The economy of

Cuba Cuba, officially the Republic of Cuba, is an island country, comprising the island of Cuba (largest island), Isla de la Juventud, and List of islands of Cuba, 4,195 islands, islets and cays surrounding the main island. It is located where the ...

is a

planned economy A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, ...

dominated by state-run enterprises. The

Communist Party of Cuba The Communist Party of Cuba (, PCC) is the sole ruling party of Cuba. It was founded on 3 October 1965 as the successor to the United Party of the Cuban Socialist Revolution, which was in turn made up of the 26th of July Movement and Popu ...

maintains high levels of public sector control and exerts significant influence over the Cuban economy. The island has a low cost of living, inexpensive

public transport Public transport (also known as public transit, mass transit, or simply transit) are forms of transport available to the general public. It typically uses a fixed schedule, route and charges a fixed fare. There is no rigid definition of whic ...

, as well as subsidized education, healthcare, and food. Cuba's economic growth has historically been weak due to high labour emigration, import dependency, an ongoing energy crisis, foreign trade sanctions, and limited

tourism in Cuba Tourism in Cuba is an economic sector that generates over 4.7 million arrivals , and is one of the main sources of revenue for the island. With its favorable climate, beaches, colonial architecture and distinct cultural history, Cuba has long b ...

. The

dual economy of Cuba The dual economy of Cuba was developed after the dissolution of the Soviet Union, which caused major economic changes on the island. Tourism was regarded as the only stable sector of the Cuban economy and became the subject of policy changes to e ...

has led to a series of financial crises. Cuba is one of the poorest countries in Latin America and the Caribbean with high inflation, collective poverty, and food shortages. In the 19th century, Cuba was one of the most prosperous pre-industrial Latin American countries with the export of tobacco, sugar, and coffee. At the

Cuban Revolution The Cuban Revolution () was the military and political movement that overthrew the dictatorship of Fulgencio Batista, who had ruled Cuba from 1952 to 1959. The revolution began after the 1952 Cuban coup d'état, in which Batista overthrew ...

of 1953–1959, during the military dictatorship of

Fulgencio Batista Fulgencio Batista y Zaldívar (born Rubén Zaldívar; January 16, 1901 – August 6, 1973) was a Cuban military officer and politician who played a dominant role in Cuban politics from his initial rise to power as part of the 1933 Revolt of t ...

, Cuba was on a growth trajectory within Latin America. During the

Cold War The Cold War was a period of global Geopolitics, geopolitical rivalry between the United States (US) and the Soviet Union (USSR) and their respective allies, the capitalist Western Bloc and communist Eastern Bloc, which lasted from 1947 unt ...

, the Cuban economy was heavily subsidized – 10% to 40% of Cuban GDP in various years – by the

Eastern Bloc The Eastern Bloc, also known as the Communist Bloc (Combloc), the Socialist Bloc, the Workers Bloc, and the Soviet Bloc, was an unofficial coalition of communist states of Central and Eastern Europe, Asia, Africa, and Latin America that were a ...

, due to their geopolitical alignment with the

Soviet Union The Union of Soviet Socialist Republics. (USSR), commonly known as the Soviet Union, was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 until Dissolution of the Soviet ...

. Cuba endured severe economic downturn when the Soviet Union collapsed, with GDP declining 33% between 1990 and 1993. A protracted economic malaise known as the

Special Period The Special Period (), officially the Special Period in the Time of Peace (), was an extended period of economic crisis in Cuba that began in 1991 primarily due to the dissolution of the Soviet Union and the Comecon. The economic depression o ...

overcame Cuba from 1991 to 2001. The Cuban economy rebounded in 2003 with marginal liberalization and foreign support from

Venezuela Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and many Federal Dependencies of Venezuela, islands and islets in the Caribbean Sea. It com ...

. The

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

has maintained an economic embargo against Cuba since 1958 due to geopolitical tensions.

History

Colonial and Republican period (1870-1959)

Although Cuba belonged to the high-income countries of Latin America since the 1870s,

income inequality In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes ...

was high, accompanied by capital outflows to foreign investors. The country's economy had grown rapidly in the early part of the century, fueled by the sale of sugar to the United States. Before the

, in 1958, Cuba had a per-capita GDP of $2,363, which placed it in the middle of Latin American countries at the time. According to the UN, between 1950 and 1955, Cuba had a life expectancy of 59.4 years, which placed it in 56th place in the global ranking. Its proximity to the

made it a familiar holiday destination for wealthy Americans. Their visits for gambling, horse racing, and golfing made tourism an important economic sector. Tourism magazine ''Cabaret Quarterly'' described

Havana Havana (; ) is the capital and largest city of Cuba. The heart of La Habana Province, Havana is the country's main port and commercial center. Cuban dictator

had plans to line the Malecon, Havana's famous walkway by the water, with hotels and casinos to attract even more tourists. The country was highly dependent on its sugar production. In the late 1950s, Cuba's oil sector was controlled by three large international oil companies:

Standard Oil of New Jersey Exxon Mobil Corporation ( ) is an American multinational oil and gas corporation headquartered in Spring, Texas, a suburb of Houston. Founded as the largest direct successor of John D. Rockefeller's Standard Oil, the modern company was formed ...

(Esso),

Texaco Texaco, Inc. ("The Texas Company") is an American Petroleum, oil brand owned and operated by Chevron Corporation. Its flagship product is its Gasoline, fuel "Texaco with Techron". It also owned the Havoline motor oil brand. Texaco was an Independ ...

, and

Royal Dutch Shell Shell plc is a British multinational oil and gas company, headquartered in London, England. Shell is a public limited company with a primary listing on the London Stock Exchange (LSE) and secondary listings on Euronext Amsterdam and the New ...

