Cuba's traditional economic model has been transformed into another one much more modern and less vulnerable. The tertiary sector has become the chief and most dynamic component of the island's economy.
Tourism plays a key role in the export of services. Cuba in the threshold of an economy of knowledge.

By Luz Marina Fornieles Sánchez
AIN Special Service

Nowadays, nobody questions the boom that services are experiencing in world economy and, particularly, in Cuban economy.

Lots of experts closely monitor the dynamics of the tertiary sector (the sector of services), made up -in the case of Cuban statistics on Gross National Product (GNP)- by the economic activity of shops, restaurant and hotels; transport, storage and communications; banks, immovable assets and services to companies; communal , social and personal services.

The model of insertion of the island in the economic global scene during the 70's and the 80's, was structured according to the comparative advantages of Cuba taking into account the scheme of socialist integration existing by then. During that period the industries processing natural resources (sugar, minerals and citrus) were given top priority. Cuba boosted the modernization in the sector of industry. This overall picture, along with the prevailing theories of development in that moment, prevented the progress of an economy based on the production and the export of services.

During the early 90's, facing the severe difficulties generated from the collapse of the East European Socialist Block -the main commercial partners of the island- and the reinforcement of the US economic blockade, the Cuban government began to invest in those sectors which could bring profits more rapidly in order to mitigate this tense socioeconomic climate. Tourism stood out among the choices due to its dynamism.

Thus, services became the driving force of the Cuban economy in the 90's-a clear evidence of this fact is the large participation of tourist industry in the increasing of Cuba's GNP, which not only exhibits the increase of transactions but also the real progress achieved in the benefit of the people. In 2005, a growth of 11.8% was reported, the highest ever since 1959 and achieved in much more adverse conditions.

During 2005, Cuba was battered by three hurricanes -causing losses estimated at over 2 billion pesos- and suffered the most intense drought in the last century. In addition, the island had to deal with a reinforced economic, commercial and financial blockade which has cost more than 82 billion dollars to Cuba.

In the last decade, Cuba stepped into the threshold of an economy of knowledge with increasing levels of efficiency, though yet insufficient, and supported by the quality of its human resources educated along 47 years of Revolution.

MODERN AND LESS VULNERABLE STRUCTURE

The development of an economy with this profile includes as an essential factor the opening of services to international commerce.
The President of the Cuban Parliament's Commission for Economic Affairs, Osvaldo Martinez, has summarized the evolution of the Cuban economy like this:

"We have moved in the last 10 years from a typical economic model centered in the production and exportation of sugar, towards a more modern and less vulnerable economy of services. We have incorporated tourism as the axis of development, without looking down on the profits of basic industry, owing to its ability to boost the development of numerous economic activities that benefit from this sector. We have also noticed the economic and social results achieved in the sectors of biotechnology, the production of medicaments and medical equipment, and informatics which has been recently incorporated to the educational system."

Some time ago, the topic of services in Cuba's foreign commerce made reference only to those services linked directly to the export of goods. Nonetheless, today, those concepts have changed and the tertiary sector has become the most important and dynamic component of the island's economy.

Another Cuban experts support this statement with realities such as the development of the tourist industry which greatly contributed to the establishment of joint ventures in the island during the last decade.

In addition, according to statistics published by Cuba Foreign Trade magazine, edited by the Chamber of Commerce, the industry of tourism has been the chief source of incomes in the last 10 years in the sector of services.

During 2005, Cuba received 2.319,000 tourists meaning an increase of 13.2% in the number of visitors and a growth of a 10.7% of incomes (this incomes hace increased to some 2,3 million dollars annually).
Thus, the island has accumulated an expansion of 14% along the last 15 years -a rhythm considered as spectacular and the most prominent one among the 25 main tourist destinations of Latin America and the Caribbean.
By 2006, 2.5 million tourists are expected to have visited the island. This cipher would represent a growth of 7.7% (until this passed April a growth of 3.3% had been achieved). Cuba has already welcomed the first million of visitors (in early May).
Today's revolutionary transformations in the fields of education and culture across the island evidence Cuba's policy on the export of its professional and technical services in a close future.

THE CHALLENGE: DEVELOPING AND DIVERSIFYING EXPORTATIONS

Cuba's challenge of developing and diversifying the export of traditional and non traditional services has become a chief contribution to the solution of today's financial deficit in the island.

According to official statistics, Cuban foreign trade raised a 23% during 2005 while commercial exchange averaged near 10 billion pesos, which surpasses the numbers registered in 1991, before the so-called Special Period -a severe economic crisis provoked by the collapse of the east European socialist block and a reinforcement of US blockade against the island.

Likewise, the expenses of importations were offset by an increase of goods and service exportations which represented the 70% of total incomes in this area last year.

Cuban highly trained human resources have made possible a rapid assimilation of state-of-the-art technology and the development of research in the fields of biotechnology and healthcare. Biotechnology's contributions to the island's economy are estimated at 200 million dollars annually.

Cuba's provision and exportation of services is expected to increase in 2006, particularly in the sectors of healthcare, education, biotechnology and informatics. Experts predict a growth of 17.7% in the exportation of goods and services and a decrease of 1.5% of importations.

Today, Cuba has trading relations with some 3.000 companies in 170 nations. The island's chief commercial partners are Venezuela, China, Spain and Canada while its overseas trade is focused on Latin America, Europe, Asia and Africa, in that order.

In a world featured by competitiveness and a trend of developed countries toward a lesser opening up to international market, Cuba is giving top priority to the development of tourism and other services based on human resources.

Cuba is particularly affected by the US economic blockade which, despite of its reinforcement since 1959, have not been able to prevent the dramatic development of the sector of services in the island.