Dual economy of Cuba
The dual economy of Cuba was developed after the dissolution of the Soviet Union, which caused major economic changes on the island. Tourism was regarded as the only stable sector of the Cuban economy and became the subject of policy changes to enhance it's development. Cuba legalized the use of the US Dollar and created a dual currency system, one based on the dollar and the Cuban convertible peso with the other system based on the Cuban peso. Separate institutions and businesses were created which operated only one on side of the currency divide. The Cuban peso which is used mostly by Cuban nationals lacks the ability to buy imported goods.[1] The goal of the dual economy was to create one economic sphere designed to utilize foreign investment, while keeping it separate from the other economic sphere of domestic activities.[2]
There are various practical applications of the dual economy, and informal titles that have developed from them. Cuban nationals are prohibited from entering all tourist facilities except as employees, and the entire tourist economy operated under the Cuban convertible peso which originally was illegal for Cuban nationals to use. This practice has been informally called "tourist apartheid". Since it's inception the prohibitions have been slowly reformed and Cuban nationals may now use the Cuban convertible peso.[3][4] The once prohibition to use the CUC by Cuban nationals and the later material inequality caused by most luxury goods only being accessible in the dollar economy has led critics to name the currency system "dollar apartheid".[5] The Cuban government also promotes it's healthcare facilities for the use of foreign customers, which has been charged to limit the healthcare of Cuban nationals for the preference of foreigners. This medical system has been informally labeled "medical apartheid" by critics.[6]
History
Special Period
With the dissolution of the Soviet Union in 1991 Cuba lost much of it's Soviet financial aid which it had become dependent on.[7] The loss of Soviet trade which comprised 80% of the islands foreign trade, created an economic crisis called the "Special Period" in Cuba which was defined by mass shortages. The Cuban government quickly began focusing on developing tourism on the island as the only economic sector that was believed to be able to regrow the Cuban economy.[8]
By 1990 the Cuban government began floating the idea of formal segregation between foreigners and Cuban nationals.[8] Between 1992 and 1997 it was a crime for a Cuban national to even associate with a foreigner. After condemnation by human rights groups, Cuba changed policy and now associating with tourists is an informal taboo that often results in police harassment.[9] Most of the tourist facilities developed since the 1990s are all inclusive resorts concentrated together in enclaves on the Cuban cost. The construction of geographically separated resorts, restrictions on Cuban nationals entering tourist facilities, and the prohibition on associating with foreigners have led critics to speculate that the Cuban government worries about the political consequences of encounters between Cubans and foreigners.[8]
On August 5, 1994 protests erupted in Havana. These protests had been built up by years of Cuban nationals receiving visits from their exiled relatives who were observed to be much more financially successful, as well as the luxurious lifestyle possessed by many of the island's new tourists. These factors had driven in the idea that Cuban nationals were suffering under a worse standard of living not experienced by those outside the island.[7]
After the protests, Cubans were allowed to legally possess US dollars and shop at Dollar stores. This new dollar economy mostly benefitted white Cubans who were more likely than black Cubans to find work in lucrative tourism jobs or have family in the United States who could send remittances.[10] The Cuban government also legalized the ability for Cubans to open small private businesses.[11]
After the Special Period
Cuban nationals were not permitted to stay at hotels for foreigners until policy was reformed in 2008.[12]
Since 2020 Cuba began to suffer under an economic crisis that hadn't been seen since the Special Period. In order to try to revitalize the economy the CUC currency was eliminated in 2020 and instead the Cuban peso will be directly convertible to US dollars.[13]
Effects
Racial inequality
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Tourism enclaves
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The dual economy which incentivizes foreign investment and tourism has created tourism enclaves on the island. In 2004 around 80% of foreign tourists resided in either Havana or Varadero, with no major tourist destinations elsewhere.[14] It has been inferred that the preference the Cuban government has for developing separated tourist enclaves is to reduce the interactions Cubans have with the often more luxurious lifestyles of foreigners. Most of the resort enclaves outside of Havana are on the islands northern archipelagos which are hold a good geographic distance from the mainland and often have no permanent residents.[15]
Old Havana has been the subject to major redevelopment efforts. Many of the buildings have been architecturally restored, and many buildings have been made into hotels. This redevelopment has come at the expense of the relocation of many of the locals who had their apartments turned into hotels, as well as a total lack of revitalization efforts elsewhere in Havana or in Cuba in general.[16]
References
- ^ Jimenez, Marguerite; Kirk, John; LeoGrande, William (2014). A Contemporary Cuba Reader The Revolution Under Raúl Castro. Rowman and Littlefield Publishers. p. 174. ISBN 9781442231009.
- ^ Herrschel, Tassilo (2006). Global Geographies of Post-Socialist Transition Geographies, Societies, Policies. Taylor and Francis. p. 15. ISBN 9781134356768.
- ^ Economics—Advances in Research and Application: 2013 Edition. ScholarlyEditions. 2013. p. 615. ISBN 9781481675208.
- ^ Post-socialism is Not Dead Reading the Global in Comparative Education. Emerald Group Publishing Limited. 2010. p. 359. ISBN 9780857244185.
- ^ Shaffer, Kirwin (2022). A Transnational History of the Modern Caribbean Popular Resistance Across Borders. Springer International Publishing. p. 180. ISBN 9783030930127.
{{cite book}}: line feed character in|title=at position 48 (help) - ^ Cuba A Country Study. Federal Research Division, Lubrary of Congress. 2002. p. 150.
- ^ a b O'McKee, Jesse (200). Ethnicity in Contemporary America A Geographical Appraisal. Rowman and Littlefield Publishers. p. 149. ISBN 9780742500341.
- ^ a b c Simoni, Valerio (2015). Tourism and Informal Encounters in Cuba. Bergahahn Books. p. 39-40. ISBN 9781782389491.
- ^ Corbett, Ben (2007). This Is Cuba An Outlaw Culture Survives. Basic Books. ISBN 9780465009961.
- ^ Encyclopedia of the African Diaspora Origins, Experiences, and Culture · Volume 1. ABC-CLIO. 2008. p. 349.
- ^ Sawyer, Mark (2005). Racial Politics in Post-Revolutionary Cuba. Cambridge University Press. p. 76. ISBN 9781139448109.
- ^ Insight Guides Cuba. APA. 2014. ISBN 9781780058429.
- ^ Frank, Marc (December 11, 2020). "How Cuba's monetary reform will take place and impact the economy". reuters.com.
- ^ Morris, Andrea (2020). Migrant and Tourist Encounters The Ethics of Im/mobility in 21st Century Dominican and Cuban Cultures. Taylor and Francis. ISBN 9781000074536.
- ^ Poverty and Development Problems and Prospects. Channel View Publications. 2001. ISBN 9781845418496.
- ^ Estrada, Alfredo (2016). Havana: Autobiography of a City. St. Martin's Publishing Group. p. 55-57. ISBN 9781250114662.