Impact of Economic Reform in Cuba

The impact of reform in Cuba is described below in terms of self enforcing and non self enforcing transaction market.

In case of the self enforcing transaction market, the Cuban government made the use of US dollar as a legal tender that provided a good medium of transaction exchanges for all kind of markets. The system of self-enforcing transactions did have a good effect on the market as well as other illegal retail transactions. Self employment had been allowed in almost hundred occupations and professionals were encouraged to engage with self employment within 1993.Farmers’ market had been reformed by prohibiting the participation of the intercessors.

The Cuban government tried to control the market supply without reducing the agricultural output. The government also took over the control of the dollar stores retail market, for these markets helped the government to capture money, or better to say, dollar, from those members who engaged in illegal activities and who were used to collect the remittances.

There was another kind of market in Cuba, for example skilled labor services markets, financial markets and markets for investments and innovations, where the transactions were not self enforcing. These markets were able to follow a modern economy through the reform. Foreign investors started to enter into these sectors.

Due to this reform in Cuba, the economic growth had been accelerated again and few important internal economic imbalances were rectified partially. The government diversified the market sector wise to reenter into the world market. Another important effect of reform was that after the crisis period certain services like, education, social security and health care, improved a lot.

Despite the success of reform, the Cuban government had to face some economic challenges in the form of low productivity and corruption. The dual currency system had to be eliminated to combat the unfavourable condition of dwellings and transportation.