resource for the Cuban economy. Pharmaceutical Industry: Cuba has a number of biotechnological and pharmaceutical companies. It grows medicinal plants throughout the island. Although, it faces tough competition from multinational companies, it has a significant level of export. [...]
[...] ( Figures 2 and 3 below). Figure Distribution of sources of imports in 2009 Cuban Source: Central Intelligence Agency (CIA) - The World Factbook: Cuba Online. .Retrieved January Figure Breakdown of the destination of Cuban exports in 2009 Source: Central Intelligence Agency (CIA) - The World Factbook: Cuba Online. .Retrieved January Although in terms of volume, the imports and exports have improved from the early 1990s, the difference between the nature of imports and exports is still very high. [...]
[...] Reforms in the Cuban economy (1980 - 2011) Introduction The current economic situation in Cuba cannot be attributed to the lack of natural resources or manpower. The cause can be traced back to their dependence on the USSR and the other members of COMECON between the 1970s and the 1980s. This enabled the country to receive preferential rates in trade, they exported raw materials in return for food, oil and capital goods. Unfortunately, the Cubans did not expect the fall of the USSR and so, did not use the funds and resources provided by the former Soviet bloc to build a strong and resilient economic structure. [...]
[...] - Restructuring of the banking and financial systems. These reforms have helped the Cuban economy to recover to a certain extent and have generated some growth but they are insufficient for the long run and need to be improved upon continually. Economy Before touching upon the subject of development in the Cuban economy, one should remember that Cuba went through a period of crisis between 1989 and 1993, this in addition to the embargo imposed by the United States in1962 led to the enormous difficulties its economy is facing today. [...]
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