CUBAN TRANSITIONS

Recent news coming out of Cuba shows promising signs for growth in Cuba’s economy. The two main markets that have been opened are in housing and car sales. This past November, Cuba lifted a half-century ban on the sale of used cars and the trading of properties on the island. The move by Raul Castro was an effort to try to improve the island’s dismal economy, one that has been dealing with shortages and blackouts since the topple of the Soviet Union and the beginning of the ‘Special Period’ of food rationing and cutbacks in 1990. The new measures demonstrate to the world Cuba’s growing interest in expanding its markets and bringing capitalism to the island for the first time in 50 years.

(Image source: New York Times)

However, while the United States is quick to celebrate any small move in the direction of free market economy and capitalistic exploits, there is a cautionary footnote that must be added onto these economic advancements. For one, while cars may now be more widely available to the public, it is important to note that the majority of Cubans, especially those working in government-controlled jobs, cannot afford the cars. Because of their value and rarity, used cars made after the 1959 revolution have extremely inflated price tags, selling for thousands and thousands of dollars above their market value. This makes the used car market an extremely elite enterprise considering that the average monthly income on the island is around $20, hardly enough to even cover the cost of gas. The same goes for the country’s real estate market. With poor construction and overcrowding as common problems in Cuba’s largest cities, only people with connections, resources, and money can really benefit from the opening of these markets.

Nonetheless, openings in the Cuban economy have spurred an increase in cash flow and a move towards entrepreneurial enterprises, giving certain members of the Cuban population a new chance to succeed in an economy that, for so long, gave little opportunity for upward mobility.

Sources:

Burnett, Victoria. “Relenting on Car Sales, Cuba Turns Notorious Clunkers Into Gold.” New York Times Nov. 5, 2011. March 2, 2012 <http://www.nytimes.com/2011/11/06/world/americas/relenting-on-car-sales-cuba-turns-notorious-clunkers-into-gold.html?ref=cuba>

Burnett, Victoria. “Cuba Unleashes the Pent-Up Energy of Real Estate Dreams.” New York Times Feb. 15, 2012. March 2, 2012 <http://www.nytimes.com/2012/02/16/world/americas/real-estate-fever-spreads-in-cuba.html?ref=cuba>