It has been stated that during the three decades following the triumph of the Revolution in 1959, the presence of foreign capital in the Cuban economy was hardly perceptible, and it was not until 1988 that the Cuban state began to promote the development of foreign capital relations as part of its economic strategy.

With the disappearance of traditional sources of financing and without the possibility of a short-term reactivation of credit, either bilateral or multilateral, Cuba had to accept and more recently promote the involvement of foreign capital in the economy, as an economic measure enhancing the reform process.

At the present time, this activity is promoted by Law 77, the Foreign Investment Act, approved by the National Assembly on September 5, 1995. It stipulates that foreign investment should contribute to strengthening the country's economic capacity and sustained development, on the basis of respect for national sovereignty and independence, and the protection and rational use of natural resources.

This new legislation offers more guarantees, greater security and new benefits for the investor, as well as providing a more significant opening in various economic sectors, where associations with foreign capital can be constituted.

The opening is oriented toward meeting specific needs within the Cuban economy, among them: export diversification, in terms of quality and quantity; the acquisition of raw materials; the need for new capital; insertion into new markets; the acquisition of advanced technologies; and the introduction of more modern economic management practices.

Foreign investment, which rose from less than $100 million USD in 1990 to more than $2.1 billion in 1995, now plays an important role in the search for the markets, technology and financing that disappeared simultaneously with the collapse of the socialist bloc.

In addition to the benefits previously mentioned, the process of opening up to foreign investment in Cuba has played a complementary role to national efforts to maintain capitalization in those economic branches that offer the largest rate of return. Even in sectors such as tourism, where foreign capital has been present since its current stage of development began, it is calculated that only 20 % of the investments in new capacities has been financed by foreign partners.

Neither can it be said that in Cuba the foreign investment opening is part of an ongoing privatization process. Certainly economic association with foreign capital supposes that certain assets are no longer state property, at least for as long as the agreement is in effect, which is generally long-term. But, as Minister of the Economy and Planning José Luis Rodríguez recently stated, national policy is aimed at defending the prevalence of state property in all forms of joint ventures and only accepting a majority investment or 100 % foreign control in justified cases.

Foreign capital represents barely 3 % of the gross domestic product, and the work force employed in this sector is approximately 5 % of the country's total.

Cuba has signed bilateral investment promotion and reciprocal protection agreements with 18 countries: Italy (1993); Argentina (1995); Russia (1993); Lebanon (1995); Spain (1994); South Africa (1995); Colombia (1994); Romania (1995); United Kingdom (1995); Chile (1996); China (1995); Barbados (1996); Ukraine (1995); Greece (1996); Bolivia (1995); Germany (1996); Viet Nam (1995); Switzerland (1996).

The evolution of economic associations with the foreign capital has had several phases. The first one went from the emergence of the first association up until September 1991, when there were still very few associations and they consisted of small and medium-sized companies, aimed at braking the drop of global indicators.

Between that date and 1993 there were no significant variations, although more than 60 entities of that kind were constituted. Starting in September 1994, a new wave of joint ventures emerged, mainly in services, housing construction, real estate and telecommunications, and at that point associations were allowed in all the productive branches of the country. At that time, companies with great prestige and international ranking, mainly European, began to do business on the island.

In this process, ever increasing interest has been expressed by entrepreneurs from United States. Consultancies such as the U.S.-Cuba Trade and Economic Council, Inc., with headquarters in New York, have experienced significant growth in their membership since that Cuban legislation went into effect.

In recent years several Cuba-United States business encounters have taken place, with the participation of executives and representatives of major international companies such as Mobil Oil Corporation, Texaco Inc., Bristol Myers Squibb Co., Pharmacia and Upjohn Co., Continental Grain Co., Wyeth Ayerst International Inc., Caterpillar Inc. and Lincoln Property Co.

Economic associations with foreign capital have grown steadily, going from 20 in 1990 to 260 in 1996 and 317 in 1997. At the present time, there are a total of 332. Since the beginning, only 63 have been dissolved, for various reasons. In 1998, 74 % of the associations with foreign capital were concentrated in six sectors: basic industry, tourism, light industry, the food industry, construction and agriculture.

The most far-reaching agreements are those established in telecommunications, the nickel industry, tourism and petroleum exploration and extraction. Prospects in tourism are very positive and Cuban authorities plan to continue creating new capacities and remodeling existing facilities. The most recent additions to the regulations promoting foreign investment were the Duty-Free Zones and Industrial Parks Act and the new tariff system, which went into effect on July 1, 1996.

Furthermore, there are three duty-free zones functioning in the country: Berroa and Wajay, in City of Havana, and Mariel, in La Habana province. By late 1997, a total of 190 operators had been authorized to do business in the duty-free zones, 140 of them commercial.