Early economic planning (1959-1967)

On 3 March 1959, Fidel Castro seized control of the Cuban Telephone Company, which was a subsidiary of the International Telephone and Telecommunications Corporation. This was the first of many nationalizations made by the new government; the assets seized totaled US$9 billion. After the 1959 Revolution, citizens were not required to pay a personal

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

(their salaries being regarded as net of any taxes). The government also began to subsidize

healthcare Health care, or healthcare, is the improvement or maintenance of health via the preventive healthcare, prevention, diagnosis, therapy, treatment, wikt:amelioration, amelioration or cure of disease, illness, injury, and other disability, physic ...

and education for all citizens; this action created strong national support for the new revolutionary government. The

USSR The Union of Soviet Socialist Republics. (USSR), commonly known as the Soviet Union, was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 until Dissolution of the Soviet ...

and Cuba reestablished their diplomatic relations in May 1960. When oil refineries like Shell, Texaco, and Esso refused to refine Soviet oil, Castro nationalized that industry as well, taking over the refineries on the island. Days later in response, the United States cut the Cuban sugar quota completely; Eisenhower was quoted saying "This action amounts to economic sanctions against Cuba. Now we must look ahead to other economic, diplomatic, and strategic moves." Cuba and the Soviet Union signed their first trade deal that year, in which Cuba traded sugar to the Soviet Union in exchange for fuel. On 7 February 1962, Kennedy expanded the United States embargo to cover almost all U.S. imports. Using machinery and equipment provided by the Soviet Union and other socialist countries, from 1959 to 1963, the Cuban government attempted to implement

import substitution industrialization Import substitution industrialization (ISI) is a protectionist trade and economics, economic policy that advocates replacing foreign imports with domestic production. It is based on the premise that a country should attempt to reduce its foreign ...

. This approach was deemed to have failed by 1964 and Cuba resumed an export strategy focused on sugar. The economy remained inefficient and over-specialized in a few commodities purchased by the

countries. By the late 1960s, Cuba became dependent on Soviet economic, political, and military aid. It was also around this time that Castro began privately believing that Cuba could bypass the various stages of socialism and progress directly to

pure communism In Marxist thought, a communist society or the communist system is the type of society and economic system postulated to emerge from technological advances in the productive forces, representing the ultimate goal of the political ideology of ...

. General Secretary

Leonid Brezhnev Leonid Ilyich Brezhnev (19 December 190610 November 1982) was a Soviet politician who served as the General Secretary of the Communist Party of the Soviet Union from 1964 until Death and state funeral of Leonid Brezhnev, his death in 1982 as w ...

consolidated Cuba's dependence on the USSR when, in 1973, Castro caved to Brezhnev's pressure to become a full member of

Council for Mutual Economic Assistance The Council for Mutual Economic Assistance, often abbreviated as Comecon ( ) or CMEA, was an economic organization from 1949 to 1991 under the leadership of the Soviet Union that comprised the countries of the Eastern Bloc along with a number of ...

(Comecon). Comecon deemed Cuba one of its underdeveloped member countries and therefore Cuba could obtain oil in direct exchange for sugar at a rate that was highly favorable to Cuba. Hard currency Cuba obtained from re-exporting oil facilitated Cuba's importation of goods from non-Comecon countries and facilitated its investments in social services.

1968-1990

In 1970 as part of the

Revolutionary Offensive The Revolutionary Offensive (Spanish: ''Ofensiva revolucionaria'') was a political campaign in Cuba starting in 1968 to nationalize all remaining private small businesses, which at the time totaled to be about 58,000 small enterprises. The campai ...

economic campaign, Fidel Castro attempted to motivate the Cuban people to harvest 10 million tons of sugar, in Spanish known as ''

La Zafra La Zafra (in Valencian ''La Safra'') is a minor local entity in the municipality of Villena, in the Alhorines Valley, in the comarca of Alto Vinalopó, Alicante. Its population has declined significantly since 1970, when it numbered 235 people, to ...

'', to increase their exports and grow their economy. Despite the help of most of the Cuban population, the country fell short and produced only 7.56 million tons. In July 1970, after the harvest was over, Castro took responsibility for the failure, but later that same year, shifted the blame toward the Sugar Industry Minister saying "Those technocrats, geniuses, super-scientists assured me that they knew what to do to produce the ten million tons. But it was proven, first, that they did not know how to do it and, second, that they exploited the rest of the economy by receiving large amounts of resources ... while there are factories that could have improved with a better distribution of those resources that were allocated to the Ten-Million-Ton plan". During the Revolutionary period, Cuba was one of the few developing countries to provide

foreign aid In international relations, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of resources from one country to another. The ...

to other countries. Foreign aid began with the construction of six hospitals in Peru in the early 1970s. Between 1970 and 1985, Cuba sustained high rates of growth: "Cuba had done remarkably well in terms of satisfying basic needs (especially education and health)" and "was actually following the World Bank recipe from the 1970s: redistribution with growth". Foreign aid expanded later in the 1970s to the point where some 8000 Cubans worked in overseas assignments. Cubans built housing, roads, airports, schools, and other facilities in

Angola Angola, officially the Republic of Angola, is a country on the west-Central Africa, central coast of Southern Africa. It is the second-largest Portuguese-speaking world, Portuguese-speaking (Lusophone) country in both total area and List of c ...

Ethiopia Ethiopia, officially the Federal Democratic Republic of Ethiopia, is a landlocked country located in the Horn of Africa region of East Africa. It shares borders with Eritrea to the north, Djibouti to the northeast, Somalia to the east, Ken ...

Laos Laos, officially the Lao People's Democratic Republic (LPDR), is the only landlocked country in Southeast Asia. It is bordered by Myanmar and China to the northwest, Vietnam to the east, Cambodia to the southeast, and Thailand to the west and ...

Guinea Guinea, officially the Republic of Guinea, is a coastal country in West Africa. It borders the Atlantic Ocean to the west, Guinea-Bissau to the northwest, Senegal to the north, Mali to the northeast, Côte d'Ivoire to the southeast, and Sier ...

Tanzania Tanzania, officially the United Republic of Tanzania, is a country in East Africa within the African Great Lakes region. It is bordered by Uganda to the northwest; Kenya to the northeast; the Indian Ocean to the east; Mozambique and Malawi to t ...

, and other countries. By the end of 1985, 35,000 Cuban workers had helped build projects in some 20 Asian, African, and Latin American countries. For

Nicaragua Nicaragua, officially the Republic of Nicaragua, is the geographically largest Sovereign state, country in Central America, comprising . With a population of 7,142,529 as of 2024, it is the third-most populous country in Central America aft ...

in 1982, Cuba pledged to provide over $130 million worth of agricultural and machinery equipment and some 4000 technicians, doctors, and teachers. Over the course of the 1980s, Cuba provided approximately 90,000 tons of oil to Nicaragua per year to support the

Sandinista revolution The Nicaraguan Revolution () began with rising opposition to the Somoza dictatorship in the 1960s and 1970s, the ouster of the dictatorship in 1978–79, and fighting between the government and the Contras from 1981 to 1990. The revolution r ...

