Cuban Economists on the Cuban Economy

10. Tourism: Natural Product, Source of Exchange with the Outside World, and Ideological Challenge

10 Tourism Natural Product, Source of Exchange with the Outside World, and Ideological Challenge Alfredo García Jiménez Since the early 1990s, tourism has become a high-priority activity in the development strategy designed by the Cuban state and government. Its primary goal has been to secure foreign-exchange earnings in the short and medium terms which, given how Cuba’s foreign exchange has historically constrained its growth and development, are necessary for the country’s economic recovery from its post-1990 economic crisis. Beyond that is the need for Cuba to reinsert itself into the changed international economic markets in radically new ways. Tourism was the key sector for accomplishing this purpose in the 1990s, and it is still one important sector today. Although Cuba has faced a foreign-exchange constraint on its growth and development since before the beginning of the Revolution, the events of the late 1980s and early 1990s transformed this problem from chronic to extremely acute, when Cuba’s favorable external economic relations with the former USSR and Eastern Europe, which had existed for two decades, ended. Seemingly overnight, Cuba had to cope with the most difficult economic situation it had faced since the victory of the Revolution in 1959. Not only did it have to redirect 75 percent of its foreign trade, which in itself is a mammoth problem for any country, but it also faced an even more difficult problem: to radically adapt Cuba’s entire economic model to make it compatible with the new necessity for much more extensive trade with the capitalist world economy. In addition to this fundamental structural problem, the U.S. economic blockade was strengthened even further by the adoption of the Torricelli and HelmsBurton Acts, increasing its already high yearly cost to Cuba. Such a major disruption and additional interference in the external economic environment of a small, open, and dependent economy such as Cuba’s had the potential to cause economic collapse. To avoid this, the Cuban state Tourism: Natural Product, Source of Exchange, and Ideological Challenge 253 and government moved quickly to change the basic components of its economic development strategy. Being open and dependent, the Cuban economy needed external inputs in nearly all its productive processes. When its longstanding input sources from the socialist countries suddenly terminated, Cuba had to buy what inputs it could afford from the world capitalist markets. That, in turn, required it to earn a lot more convertible foreign exchange than before. Cuba’s new survival strategy targeted the generation of external income based on maximal exploitation of two comparative advantages that it had not extensively commercialized before: scientific-technical capacity and tourism. Both of these had the potential to generate rapid returns on investments. On one front Cuba began to commercialize its human capital, especially in biotechnology and pharmaceuticals (see chapter 12). Even more remunerative in the very short term, Cuba radically increased the commercialization of its comparative advantage in particular types of natural conditions and resources, creating almost de novo an international tourism industry. One particularly important aspect of tourism is its ability to earn very rapid foreign-exchange profits on investment. No medium or large economy can live off tourism alone, of course, and the revival of agriculture and industry, which also have potential to earn the foreign exchange required by the Island’s open and dependent economy, is essential. But in 1990 it was clear that the revivals of those branches of the economy, which both had to be entirely redesigned, would be lengthy processes. Only tourism could generate the foreign exchange in the short term that would allow Cuba to survive long enough to carry out a medium-term recovery. The rapid development of tourism had an immediate and major impact on Cuba’s process of economic recovery. According to estimates, in just a decade and a half the tourism sector grew from being economically insignificant to accounting for nearly 7 percent of the GDP,1 employing 6.3 percent of the total workforce, and providing 18 percent of the total export revenue. Currently , tourism is one of the most influential economic activities within the Cuban economy. Between 1990 and 2007 tourism export earnings (including the international transportation of passengers) contributed $27.1 billion to the country. This represented nearly one in three dollars earned through the export of goods and services in that period. In terms of the functioning of the entire Cuban economy, it has paid for approximately the same percentage of...