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Manufacturing's share of Cuban GDP takes a steep tumble.

Cuba's manufacturing sector has performed poorly over the past decade (2003-11) when compared to what the nation achieved two decades earlier (1983-91).

Manufacturing's share of Cuba's GDP is now 13.1%--down from 36.1% in the period right before the collapse of the Soviet bloc, when the island suddenly lost its economic umbrella, including markets, suppliers, financial guaranty and political patrons.

For instance, fertilizer production--a key indicator in a country that was largely dependent on sugar exports for most of its history--is currently just over one-fifth what it was in the 1980s. This isn't the only cause of problems in the agriculture sector, but certainly accounts for part of its downfall.

It's the same story with other industries, some of them essential to Cuba's economy. Others aren't so fundamental, but their failure forces Cuba to divert some of its surplus cash to imports, such as tires and batteries.

It's impossible to depict the collapse of Cuba's manufacturing sector in a few graphics on one page, but the pattern is the same for many key products including cement (see CubaNews, March 2012, page 8), concrete prefabs, textiles, milled rice, petroleum products, chemicals, food preserves, home appliance, vehicle assembly and soap, to name a few.

Exceptions do exist, such as electric power generation, which is 26% higher today than two decades ago. That's thanks in part to natural gas usage by Energas, a Cuban-Canadian venture that currently generates 11.6% of the electricity produced in Cuba.

Under current circumstances, it's nearly unthinkable to return to previous output levels. It is not just a matter of investments, energy or the availability of raw materials.

It also has to do with quality and competitiveness--factors generally disregarded by Cuba's state-run manufacturing entities.

Other factors holding Cuba down include the island's enormous industrial investments of the 1970s and '80s which today cannot be saved, and an immense bureaucratic apparatus that prevents individual entities from making timely decisions about technology, freely using their income, receiving or disclosing information, or lobbying for their needs.

Nevertheless, Cuba's domestic market--strongly dependent on imports in a cashstarved environment--offers strong potential for manufacturing growth. And a globalized market would give Cuba's manufacturing sector a chance to play a prominent role as a provider of goods and services.

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Author:Portela, Armando H.
Geographic Code:5CUBA
Date:Apr 1, 2012
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