Ral Castros administration regularized most of these international debt obligations and renegotiated its debt to the Paris Club. The high priority given to the containment of the coronavirus resulted in the lowest infection rate in all Latin American countries. Theyve remained in power. There is a consensus among the ruling elite that socialism has to integrate some kind of market elements. Professor of Economics, Florida International University. However, they tend to struggle for relative degrees of autonomy in order to articulate some of the interests of their constituencies. In addition, Cuba imports more than half of the fuel, food, medicine and other goods people consume. About two million working-age Cubans are neither employed by the state nor seek state employment. In principle, the Cuban government learns from past experiences, as well as from foreign examples. The Government of Cuba must also authorize each and every foreign investment from any country, and it has yet to authorize one from the United States. This has not limited structural transformations but instead was a key factor in pushing through a monetary and exchange rate reform in January 2021. The state barely polices its own enterprises, although the courts at times try and convict abusive administrators. It will be a core challenge to reign in these inflationary pressures and to keep the currency devaluation within controllable bounds. Latinobarmetro does not cover Cuba. Goingto the beach is something that the neither the President of the United States nor OFAC can authorize. It ends the circulation of the so-called convertible peso (CUC) pegged to the dollar and leaves the regular Cuban peso (CUP) as the only national currency with an exchange rate of 25 pesos to one U.S. dollar, preventing state-owned enterprises from benefiting from the previous, highly overvalued official rate of 1:1. Cuba is periodically hit by hurricanes, which cause varying levels of damage. The economic trends of recent years have further widened this gap. To offset the drop in GDP since late 2016, the country adopted a countercyclical, expansive fiscal policy at the cost of increasing the fiscal deficit. In addition, territorial differences were reduced. The government does not see independent media as a legitimate actor in public life. According to World Development Indicators (WDI), the literacy rate is 99.8%, while the ratio of female to male enrollment is 1.0 for both primary and secondary schools, and 1.4 for tertiary education. Communist Party membership dipped slightly in the 1990s but has since recovered to a little above half a million members. As a consequence, the states capacity to provide services and goods has declined. Moreover, it successfully managed to orchestrate the transition of political leadership first from Fidel to Ral Castro and then from Ral Castro to a younger successor, without causing fissures among the political elite or social unrest in the streets. See how Cuba compares to another country using any of the measures in the Index. Perhaps the most serious effects of environmental damage have been on the water supply. The answers have been edited for clarity and length. While the lack of population growth and emigration have lowered pressure on the crowded housing situation, continued migration pressure from the provinces to Havana is not matched by new construction. On the exports side, President George W. Bush authorized U.S. agricultural exports to Cuba in late 2001 under presidential discretion, which exceeded $5 billion between 2002 and 2014. The Communist Party claims that it governs on behalf of the majority and under its definition, the political system is governed democratically. But, oddly, U.S. agricultural exports to Cuba declined by over one-third (if you compare January-June 2014 to the same months in2015) since the President Obamas announcement. Citizen protection against arbitrary arrest is seriously deficient. Rhetorically most do, but this has never been put to a test in real politics. Thats a burden for growth, but also creates business activity and opportunity: Cuba suddenly needs to build retirement communities. Instead, it chose to spend beyond its means double its revenues and then raise taxes. More than 20,000 Cuban emigrants have made use of it as a means of de facto acquiring dual citizenship, while most of them continue to mainly live abroad. The conflict with the United States is part of the external structural constraint. Cuba has systematically defaulted on its international debt obligations in 1960, 1986 and several times over the decades that followed. This is producing frustration and anger in a society that was socialized to believe in equality. Set production goals are often not met, and plans are often subordinate to shorter-term problem-solving and crisis management. Housing costs in Cuba are very low, and education and health care are free and universal (even if at declining quality). The state sector employs over 70 percent of workers, and private business activity is severely repressed. Cuba cooperates with the United States and other countries on drug-trafficking interdiction and punishes drug traffickers harshly. However, although they are embedded in a vertical top-down logic, associations (some more than others) articulate some of the interests of their constituencies and sometimes express discontent in a carefully managed fashion. Under-payment also characterizes much of the Cuban economy. Under Ral Castro, enrollment in higher education has