. From 1986 through 1990, Fidel Castro began the Rectification Process in an effort to decrease market elements in the economy. In 1986, Cuba defaulted on its $10.9 billion debt to the

Paris Club Paris Club () is a group of major creditor countries aiming to provide a sustainable way to tackle debt problems in debtor countries. Its creation, which is the first informal meeting, dates back to 1956, when Argentina agreed to hold a meeting ...

. In 1987, Cuba stopped making payments on that debt. In 2002, Cuba defaulted on $750 million in Japanese loans.

Special Period (1991-1994)

The Cuban gross domestic product declined at least 35% between 1989 and 1993 due to the loss of 80% of its trading partners and Soviet

subsidies A subsidy, subvention or government incentive is a type of government expenditure for individuals and households, as well as businesses with the aim of stabilizing the economy. It ensures that individuals and households are viable by having acce ...

. This loss of subsidies coincided with a collapse in world sugar prices. Sugar had done well from 1985 to 1990, crashed precipitously in 1990 and 1991 and did not recover for five years. Cuba had been insulated from world sugar prices by Soviet price guarantees. However, the Cuban economy began to improve again following a rapid improvement in trade and diplomatic relations between Cuba and Venezuela following the election of

Hugo Chávez Hugo Rafael Chávez Frías (; ; 28 July 1954 – 5 March 2013) was a Venezuelan politician, Bolivarian Revolution, revolutionary, and Officer (armed forces), military officer who served as the 52nd president of Venezuela from 1999 until De ...

in Venezuela in 1998, who became Cuba's most important trading partner and diplomatic ally. This era was referred to as the "Special Period in Peacetime", later shortened to "

". A ''

Canadian Medical Association Journal The ''Canadian Medical Association Journal'' (French ''Journal de l'Association Médicale Canadienne'') is a peer-reviewed open-access general medical journal published by the Canadian Medical Association. It publishes original clinical research ...

'' paper claimed, "The famine in Cuba during the Special Period was caused by political and economic factors similar to the ones that caused a

famine in North Korea The North Korean famine (), dubbed by the government as the Arduous March (), was a period of mass starvation together with a general economic crisis from 1995 to 2000 in North Korea. During this time there was an increase in defection from Nor ...

in the mid-1990s because both countries were run by authoritarian regimes that denied ordinary people the food to which they were entitled to when the public food distribution collapsed and priority was given to the elite classes and the military." Other reports painted an equally dismal picture, describing Cubans having to resort to eating anything they could find, from Havana Zoo animals to domestic cats. But although the collapse of centrally planned economies in the Soviet Union and other countries of the Eastern bloc subjected Cuba to severe economic difficulties, which led to a drop in calories per day from 3052 in 1989 to 2600 in 2006, mortality rates were not strongly affected thanks to the priority given on maintaining a

social safety net A social safety net (SSN) consists of non-contributory assistance existing to improve lives of vulnerable families and individuals experiencing poverty and destitution. Examples of SSNs are previously-contributory social pensions, in-kind and foo ...

Reforms and recovery (1994-2011)

The government undertook several

reforms Reform refers to the improvement or amendment of what is wrong, corrupt, unsatisfactory, etc. The modern usage of the word emerged in the late 18th century and is believed to have originated from Christopher Wyvill's Association movement, which ...

to stem excess

liquidity Liquidity is a concept in economics involving the convertibility of assets and obligations. It can include: * Market liquidity In business, economics or investment, market liquidity is a market's feature whereby an individual or firm can quic ...

, increase labor incentives, and alleviate serious shortages of food,

consumer good A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike an intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good. Whe ...

s, and services. To alleviate the economic crisis, the government introduced a few

market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market *Marketing, the act of sat ...

-oriented reforms, including opening to tourism, allowing foreign investment, legalizing the U.S. dollar, and authorizing self-employment for some 150 occupations. (This policy was later partially reversed so that while the U.S. dollar is no longer accepted in businesses, it remains legal for Cubans to hold the currency.) These measures resulted in modest economic growth. The liberalized agricultural markets were introduced in October 1994, at which state and private farmers sell above-quota production at

free market In economics, a free market is an economic market (economics), system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of ...

prices, broadened legal consumption alternatives, and reduced

black market A black market is a Secrecy, clandestine Market (economics), market or series of transactions that has some aspect of illegality, or is not compliant with an institutional set of rules. If the rule defines the set of goods and services who ...

prices. Government efforts to lower subsidies to unprofitable enterprises and to shrink the money supply caused the semi-official

exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...

for the

Cuban peso The Cuban peso ( in Spanish language, Spanish, ISO 4217 code: CUP) also known as (Spanish for 'national currency'), is the official currency of Cuba. The Cuban peso historically circulated at par with the Spanish dollar, Spanish-American silver ...

to move from a peak of 120 to the dollar in the summer of 1994 to 21 to the dollar by year-end 1999. The drop in GDP halted in 1994 when Cuba reported 0.7% growth, followed by increases of 2.5% in 1995 and 7.8% in 1996. Growth slowed again in 1997 and 1998 to 2.5% and 1.2% respectively. One of the key reasons was the failure to notice that sugar production had become uneconomic. Reflecting on the Special Period, Cuban president

Fidel Castro Fidel Alejandro Castro Ruz (13 August 1926 – 25 November 2016) was a Cuban politician and revolutionary who was the leader of Cuba from 1959 to 2008, serving as the prime minister of Cuba from 1959 to 1976 and President of Cuba, president ...

later admitted that many mistakes had been made, "The country had many economists, and it is not my intention to criticize them, but I would like to ask why we hadn't discovered earlier that maintaining our levels of sugar production would be impossible. The Soviet Union collapsed, oil cost $40 a barrel, and sugar prices were at basement levels, so why did we not rationalize the industry?"

Living conditions Habitability is the adequacy of an environment for human living. Where housing is concerned, there are generally local ordinances which define habitability. If a residence complies with those laws, it is said to be habitable. In extreme environ ...

in 1999 remained well below the 1989 level. GDP-Caribbean

Due to the continued growth of tourism, growth began in 1999 with a 6.2% increase in GDP. Growth then picked up, with a growth in GDP of 11.8% in 2005 according to government figures. In 2007 the Cuban economy grew by 7.5%, higher than the Latin American average. Accordingly, the cumulative growth in GDP since 2004 stood at 42.5%. However, starting in 1996, the government imposed income taxes on self-employed Cubans. Cuba ranked third in the region in 1958 in GDP per capita, surpassed only by

and

Uruguay Uruguay, officially the Oriental Republic of Uruguay, is a country in South America. It shares borders with Argentina to its west and southwest and Brazil to its north and northeast, while bordering the Río de la Plata to the south and the A ...

