Foreign Direct Investment in Cuba: A Necessity and a Challenge

Foreign investors, absent since the 1959 Revolution, returned to the Cuban economy at the beginning of the 1990s in the context of the so-called Special Period. In certain spheres, such as tourism, foreign capital was very dynamic and propelled fundamental structural change. In general, however, the isolation of external investment projects from the overall economy—and the persistence of administrative bottlenecks that fostered this separation—created idiosyncrasies that converted the Cuban case into a sui generis for the absorption of international capital. This was evident in the government’s insistence on considering each investment proposal separately, as well as in the use of a currency other than the Cuban peso to implement all agreements. As a result of these obstacles, after a period of steady expansion until 2003, foreign investment in Cuba stagnated despite various measures targeted toward its stimulation.