plummeted. While the government opened a separate retail circuit of hard-currency shops, life for those who have to live on peso salaries or pensions has become dire. The state-owned hard-currency stores have become a symbol of considerable popular anger among those excluded from their well-stocked supplies. Copyright 20102022, The Conversation US, Inc. in part due to other recent U.S. sanctions, food and power shortages and long lines for fuel, November 2020 ban on using Western Union to send remittances, plunge in the black market value of the peso, government eliminated the covertible peso, acknowledging the Cuban government bore some blame, one of the highest in the Western Hemisphere, many analysts and activists and the Cuban government argue. The monetary reform of January 1, 2021 and the newly unified exchange rate will force state companies to cut costs by reducing excess workforce. Though in practice dual citizenship has become more accepted over the years, to the point that the constitutional reform adopted in 2019 dropped the ban on Cubans having a second citizenship (merely stating that on Cuban territory they will be seen as Cuban citizens only). Likewise, in the monetary reform process, announced hikes in electricity tariffs and a number of state-set prices for goods were reduced in a reaction to public discontent. Since the 1989 crisis, the Cuban governments strategic priority has been to maintain the socialist system and the established political order. From the start, the revolutionary government of Cuba chose to run the economy unsustainably. Notwithstanding, there are a few positive signs. The opposition groups commitment to democracy has never been tested. However, if Cubas national vaccine development program proves successful and a broad vaccination campaign is rolled out, Cuba could market itself as a safe tourist destination well ahead of other tropical countries. This receives particular importance due to the history of high emigration, with around 10% of Cubas population living abroad. The goal of 4% growth could indicate that Cuba will still see shortages of critical goods and have continued difficulty paying creditors, said a western businessman in Cuba with years of experience in the market.
Given the rise of racial inequalities and the frustration that many Afro-Cubans feel about this, race could become an explosive issue in the future. Cubas economic freedom score is 29.5, making its economy the 175th freest in the 2022 Index.
(There is no data transparency on public debt.). To the extent that we can estimate, a third of the economy disappeared during this time and a slow recovery followed. These groups were highly vocal in the constitutional reform debate in 2018/19 in which religious groups campaigned strongly and successfully against the legalization of same-sex marriage. The government may set price caps for private services or revoke at will state-issued licenses for self-employment and has occasionally done so publicly to deter behavior of which it disapproves. Another hope lies in the fact that Cuba is the only country in Latin America that has pursued its own development of COVID-19 vaccines. The meeting engendered considerable hope that a sustained dialogue might take place to address specific grievances among Cubas cultural workers and artists. Support for further pro-market measures, but also for social protection programs for those affected negatively by these, could constitute a fruitful field for cooperation with Western state and non-state actors, as long as the government does not perceive this support as seeking to undermine the political regime. Waste management is a real problem on the island. In civil and family related cases, the Supreme Court affirms 85% of the decisions rendered by courts of appeal, but this also means that in a minority of cases the appeal succeeds. Sign up today.]. However, the prevailing priorities of the political leadership are focused on regime stability and elite cohesion, which makes doubtful the coherent and consistent implementation of the announced plans. Since then, the Cuban state media has waged a defamation campaign against most of the artists who participated in the N27 protest. The respect of Communist Party loyalists and institutions will likely be a controversial issue if todays opposition groups were allowed to enter the political arena.
The cost of living has increased considerably in recent years. It conducts public opinion polling, demographic research, media content analysis and other empirical social science research. Over the past few years, many Cubans living abroad and foreigners have bought properties in the name of a relative or friend. A crucial exception is the Armed Forces, where leadership positions for women is still highly exceptional. Getting a handle on even basic information about Cubas economy is difficult, for a number of reasons. It turns incentives about acquiring skills upside down. On the one hand, garbage collection is insufficient and leads to the build-up of waste in urban areas and rivers. The process of pro-market economic change, authorized in the 2011 VI Party Congress, improved the governments capacity to coordinate some conflicting objectives. As wages are so depressed, the loss of employment does not translate into a loss of income in the same way as in other countries. Cuba tends to be a reliable partner in the agreements it initiates and is known for its high level of professionalism when cooperating with international organizations such as WHO.
