The impact of political risk on FDI in Cuba : Case of Mariel Special Economic Development Zone

Abstract

The main purpose of this study is to analyze possible sources of political risk in Cuba, and secondly, the effects on business these political risks could cause to foreign companies operating in the Mariel Special Economic Development Zone (SEDZ) in particular, and Cuba in general. The empirical data for the study was collected by interviewing three experts in the Cuban economy, society and investment climate. The experts evaluated the macro and micro sources of political risk of Cuba’s current political and economic system, as well as the effects of these on businesses operating in Cuba. The findings of this study conclude that the SEDZ Mariel possesses significant political risks due to economic stagnation and unfavorable economic forecasts, the economic isolation caused by the embargo imposed by the United States and due to the obstructions and impediments of Cuba’s state- controlled economy. The experts concluded also that many of the obstacles Cuba’s economy has, are feasible to amend by changes in local legislation and stimulating the private economy further.