. It had descended to 9th, 11th, or 12th place in the region by 2007. Cuban social indicators suffered less. in Every year the United Nations holds a vote asking countries to choose if the United States is justified in its economic embargo against Cuba and whether it should be lifted. 2016 was the first year that the United States abstained from the vote, rather than voting no, "since 1992 the US and Israel have constantly voted against the resolution – occasionally supported by the Marshall Islands, Palau, Uzbekistan, Albania and Romania". In its 2020 report to the United Nations, Cuba stated that the total cost to Cuba from the United States embargo is $144 billion since its inception.

Post-Fidel Castro reforms (2011-present)

In 2011, " e new economic reforms were introduced, effectively creating a new economic system", which the

Brookings Institution The Brookings Institution, often stylized as Brookings, is an American think tank that conducts research and education in the social sciences, primarily in economics (and tax policy), metropolitan policy, governance, foreign policy, global econo ...

dubbed the "New Cuban Economy". Since then, over 400,000 Cubans have signed up to become entrepreneurs. the government listed 181 official jobs no longer under their control—such as taxi driver, construction worker and shopkeeper. Workers must purchase licenses to work for some roles, such as a mule driver, palm-tree trimmer, or well digger. Despite these openings, Cuba maintains nationalized companies for the distribution of all essential amenities (water, power, etc.) and other essential services to ensure a healthy population (education, health care). Around 2000, half the country's sugar mills closed. Before reforms, imports were double exports, doctors earned £15 per month, and families supplemented incomes with extra jobs. After reforms, more than 150,000 farmers could lease land from the government for surplus crop production. Before the reforms, the only real estate transactions involved homeowners swapping properties; reforms legalized the buying and selling of real estate and created a real estate boom in the country. In 2012 a Havana fast-food burger/pizza restaurant, La Pachanga, started in the owner's home; it served 1,000 meals on a Saturday at £3 each. Tourists can now ride factory steam locomotives through closed sugar mills. In 2008, Raúl Castro's administration hinted that the purchase of computers, DVD players, and microwaves would become legal; however, monthly wages remain less than 20 U.S. dollars. Mobile phones, which had been restricted to Cubans working for foreign companies and government officials, were legalized in 2008. In 2010 Fidel Castro, in agreement with Raúl Castro's reformist sentiment, admitted that the Cuban model based on the old Soviet centralized planning model was no longer sustainable. The brothers encouraged the development of a cooperative variant of socialism - where the state plays a less active role in the economy - and the formation of worker-owned co-operatives and self-employment enterprises. To remedy Cuba's economic structural distortions and inefficiencies, the Sixth Congress approved an expansion of the internal market and access to global markets on 18 April 2011. A comprehensive list of changes is: * expenditure adjustments (education, healthcare, sports, culture) * change in the structure of employment; reducing inflated payrolls and increasing work in the non-state sector * legalizing 201 different personal business licenses * fallow state land in

usufruct Usufruct () is a limited real right (or ''in rem'' right) found in civil law and mixed jurisdictions that unites the two property interests of ''usus'' and ''fructus'': * ''Usus'' (''use'', as in usage of or access to) is the right to use or en ...

leased to residents * incentives for non-state employment, as a re-launch of self-employment * proposals for the formation of non-agricultural cooperatives * legalization of the sale and private ownership of homes and cars * greater autonomy for state firms * search for food self-sufficiency, the gradual elimination of universal rationing and change to targeting the poorest population * possibility to rent state-run enterprises (including state restaurants) to self-employed persons * separation of state and business functions * tax-policy update * easier travel for Cubans * strategies for external debt restructuring On 20 December 2011, a new credit policy allowed Cuban banks to finance entrepreneurs and individuals wishing to make major purchases to make home improvements in addition to farmers. "Cuban banks have long provided loans to farm cooperatives, they have offered credit to new recipients of farmland in usufruct since 2008, and in 2011 they began making loans to individuals for business and other purposes". The system of rationed food distribution in Cuba was known as the ''Libreta de Abastecimiento'' ("Supplies booklet"). ration books at bodegas still procured rice, oil, sugar, and matches above the government average wage of £15 monthly. , the country's public debt comprised 35.3% of GDP, inflation (CDP) was 5.5%, and GDP growth was 3%. Raúl Castro signed Law 313 in September 2013 to set up a

special economic zone A special economic zone (SEZ) is an area in which the business and trade laws are different from the rest of the country. SEZs are located within a country's national borders, and their aims include increasing trade balance, employment, increas ...

, the first in the country, in the port city of Mariel. The zone is exempt from normal Cuban economic legislation. On 22 October 2013, the government eventually announced its intention to end the dual-currency system. The convertible peso (CUC) was no longer issued from 1 January 2021 and ceased circulation on 30 December 2021. The achievements of the radical social policy of socialist Cuba, which enabled social advancement for the formerly underprivileged classes, were curbed by the economic crisis and the low wages of recent decades. The socialist leadership is reluctant to tackle this problem because it touches a core aspect of its revolutionary legitimacy. As a result, Cuba's National Bureau of Statistics (ONE) publishes little data on the growing socio-economic divide. A nationwide scientific survey shows that social inequalities have become increasingly visible in everyday life and that the Afro-Cuban population is structurally disadvantaged. The report notes that while 58 percent of white Cubans have incomes of less than $3,000 a year, that proportion reaches 95 percent among Afro-Cubans. Afro-Cubans, moreover, receive a very limited portion of family remittances from the Cuban-American community in South Florida, which is mostly white. Remittances from family members from abroad serve often as starting capital for the emerging private sector. The most lucrative branches of business, such as restaurants and lodgings, are run by white people in particular. In February 2019, Cuban voters approved a new constitution granting the right to private property and greater access to free markets while also maintaining Cuba's status as a socialist state. In June 2019, the 16th ExpoCaribe trade fair took place in Santiago. Since 2014, the Cuban economy has seen a dramatic uptick in foreign investment. In November 2019, Cuba's state newspaper, '' Granma'', published an article acknowledging that despite the deterioration in relations between the U.S. and Cuban governments, the Cuban government continued to make efforts to attract foreign investment in 2018. In December 2018, the official Cuban News Agency reported that 525 foreign direct investment projects were reported in Cuba, a dramatic increase from the 246 projects reported in 2014. In February 2021, the Cuban Cabinet authorized private initiatives in more than 1,800 occupations. The Cuban economy was negatively affected by the

COVID-19 pandemic The COVID-19 pandemic (also known as the coronavirus pandemic and COVID pandemic), caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), began with an disease outbreak, outbreak of COVID-19 in Wuhan, China, in December ...

