The military has been downsized by about half, and a report from Havana last week indicates that about half Cuba's military personnel are engaged in agriculture or other civilian production. But other reforms are more significant because they are introducing elements of capitalism to Cuba's socialist economy. I want to be careful to place these reforms in context. Cuba is surrounded by market economies, and for the past decade and more, many of these Caribbean and Latin American nations have worked to make their economies more open to competition and investment, both domestically and internationally. But seen from inside Cuba, the changes brought by these reforms are far more significant than they appear from here, and their impact on the lives of individual Cubans is far more important than we can imagine from afar.
Foreign investment is one example.
Total foreign investment in Cuba is relatively small - one analyst, Maria Werlau, estimates that total inward investment between 1990 and 1995 was less than half Chile's investment in Argentina during that period. Because of Cuba's legal and regulatory environment and other factors, in most areas Cuba is not a strong competitor for inward investment in the Caribbean basin. But after a three-decade drought, the impact of new investment on the economy and on the workforce is significant. A growing tourism sector has attracted, according to official data, over a million tourists annually for the past two years. As a result, hotels, restaurants, and retail shops are being built.