In contrast, it exported $81 million to, and imported $614 million, from Brazil. Poverty and inequality have both grown since the end of the Soviet economic support for and subsidies to Cuba. The longest-lasting Communist dictatorship in the Western Hemisphere has ruled Cuba since 1959. Incidents of political violence are extremely rare. Public debt is equivalent to 69.4 percent of GDP. In July 2021, huge and unprecedented protests broke out with protestors demanding freedom and an end to the brutal dictatorship. Non-monetary achievements also explain Cubas relatively high ranking in the Human Development Index. It is unclear whether the small number of opposition groups and dissidents share this concept of democracy. Controlling inflation is a policy goal, but it is institutionally and politically subordinated to other goals. In 2020, with the shrinking of the economys dollar sectors, corruption will also have likely decreased. Religious and faith-based groups compete with each other but have no tradition of resorting to violence. Given the countrys financial constraints, the reaction to the COVID-19-induced crisis of 2020 has not been increased social spending, but rather a painful adjustment process, along with government pledges to leave nobody behind. But this will be difficult to achieve without specific social policies targeted at vulnerable populations. In addition to the legally registered self-employed, there is a wide network of informal or black-market entrepreneurial activities, which employ hundreds of thousands of people, though not necessarily in full-time jobs. The state expanded the hard-currency retail outlets in order to maximize channeling foreign exchange revenues mostly from remittances into the states coffers. But so far bed and breakfasts have not been allowed to develop into hotels, so that the higher-priced state sector for tourist accommodation remains shielded from private competition. The overall goal is to guarantee the continuity and irreversibility of socialism, as well as to promote economic development and improve the living standards of the population. There is no value added tax in Cuba.
When you put all these pieces together around education and health care, its clear that Cuba is likely a champion of investment in the development of human capitalbut for the last 50 years it has an extremely low economic return on this investment. Most FDI has to be in partnership with Cuban state-owned enterprises, and the labor force must be hired through a Cuban state hiring company. The Catholic Church has played an important mediating role in freeing political prisoners; Pope Francis was a facilitator of the U.S.-Cuban rapprochement under the U.S. Obama administration. The constitution defines the Communist Party as the guiding force in state and society. The exacerbation of the crisis in the wake of the COVID-19 pandemic meant that in 2020 Cuba lost about half of its foreign exchange revenues. The government increased salaries to state employees to try to compensate for the pesos dropping worth, but private workers who havent seen their wages rise saw the real value of their pay plunge. To avoid this triggering inflation, the state financed the deficit by issuing Republic of Cuba bonds that Cuban banks were obliged to purchase. While the economy was in crisis before, the pandemic led to an almost complete collapse of international tourism, the islands most important economic sector. The same thing is true for droughts, which have affected Cuban agriculture in recent years. In other public institutions, such as the National Assembly, the state deliberately seeks to ensure adequate representation of Afro-Cubans and women. Government investment represented just 9.1% of GDP in 2012, versus 14.2% in 1989, which Hernandez-Cata said reveals one of the most disturbing aspects of Cubas recent economic history: the weakness of capital formation. (Official government figures put economy-widefixed capital investment, from all sources, at 8.3% of GDP in 2013, considered low by international standards.).
Under the new law, only Cubans residing in Cuba can purchase or sell real estate. There are no functioning democratic institutions in Cuba, according to the BTI definition of democratic. Moreover, Cuba does not have a multiparty system. (+1) 202-857-8562 | Fax As The Economist recently explained, state-owned firms and foreign joint ventures value eachordinary peso at one convertible peso that is, at $1: The massively overvalued rate creates huge distortions in the economy, allowing importers to buy a dollars-worth of goods for one peso. Whilemost of Cubas exports are in the form of services (such as doctors and teacher working overseas), nearly all of its imports are goods (petroleum, foodstuffs, machinery and equipment, and chemicals). China has insisted that Cuba pay its debts and its annual import bills. Limited market opportunities have been given room since the mid-1990s and especially since Ral Castro embarked on a gradual economic reform process in 2010, which President Daz-Canel has continued.