, as well as by additional sanctions from the United States imposed by the Trump administration. In 2020, the country's economy declined by 11%, the country's worst decline in nearly 30 years. Cubans have faced shortages of basic goods as a result.

International debt negotiations

Raúl Castro's government began a concerted effort to restructure and to ask for forgiveness of loans and debts with creditor countries, many in the billions of dollars and long in arrears from loans and debts incurred under Fidel Castro in the 1970s and 1980s. In 2011, China forgave $6 billion in debt owed to it by Cuba. In 2013, Mexico's Finance Minister Luis Videgaray announced a loan issued by Mexico's foreign trade development bank Bancomext to Cuba more than 15 years prior was worth $487 million. The governments agreed to "waive" 70% of it, approximately $340.9 million. Cuba would repay the remaining $146.1 million over ten years. In 2014, before making a diplomatic visit to Cuba, Russian President

Vladimir Putin Vladimir Vladimirovich Putin (born 7 October 1952) is a Russian politician and former intelligence officer who has served as President of Russia since 2012, having previously served from 2000 to 2008. Putin also served as Prime Minister of Ru ...

forgave over 90% of the debt owed to Russia by Cuba. The forgiveness totaled $32 billion. A remaining $3.2 billion would be paid over ten years. In 2015, Cuba entered into negotiations over its $11.1 billion debt to 14 members of the

. In December 2015, the parties announced an agreement - Paris Club nations agreed to forgive $8.5 billion of the $11.1 billion total debt, mostly by waiving interest, service charges, and penalties accrued over the more than two decades of non-payment. The 14 countries party to the agreement were:

Austria Austria, formally the Republic of Austria, is a landlocked country in Central Europe, lying in the Eastern Alps. It is a federation of nine Federal states of Austria, states, of which the capital Vienna is the List of largest cities in Aust ...

, Australia,

Belgium Belgium, officially the Kingdom of Belgium, is a country in Northwestern Europe. Situated in a coastal lowland region known as the Low Countries, it is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeas ...

, Canada,

Denmark Denmark is a Nordic countries, Nordic country in Northern Europe. It is the metropole and most populous constituent of the Kingdom of Denmark,, . also known as the Danish Realm, a constitutionally unitary state that includes the Autonomous a ...

Finland Finland, officially the Republic of Finland, is a Nordic country in Northern Europe. It borders Sweden to the northwest, Norway to the north, and Russia to the east, with the Gulf of Bothnia to the west and the Gulf of Finland to the south, ...

, France, Italy, Japan, Spain, Sweden,

Switzerland Switzerland, officially the Swiss Confederation, is a landlocked country located in west-central Europe. It is bordered by Italy to the south, France to the west, Germany to the north, and Austria and Liechtenstein to the east. Switzerland ...

, the

Netherlands , Terminology of the Low Countries, informally Holland, is a country in Northwestern Europe, with Caribbean Netherlands, overseas territories in the Caribbean. It is the largest of the four constituent countries of the Kingdom of the Nether ...

, and the United Kingdom. The payment for the remaining $2.6 billion would be made over 18 years, with annual payments due by 31 October of every year. The payments would phase in gradually, increasing from an initial 1.6 percent of the total owed until the last payment of 8.9 percent in 2033. Interest would be forgiven from 2015 to 2020, and just 1.5 percent of the total debt still be due thereafter. The agreement contained a penalty clause: should Cuba again not make payments on schedule (by 31 October of any year), it would be charged 9 percent interest until payment and late interest on the portion in arrears. The regime viewed the agreement favorably to resolve the long-standing issues and build business confidence, increasing

direct foreign investment A foreign direct investment (FDI) is an ownership stake in a company, made by a foreign investor, company, or government from another country. More specifically, it describes a controlling ownership an asset in one country by an entity based i ...

and as a preliminary step to gaining access to credit lines in Europe. In 2018, during a diplomatic visit to Cuba, the General Secretary of the Communist Party of Vietnam

Nguyễn Phú Trọng Nguyễn Phú Trọng ( ; 14 April 194419 July 2024) was a Vietnamese politician and political theorist who served as general secretary of the Communist Party of Vietnam from 2011 until his death in 2024. As the head of the party's Secretaria ...

wrote off Cuba's official debt to Vietnam. The forgiveness totaled $143.7 million. In 2019, Cuba once again defaulted on its Paris Club debt. Of the estimated payment due in 2019 of $80 million, Cuba made only a partial payment that left $30 million owed for that year. Cuban Deputy Prime Minister Ricardo Cabrisas wrote a letter to

Odile Renaud-Basso Odile Renaud-Basso (born 2 June 1965) is a French civil servant who has been serving as president of the European Bank for Reconstruction and Development since 2020. From 2016 to 2020, she served as head of the Direction générale du Trésor. ...

, president of the Paris Club, noting that Cuba was aware that "circumstances dictated that we were not able to honour our commitments with certain creditor countries as agreed in the multilateral Minute signed by the parties in December 2015". He maintained that they had "the intention of settling" the payments in arrears by 31 May 2020. In May 2020, with payments still not made, Deputy PM Cabrisas sent a letter to the fourteen Paris Club countries in the agreement requesting "a moratorium (of payments) for 2019, 2020 and 2021 and a return to paying in 2022". As of Aug 2023, payments had still not resumed with a new payment calendar still being negotiated.

