The Economy of Cuba

Cuba has a dual economy, with 2 distinct systems operating side by side. The socialist peso economy applies to most Cubans, providing them with free education, free health care, universal employment, unemployment compensation, disability and retirement benefits and the basic necessities of life – food, housing, utilities, and some entertainment at very low cost. The free-market dollarized economy operates in the tourist, international and export sectors, and substantially sustains the socialist 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. The economy of Cuba is a largely state-controlled.

Due to the loss of 80% of its trading partners and Soviet subsidies, the Cuban economy is in the state of recovery from a decline in gross domestic product of at least 35% between 1989 and 1993. To solve this crisis, the government introduced a few market-oriented reforms, including opening to tourism, allowing foreign investors, legalizing the dollar, and authorizing self-employment for some 150 occupations.

The country experienced a surge in foreign tourist visits over the past decade. Due to the continued growth of tourism, economic growth began in 1999 with a 6.2% increase in gross domestic product (GDP). It surpasses the sugar industry were it is the longest mainstay of the Cuban economy. According to official figures, the economy grew 3.6% during 2001. Despite this, overall economic output remained below the levels prior to the drop of at least 35% in GDP that occurred in the early 1990’s.