Foreign Investment in Cuba

After the disintegration of the Soviet bloc, Cuba experienced a major economic, social and political crisis. As Enrique Navarro Jurado reports, international tourism was seen as part of the solution. This included opening the sector to foreign investment, in the form of joint-ventures and the legalisation of the US dollar as an accepted currency.

Furthermore, small enterprises were permitted, which led to a highly segmented economy. The traditional sector on the one hand and the export oriented sector on the other hand led to a dual system with two different currencies, the Cuban peso and the US dollar. The country has seen increasing income disparities, while maintaining good social indicators. Tourism has led to a major social and economic transformation and to the same kind of dependencies experienced by other destinations in the Caribbean.

In Cuba, however, it is the state that controls tourism development. It also acts as an entrepreneur. Spanish businesses have dominated, but investment from China, Qatar, the Bermudas and Brazil is likely to increase. So far, tourism in Cuba has not led to a real estate boom. Tourism development was limited to hotels, without investment in golf courses and marinas. The future will show whether Cuba will simply copy mainstream tourism models with little benefit for the local population. This may be economically feasible on the short run, but will not be sustainable on the long run.

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