Sectors

Energy

As of 2011, 96% of electricity was produced from fossil fuels. Solar panels were introduced in some rural areas to reduce blackouts, brownouts, and the use of kerosene. Citizens were encouraged to swap inefficient lamps with newer models to reduce consumption. A power tariff reduced inefficient use. In 2007, Cuba produced an estimated 16.89 billion kWh of electricity and consumed 13.93 billion kWh with no exports or imports. About 25% of Cuba's electricity is generated on ships with floating power plants. As of 2023, eight powerships from Turkey provide 770 MW from burning oil. The Energy Revolution is a program begun by Cuba in 2005. This program focused on developing the country's socioeconomic status and transitioning Cuba into an energy-efficient economy with diverse energy resources. Cuba's energy sector lacks the resources to produce optimal amounts of power. One of the issues the Energy Revolution program faces comes from Cuba's power production suffering from the absence of investment and the ongoing trade sanctions imposed by the United States. Likewise, the energy sector has received a multimillion-dollar investment distributed among a network of power resources. However, customers are experiencing rolling blackouts of power from energy companies to preserve electricity during Cuba's economic crisis. Furthermore, an outdated electricity grid that's been damaged by hurricanes caused the energy crisis in 2004 and continued to be a major issue during the Energy Revolution. Cuba responded to this situation by providing a variety of different types of energy resources. 6000 small diesel generators, 416 fuel oil generators, 893 diesel generators, 9.4 million incandescent bulbs for energy-saving lamps, 1.33 million fans, 5.5 million electric pressure cookers, 3.4 million electric rice cookers, 0.2 million electric water pumps, 2.04 million domestic refrigerators and 0.1 million televisions were distributed among territories. The electrical grid was restored to only 90% until 2009. The country frequently suffers rolling blackouts due to fuel shortages, and many plants are shut down due to a lack of fuel. In October 2024, the entire country suffered a multiday electricity blackout when the Antonio Guiteras power plant failed and efforts to restart the grid were not successful.

Renewable energy

Renewable energy has become a major priority as the government has promoted wind and solar power. Under a March 2017 law, the Cuban government has begun to roll out solar panels to every home in Cuba. The crucial challenge the Energy Revolution program will face is developing sustainable energy in Cuba but, take into account a country that's continuing to develop, an economic sanction and the detrimental effects of hurricanes that hit this country. The passage of Decree-Law 345 in 2019 permits Cubans to purchase

photovoltaic Photovoltaics (PV) is the conversion of light into electricity using semiconducting materials that exhibit the photovoltaic effect, a phenomenon studied in physics, photochemistry, and electrochemistry. The photovoltaic effect is commercially ...

solar panels for private use and to sell surplus energy to state company Unión Eléctrica. In 2022, about 1.5% of electricity came from solar power.

Oil and gas

From 1960 to 1990, the Soviet Union provided Cuba with all of its oil needs on credit (which was not paid back) and at subsidized prices. As of August 2012, off-shore petroleum exploration of promising formations in the Gulf of Mexico had been unproductive, with two failures reported. Additional exploration is planned. In both 2007 and 2008 estimates, the country produced 62,100 bbl/d of oil and consumed 176,000 bbl/d with 104,800 bbl/d of imports, as well as 197,300,000 bbl proved reserves of oil. Venezuela is Cuba's primary source of oil. In 2017, Cuba produced and consumed an estimated 1189 million m³ of natural gas and has 70.79 billion m³ of proved reserves the nation did not export or import any natural gas.

Agriculture

Cuba produces sugarcane, tobacco, citrus, coffee, rice, potatoes, beans, and livestock. As of 2015, Cuba imported about 70–80% of its food and 80–84% of the food it rations to the public.

Raúl Castro Raúl Modesto Castro Ruz ( ; ; born 3 June 1931) is a Cuban retired politician and general who served as the First Secretary of the Communist Party of Cuba, first secretary of the Communist Party of Cuba, the most senior position in the One-par ...

ridiculed the bureaucracy that shackled the agriculture sector.

Industry

Industrial production accounted for almost 37% of Cuban GDP or US$6.9 billion and employed 24% of the population, or 2,671,000 people, in 1996. A rally in sugar prices in 2009 stimulated investment and development of sugar processing. In 2003 Cuba's biotechnology and pharmaceutical industry was gaining in importance. Among the products sold internationally are

vaccine A vaccine is a biological Dosage form, preparation that provides active acquired immunity to a particular infectious disease, infectious or cancer, malignant disease. The safety and effectiveness of vaccines has been widely studied and verifi ...

s against various viral and bacterial pathogens. For example, the drug

Heberprot-P Nepidermin (INN proposed), also known as recombinant human epidermal growth factor (rhEGF), is a recombinant form of human epidermal growth factor (EGF) and a cicatrizant (a drug that promotes wound healing through formation of scar tissue). ...

was developed as a cure for

diabetic foot ulcer Diabetic foot ulcer is a breakdown of the skin and sometimes deeper tissues of the foot that leads to sore formation. It is thought to occur due to abnormal pressure or mechanical stress chronically applied to the foot, usually with concomitant pre ...

and had success in many developing countries. Cuba has also done pioneering work on the development of drugs for cancer treatment. Scientists such as V. Verez-Bencomo were awarded international prizes for their biotechnology and sugar cane contributions.

Biotechnology

Cuba's biotechnology sector developed in response to the limitations on technology transfer, international financing, and international trade resulting from the United States embargo. The Cuban biotechnology sector is entirely state-owned.

Services

Tourism

In the mid-1990s, tourism surpassed sugar, the mainstay of the Cuban economy, as the primary source of foreign exchange. Havana devotes significant resources to building tourist facilities and renovating historic structures. Cuban officials estimate roughly 1.6 million tourists visited Cuba in 1999, yielding about $1.9 billion in gross revenues. In 2000, 1,773,986 foreign visitors arrived in Cuba. Revenue from tourism reached US$1.7 billion. By 2012, some 3 million visitors brought nearly £2 billion yearly. The growth of tourism has had social and economic repercussions. This led to speculation of the emergence of a two-tier economy and the fostering of a state of tourist apartheid. This situation was exacerbated by the influx of dollars during the 1990s, potentially creating a dual economy based on the dollar (the currency of tourists) on the one hand and the peso on the other. Scarce imported goods – and even some local manufactures, such as

rum Rum is a liquor made by fermenting and then distilling sugarcane molasses or sugarcane juice. The distillate, a clear liquid, is often aged in barrels of oak. Rum originated in the Caribbean in the 17th century, but today it is produced i ...

and coffee – could be had at dollar-only stores but were hard to find or unavailable at peso prices. As a result, Cubans who earned only in the peso economy, outside the tourist sector, were at a disadvantage. Those with dollar incomes based upon the service industry began to live more comfortably. This widened the gap between Cubans' material living standards, conflicting with the Cuban government's long-term socialist policies.

