Economic Recovery Measures

Despite the crisis, the Cuban leadership guaranteed the basic needs of the population and made sure that the readjustment measures affected all citizens equally with no discrimination toward women. Its conception of development led to very different economic strategies and social policies from the neoliberal ideas that ruled readjustment policies in other countries in the region, as it maintained universal access to education, health care, subsidized food, social security, social care, sports, and culture.

The economic recovery measures of the 1990s included: [1]

These measures were the result of adapting development ideas valid in Cuba up to that moment in order to incorporate the country into the global world economy. They continued the path of transition to socialism and were designed under enormous pressure, in a short period, flexibly, and with a practical approach (Monreal, 2007). Cuba began to come out of the crisis in 1994, and by 2004 GDP had reached 99 percent of the 1989 GDP (Perez Villanueva, 2008). In 2007 the economy grew 7.5 percent, showing its gradual consolidation following a 42.5 percent increase in GDP since 2004 (Rodriguez, 2007).

All through the 1990s Cuba pursued industrialization as a way to substitute imports and to advance its long-range development plans. The country’s economic connections with the rest of the world changed because its exports had to compete in different conditions than those prevailing in CMEA member countries. “The purpose was to keep the industrial structures existing previous to the crisis and to modernize them partially in order to wait for the moment when new investments appeared. Tourism, nickel and pharmaceutical industries received the highest investments” (Monreal, 2007, p. 130). The goal was to intensively exploit the country’s natural resources, advanced technologies, and highly qualified labor force to reinsert Cuba into world markets with products of high aggregate value.

In these conditions tourism grew by 20 percent annually, pushing forward the rest of the economy while the basic social policies were retained. Tourism not only created direct and indirect jobs for 300,000 persons, but its growth stimulated the recovery of other areas such as agriculture and the food industry, beverages and liqors, construction, communications, and transportation. By 1994 it had replaced the sugar industry as the main earner of hard currency (Garcia Molina, 2004). It dynamically influenced the so-called upward technological learning that took place in the fields of business administration—including marketing and advertising—and in-job training and retraining. The aviation, pharmaceutical (based on biotechnology), medical equipment, and telecommunications sectors also felt the effects of implementing this highly professional training.

One of the readjustment measures consisted in reorganizing part of the industrial structures previously designed for the CMEA integration scheme to produce for the Cuban domestic hard currency market. The purpose of this was to increase the amount of hard currency in the country, use it to restore the economy, and invest it in sectors aimed at covering the basic needs of the population. The potential purchasers of these goods were state enterprises, joint ventures, and Cubans with access to hard currency (those working in enterprises that paid their employees with hard currency, the self-employed, small land owners, and remittance receivers). These “inside-frontier-exports” helped reactivate and modernize those industries that were producing for domestic markets and selling their goods in Cuban pesos. The products initially lacked export quality, but some of them developed to levels of excellence and were purchased by tourist enterprises.

  • [1] Reform of state enterprises. • Reintroduction of the economy into the world market with newtrading partners. • Decentralization of economic functions. • Enlarging of the private sector. • Increased importance given to tourism, telecommunications, andmining, with tourism acting as the “engine” that mobilized the othereconomic sectors. • No devaluation of the Cuban peso and free circulation of the USdollar (with stores accepting only the latter opened to collect flowscoming through remittances). • Efficient use of a qualified labor force with technological learningabilities.
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