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Economy of Cuba



The Cuban state adheres to socialist principles in organizing its largely state-controlled planned economy. Most of the means of production are owned and run by the government and most of the labor force is employed by the state. Recent years have seen a trend toward more private sector employment. By 2006, public sector employment was 78% and private sector 22%, compared to 91.8% to 8.2% in 1981. Capital investment is restricted and requires approval by the government. The Cuban government sets most prices and rations goods. Any firm wishing to hire a Cuban must pay the Cuban government, which in turn will pay the employee in Cuban pesos. Cubans cannot change jobs without government permission. The average wage at the end of 2005 was 334 regular pesos per month ($16.70 per month) and the average pension was $9 per month.

Cuba relied heavily on trade with the Soviet Union. From the late 1980s, Soviet subsidies for Cuban goods started to dry up. Before the collapse of the Soviet Union, Cuba depended on Moscow for substantial aid and sheltered markets for its exports. The removal of these subsidies (for example the oil  ) sent the Cuban economy into a rapid depression known in Cuba as the Special Period. In 1992 the United States tightened the trade embargo, hoping to see democratisation of the sort that took place in Eastern Europe.

Like some other Communist and post-Communist states following the collapse of the Soviet Union, Cuba took limited free market-oriented measures to alleviate severe shortages of food, consumer goods, and services. These steps included allowing some self-employment in certain retail and light manufacturing sectors, the legalization of the use of the US dollar in business, and the encouragement of tourism. Cuba has developed a unique urban farm system (the organopónicos) to compensate for the end of food imports from the Soviet Union. In recent years, Cuba has rolled back some of the market oriented measures undertaken
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