Retail

Cuba has a small retail sector. A few large shopping centers operated in Havana as of September 2012 but charged US prices. Pre-Revolutionary commercial districts were largely shut down. Most stores are small dollar stores, bodegas, agro-mercados (farmers' markets), and street stands.

Finance

The financial sector remains heavily regulated, and access to credit for entrepreneurial activity is seriously impeded by the shallowness of the financial market.

Land

The state retains land in

Foreign investment and trade

Foreign ownership in land is prohibited; foreign entities are only allowed to rent land. In 2023, Canada receives the largest share of Cuban exports (30.6%), 70 to 80% of which go through Indiana Finance BV, a company owned by the

Van 't Wout Van 't Wout is a surname primarily belonging to a Dutch family that conducts its business through Indiana Finance BV. As of 2016 the company was responsible for 40–51% of Dutch trade with Cuba. History Family head Willem Van 't Wout started ...

family, who have close personal ties with Fidel Castro. This trend can be seen in other colonial Caribbean communities with direct political ties with the global economy. Cuba's primary import partner is Venezuela. The second-largest trade partner is China, with a 16.9% share of the Cuban export market. Cuba began courting foreign investment in the Special Period. Foreign investors must form joint ventures with the Cuban government. The sole exception to this rule is Venezuelans, who can hold 100% ownership in businesses due to an agreement between Cuba and Venezuela. Cuban officials said in early 1998 that 332 joint ventures had begun. Many of these are loans or contracts for management, supplies, or services normally not considered equity investments in Western economies. Investors are constrained by the U.S. Helms–Burton Act that provides sanctions for those who traffic in property expropriated from U.S. citizens. Cuba's average tariff rate is 10 percent. As of 2014, the country's planned economy deterred foreign trade and investment. At this point, the state maintained strict capital and exchange controls. In 2017, however, the country reported a record 2 billion in foreign investment. It was also reported that foreign investment in Cuba had increased dramatically since 2014. In September 2019, EU foreign policy chief

Federica Mogherini Federica Mogherini (; born 16 June 1973) is an Italian politician who served as High Representative of the Union for Foreign Affairs and Security Policy and Vice-President of the European Commission from 2014 to 2019. A member of the Democratic ...

stated during a three-day visit to Cuba that the European Union is committed to helping Cuba develop its economy

Currencies

From 1994 until 2021, Cuba had two official currencies: the national peso (or CUP) and the convertible peso (or CUC, often called "dollar" in the spoken language). In January 2021, however, a long-awaited process of currency unification began, with Cuban citizens being given six months to exchange their remaining CUCs at a rate of one to every 24 CUPs. In 1994 the possession and use of US dollars were legalized, and by 2004 the US dollar was in widespread use in the country. To capture the hard currency flowing into the island through tourism and

remittances A remittance is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. Money sent home by migrants competes ...

– estimated at $500–800 million annually – the government set up state-run "dollar stores" throughout Cuba that sold "luxury" food, household, and clothing items, compared with necessities, which could be bought using national pesos. As such, the standard of living diverged between those with access to dollars and those without. Jobs that could earn dollar salaries or tips from foreign businesses and tourists became highly desirable. Meeting doctors, engineers, scientists, and other professionals working in restaurants or as taxicab drivers was common. In response to tighter economic sanctions by the US and because the authorities were pleased with Cuba's economic recovery, the Cuban government decided in October 2004 to remove US dollars from circulation. In its place, the convertible peso was created, which, although not internationally traded, had a value pegged to the US dollar 1:1. A 10% surcharge was levied for cash conversions from US dollars to the convertible peso, which did not apply to other currencies, thus acting as an encouragement for tourists to bring currencies such as

euro The euro (currency symbol, symbol: euro sign, €; ISO 4217, currency code: EUR) is the official currency of 20 of the Member state of the European Union, member states of the European Union. This group of states is officially known as the ...

pounds sterling Sterling (Currency symbol, symbol: Pound sign, £; ISO 4217, currency code: GBP) is the currency of the United Kingdom and nine of its associated territories. The pound is the main unit of account, unit of sterling, and the word ''Pound (cu ...

Canadian dollar The Canadian dollar (currency symbol, symbol: $; ISO 4217, code: CAD; ) is the currency of Canada. It is abbreviated with the dollar sign $. There is no standard disambiguating form, but the abbreviations Can$, CA$ and C$ are frequently used f ...

s into Cuba. An increasing number of tourist zones accept Euros.

Public sector

Cuba used a planned economy with state-ownership over the large majority of the

means of production In political philosophy, the means of production refers to the generally necessary assets and resources that enable a society to engage in production. While the exact resources encompassed in the term may vary, it is widely agreed to include the ...

. The public sector thus contributes to the majority of economic activity, with the Cuban government encouraging the formation of

worker co-operative A worker cooperative is a cooperative owned and self-managed by its workers. This control may mean a firm where every worker-owner participates in decision-making in a democratic fashion, or it may refer to one in which management is elected by ...

s and

self-employment Self-employment is the state of working for oneself rather than an employer. Tax authorities will generally view a person as self-employed if the person chooses to be recognised as such or if the person is generating income for which a tax return ...

since the 1990s. It later legalized limited private property and free-market rights along with

foreign direct investment A foreign direct investment (FDI) is an ownership stake in a company, made by a foreign investor, company, or government from another country. More specifically, it describes a controlling ownership an asset in one country by an entity based i ...

in 2018. Cuba describes these revisions to its economic model as the "updated" model. Public sector employment remains high compared to the private sector but has steadily decreased since the 1980s.Social Policy at the Crossroads
Oxfam America Report All public and most private investment activity requires government approval or oversight. Economic data published by the Cuban government is not always independently verified, limiting Cuba's inclusion on economic rankings in Latin America. As of 2018, the state sector accounted for 90.8% of GDP and 67% of employment.

Private sector

Owners of small private restaurants (''

paladar In Cuba a Paladar (plural: paladares) is a small, family-run restaurant. The name comes from a Spanish word for "palate." and can only employ family members. Set monthly fees must be paid regardless of income earned, and frequent inspections yield stiff fines when any of the many self-employment regulations are violated. , public-sector employment was 65%, and private-sector employment was 35%, compared to the 2000 ratio of 76% to 23% and the 1981 ratio of 91% to 8%. As of 2012, more than 150,000 farmers had signed up to lease land from the government for bonus crops. Before, homeowners were only allowed to swap; once buying and selling were allowed, prices rose. In cities, urban agriculture farms small parcels. Growing

organopónicos ''Organopónicos'' or organoponics is a system of urban agriculture using organic farming, organic gardens. It originated in Cuba and is still mostly focused there. It often consists of low-level concrete walls filled with organic matter and soil ...

