Cuba International Trade and Development



Cuba has one of the most notably low GDP growth rates in the world, which has fallen from roughly 4.7% to just 1% (Pike, "Cuba's Economy"). These are due to many factors; some associated with domestic policies, and others associated with international relations and policies. Due to Cuba's totalitarian and communist structure, they have an apparent extreme control over all aspects of the economy. This leads to a lack of involvement of foreign firms, most notably the U.S., in the Cuban economy, which limits the opportunity for foreign investment and competition (Broadbent, et. al., Commissioners). Cuba also lacks "hard foreign currency," and in addition to overall domestic fiscal constraints, this makes importing very difficult. Cuba is unable to purchase imports from powers like the U.S. due to their lack of foreign currency and the uncertainty perceived with their own Cuban currency due to domestic fiscal challenges (Broadbent, et. al., Commissioners). Additionally, there are barriers in Cuba surrounding property rights. To foreign investors, “the lack of rights to own land and some physical goods” provides great concern and decreases the likelihood of investment (Broadbent, et. al., Commissioners).

Cuba has attempted to resolve some of their issues by loosening restrictions on foreign investment. They are very recent changes, and the effectiveness cannot be fully analyzed, but this signals as an opportunity for Cuba to escape the low growth associated with their totalitarian communist government with extreme restrictions. Additionally, Cuba has made significant improvements to their infrastructure, such as “the new port of Mariel, the railway expansion to the new port, and telecommunications improvements.” Telecommunications are apparently still poor, and the infrastructure isn’t extremely strong, but this has provided a benefit and efficiency in their import oriented market (Broadbent, et. al., Commissioners).



Broadbent, Meredith M., et al. “Overview of Cuba Imports of Goods and Services and Effects of U.S. Restrictions.” United States International Trade Commission, United States International Trade Commission, Mar. 2016. https://www.usitc.gov/publications/332/pub4597.pdf
Pike, John. “Cuba's Economy.” GlobalSecurity.org, GlobalSecurity.org, www.globalsecurity.org/military/world/cuba/economy.htm.



Comments

  1. Dr. Q February 19, 2020 at 8:43 AM

    Can you define Cuba's strategy towards international trade? Is it a kind of import substitution?

    ReplyDelete

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