Last week I visited Cuba. I went with friends and family and we were all Havana great time.😆 Unfortunately the hotel we stayed at, like most places around the area, doesn’t have Wi-Fi so I did not use the internet for a whole week. Last week’s blog posts were scheduled in advance.
I had a great time staying in Varadero and visiting Havana. During my vacation I also learned a bit about the country’s economy.
As one of the last communist countries in the world, Cuba is dominated by state-run enterprises and Marxist-Leninist ideologies. Most of the means of production are owned and operated by the Communist Party of Cuba. Naturally most Cubans who work are employed by the state.
Cuba’s economy uses 2 currencies; the CUP peso is worth about US $0.06, and the convertible CUC peso is pegged to the US dollar at a conversion rate of 1 to 1. The CUP is used by the country’s residences, and the CUC is only used by tourists and foreign visitors like myself.
A big part of Cuba’s economy is exporting sugar, tobacco, fish, fruits, coffee, potatoes, rum, and minerals such as nickel. In 2013 its nickel reserves were estimated at over 7% of the world’s total. Sherritt International, a Canadian company that I’m invested in, operates a large mining facility on the east side of Cuba.
The other large and growing industry in Cuba is tourism. Over 2.5 million tourists visit Cuba every year, predominantly from Ontario/Quebec Canada and Europe, generating more than US $2 billion of economic activity. Cuba’s own population is only about 11.2 million.
The average income in Cuba per person is about US $30 per month. Outside of tourist hot spots a Cuban denizen can expect to live comfortably on a monthly salary of just US $100 a month. 😀 Local Cubans don’t need a high income to survive because housing and transportation costs are relatively low and they all receive free education, health care, and food subsidies.
Although communism has its advantages it ultimately doesn’t work well in the long run. When a market isn’t allowed to be competitive it will fall behind other countries in terms of technology, infrastructure, and productivity. For example, most Cuban household still don’t have access to internet in 2016. Another problem with a planned economy is that it thwarts economic mobility. Income inequality is often cited as a major problem in North America. But at least children who are born into poverty in the U.S. still have a better chance to climb the social economic ladder than poor children in Cuba.
Cuba’s economic freedom score is 30, making it one of the world’s least free. By comparison, Canada’s economic freedom score is 78 and the United States scores 75. All foreign investors and entrepreneurs (except from Venezuela) are required to form joint ventures with the Cuban government. Cuba does trade with other countries but its average tariff rate is 10%, which deters foreign trade and investment. President Obama will visit Cuba in a few weeks, marking the first time in more than 80 years a sitting U.S. president will visit the country. 🙂 With more diplomatic talks and western influences I hope Raul Castro and the rest of the Cuban government will adopt more free market policies in their economy. And maybe next time when I visit, there will be Wi-Fi in my hotel. 😀
Visiting developing countries always makes me realize how lucky I am to live in Canada.
Random Useless Fact
Why Leo’s speech was so fluent when he won the Oscar.