Cuba’s Economy in Crisis
Despite the fact that it has been an island country for decades, Cuba has been experiencing the effects of a crisis. The government’s fiscal policy has led to a financial bubble, and the country’s administrative structure has also declined. The crisis is not just affecting the country as a whole, but also the individual families of the people living there. Whether a person survives the crisis depends on their family ties and social capital.
Family ties are a key factor in how well or not a Cuban survives the crisis
Whether a Cuban will survive the crisis is not a foregone conclusion. There are many factors at play. One key factor is family ties.
While the Cuban government espoused the benefits of the free market, it also made a number of strides to restrict private sector activity. It nationalized some U.S.-owned businesses and imposed restrictive travel restrictions. It also began issuing passports to dissidents.
There are also some important measures of economic performance that are not reflected in official statistics. The “Freedom Flights” air bridge that connects Varadero and Miami is a good example.
Cuba has the lowest ratio of computers per capita in the Americas. It has seven computers per 100 people. Cuba’s life expectancy is comparable to Western Europe.
Cuba also has a good education system. It has an average monthly salary of around twenty dollars. Cuba also has good healthcare and sports facilities.
There is a lot more to Cuba than meets the eye. While there is no direct US-Cuba trade, there are many international partners. In fact, Cuba’s trade with the United States reveals some of these partners.
While there is no clear timeline for resuming consular services in Havana, the Biden administration has begun restaffing the embassy in Havana.
While there are many good things about Cuba, there is also the Cuban economic crisis. During the 1990s, the economy declined precipitously. Its domestic product per capita fell by a third. In the last quarter of 2013, Cuba imported $614 million from Brazil. Its exports to Venezuela were $2.3 billion.
It also boasts the world’s largest cigars. Cuba also has the world’s largest fleet of ships.
‘Social capital’ is a socially constructed concept that consists of mutually supportive relationships between people. It can also be a conduit for the flow of shared resources. Various forms of social capital exist, including social networks and other forms of ‘bonding’. Using social capital can lead to mutual prosperity. However, it can also lead to suppression of certain individuals.
Cuba’s quest for a better future has spawned two debates among ordinary Cubans. One debate focuses on whether or not capitalism is the panacea for Cuba’s problems. The other is about whether or not Cuba can survive globalization.
The first is the obvious, the latter is more complex. Despite the presence of a small, but growing informal sector, Cuba is not in a state of “dual economy” as it was in the past. Cuba’s economy is still dependent on advantageous access to global markets. But it is unlikely that Cuba will ever become a full-fledged modern economy.
The’mire’ is the fact that Cuba has not developed productive specialization, meaning that its economic supply is not as efficient as it could be. This means that Cuba is not able to export its products profitably. Moreover, it has yet to develop the technological capacity to produce more complex products. Moreover, the large area of the economy that is not competitive in the world market is heavily concentrated in the production of homogeneous items.
The ‘Mirror’ – a comparative review of the economic implications of social capital in the Caribbean and the Caribbean Islands was published in 2007. This is a comprehensive study that identifies the most important benefits of social capital in a number of Caribbean jurisdictions.
Cuba’s administrative structure has been declining over the past years
Despite a number of challenges, Cuba’s socialist system has maintained a stable political order. The Communist Party has been the guiding force in the state and society.
Cubans have a tradition of helping each other organize access to goods and services. Family relations and strong social ties are crucial in surviving a crisis. However, state control and aggressive state policies have severely depleted social capital.
A number of challenges are confronting Cuba’s administration. One is the lack of an independent central bank. Another is the continuing reliance on state-controlled economy. Another is the lack of a functioning democratic system.
Cuba’s monetary and exchange rate reforms are scheduled to begin January 1, 2021. The new exchange rate will force many state-owned enterprises to cut costs. The reform will also end the circulation of convertible pesos pegged to the dollar.
In addition, Cuba has suffered from a highly disruptive pandemic. The economic fallout from this pandemic has caused tourism to slow down. It also widened the poverty gap. This has impacted the quality of education. It has forced many qualified workers to seek better paid employment in the private sector.
Cuba’s social spending has not increased. Cuba’s strategic priority is to maintain a stable political order and provide basic services to the population. However, the plans are often subordinated to short-term problem-solving and crisis management.
Cuba’s education services have declined in quality and quantity. The government has imposed cutbacks on university enrollment. This has affected women and lower-income families.
Cuba has a wide array of professional associations, but these associations are not necessarily independent. These associations respond to the Communist Party. The party vets all senior appointments.
Cuba’s state provides education and health care for free
Despite the country’s economic crisis induced by the COVID-19 pandemic, Cuba still provides its citizens with free health and education services. In addition to these free services, the country also provides basic foodstuffs and cafeterias at subsidized prices.
The state has been centrally planned since the early 1960s. It has maintained the concept of property leasing, which was originally renewable for ten years. Although Cuba has a high degree of economic equality, social inequalities have become more noticeable since the end of Soviet subsidies in 1990.
Cubans are able to visit abroad and bring back consumer goods. This is an important source of foreign revenue. The government also permits private licenses for self-employment, including small businesses. In February 2021, the government opened 2,000 more legal self-employment categories.
Cuba’s government maintains a rationing-card system, which provides basic foodstuffs at subsidized prices to the population. The state has introduced new agricultural reforms that allow the state to lease idle state land for agricultural production. These changes will result in a reduction in food subsidies. The government expects inflation to eat up these extraordinary increases.
Cuba’s economy has been controlled by the Communist Party of Cuba since the 1959 revolution. The armed forces continue to be the pillars of the regime.
Although Cuba provides free education and health care, it has experienced a dramatic decline in the quality of these services. The government’s recent cutbacks on university enrollment have negatively affected lower-income families. Also, many qualified staff have opted for higher-paying jobs in the tourism industry.
Cuba’s health and education services are largely under state control. Although there are private associations that respond to the Communist Party, these entities do not always represent the interests of the people.
Cuba’s fiscal policy has created a financial bubble
During the past decades, Cuba’s economic performance has been shaky. After a catastrophic plunge in the 1990s, a slow recovery followed. But with the advent of the COVID-19 pandemic, the country’s economy began to unravel. The effects of the disease led to the collapse of tourism and international tourism. This triggered a monetary and exchange rate reform in January 2021.
Cuba’s monetary reform is designed to make its exports more competitive. A major part of the reform is a massive cut in subsidies. This is expected to keep the country’s fiscal deficit in check for some time. But the monetary reform also means many state-owned enterprises will lose money.
Cuba’s monetary reform also means that the country will no longer exchange convertible pesos pegged to the U.S. dollar. The government will instead issue bonds to cover the deficit. This will force the state companies to cut costs.
Cuba’s population is aging. With the country’s population expected to hit 10.8 million by 2030, it is suddenly in need of retirement communities. In February 2021, the government launched 2,000 new legal self-employment categories. It will also begin to open geriatric wards.
Cuba’s economy relies on a small number of products and services. Tourism is one of the most important economic sectors on the island. In 2013, Cuba exported $343 million to China.
Cuba has a large and well-educated labor force. However, the country’s population is aging and not conducive to economic growth. This means Cuba’s state-owned enterprises may have to lay off workers.
Cuba’s political leaders are impressive. They have shown greater respect for the church’s core interests. They have also signed debt settlement agreements with Russia, China and Paris Club members. But they have also faced challenges in servicing international creditors.