(organic gardens) in the private sector has been attractive to city-dwelling small producers who sell their products where they produce them, avoiding taxes and enjoying a measure of government help from the Ministry of Agriculture (MINAGRI) in the form of seed houses and advisers. In February 2021, the government said that it would allow the private sector to operate in most sectors of the economy, with only 124 activities remaining in the public sector, such as national security, health, and educational services. In August 2021, the Cuban government started allowing citizens to create small and medium-sized private companies, which are allowed to employ up to 100 people. As of 2023, 8,000 companies have been registered in Cuba. In 2021, Cuba's "economic freedom" score from the American conservative thinktank

Heritage Foundation The Heritage Foundation (or simply Heritage) is an American conservative think tank based in Washington, D.C. Founded in 1973, it took a leading role in the conservative movement in the 1980s during the presidency of Ronald Reagan, whose polic ...

was 28.1, ranking Cuba's economy 176th (among the "least free") on such measures as "trade freedom, fiscal freedom, monetary freedom, freedom, and business freedom". Cuba ranked 31st among the 32 South and Central America countries, with the Heritage Foundation rating Venezuela as a "client state" of Cuba's and one of the least free.

Wages, development, and pensions

Cuba has a public pension system. In 1989, Cuba had the most developed pension system in Latin America. Until June 2019, typical wages ranged from 400 non-convertible Cuban pesos a month, for a factory worker, to 700 per month for a doctor, or around 17–30 US dollars per month. However, the

Human Development Index The Human Development Index (HDI) is a statistical composite index of life expectancy, Education Index, education (mean years of schooling completed and expected years of schooling upon entering the education system), and per capita income i ...

of Cuba still ranks much higher than the vast majority of Latin American nations. After Cuba lost Soviet subsidies in 1991,

malnutrition Malnutrition occurs when an organism gets too few or too many nutrients, resulting in health problems. Specifically, it is a deficiency, excess, or imbalance of energy, protein and other nutrients which adversely affects the body's tissues a ...

resulted in an outbreak of diseases. Despite this, the poverty level reported by the government is one of the lowest in the developing world, ranking 6th out of 108 countries, 4th in Latin America and 48th among all countries. According to a 2022 report from the Cuban Human Rights Observatory (OCDH), 72 percent of Cubans live below the poverty line. 21 percent of Cubans who live below the poverty line frequently go without breakfast, lunch or dinner due to a lack of money. Pensions are among the smallest in the Americas at $9.50/month. In 2009, Raúl Castro increased minimum pensions by 2 dollars, which he said was to recompense for those who have "dedicated a great part of their lives to working ... and who remain firm in defense of socialism". Cuba is known for its system of food distribution, the '' Libreta de Abastecimiento'' ("Supplies booklet"). The system establishes the rations each person can buy through that system and the frequency of supplies. Despite rumors of ending, the system still exists. In June 2019, the government announced an increase in public sector wages, especially for teachers and health personnel. The increase was about 300%. In October, the government opened stores where citizens could purchase, via international currencies (USD, euro, etc.) stored on electronic cards, household supplies, and similar goods. These funds are provided by remittances from emigres. The government leaders recognized that the new measure was unpopular but necessary to contain the flight of capital to other countries, such as Panama, where Cuban citizens traveled and imported items to resell on the island. On 1 January 2021, the government launched the "Tarea Ordenamiento" (Ordering Task), previously announced on national television by President Miguel Díaz Canel and Gen. Raúl Castro, the then-first secretary of the Cuban Communist Party. This is an effort, years in the making, to end the use of the Cuban convertible peso (CUC) and to solely use the Cuban peso (CUP), ostensibly to increase economic efficiency. In February, the government created new restrictions to the private sector, with prohibitions on 124 activities, in areas like national security, health, and educational services. Wages and pensions were increased again, between 4 and 9 times, for all the sectors. For example, a university instructor's salary went from 1500 to 5500 CUP. Additionally, the dollar price was maintained by the Cuban central bank at 24 CUP, but was unable to sell dollars to the population due to the drought of foreign currency created by the COVID-19 pandemic.

Public facilities

* Bodegas Local shops offering basic products such as rice, sugar, salt, beans, cooking oil, matches, rum at low prices. * El coppelia A government-owned facility offering ice cream, juice and sweets. * Paladar A small, privately owned restaurant facility. * La farmacia Low-priced medicine, with the lowest costs anywhere in the world. *

ETECSA Empresa de Telecomunicaciones de Cuba S.A. (; ETECSA) is the Cuban state company that provides telephony and communications services in Cuba. It is the sole lawful provider of telephony and telecommunications permitted by the Cuban penal code, ...

National telephone service provider. * La feria A weekly market (Sunday market-type) owned by the government. * Cervecería Bucanero A beverage manufacturer providing both alcoholic and non-alcoholic beverages. *

Ciego Montero Ciego Montero is a Cuban brand of bottled water, part of Nestlé Nestlé Waters, Waters, established in 1985 and owned by the Cuban society Los Portales. Based in the village of Arriete-Ciego Montero, it produces the homonym water and soft drink ...

The main soft-drink and beverage distributor.

Connection with Venezuela

Cuba and

have agreements under which Venezuela provides cheap oil in exchange for the assistance of Cuban doctors in the Venezuelan health care system. As of 2015, Cuba had the third-highest number of physicians per capita worldwide (behind

Monaco Monaco, officially the Principality of Monaco, is a Sovereign state, sovereign city-state and European microstates, microstate on the French Riviera a few kilometres west of the Regions of Italy, Italian region of Liguria, in Western Europe, ...

and

Qatar Qatar, officially the State of Qatar, is a country in West Asia. It occupies the Geography of Qatar, Qatar Peninsula on the northeastern coast of the Arabian Peninsula in the Middle East; it shares Qatar–Saudi Arabia border, its sole land b ...

) The country sends tens of thousands of doctors to other countries as

aid In international relations, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of resources from one country to another. Th ...

, and to obtain favorable trade terms. According to Carmelo Mesa-Lago, a Cuban-born US economist, in nominal terms, the Venezuelan subsidy is higher than the subsidy which the Soviet Union gave to Cuba, with the Cuban state receiving cheap oil and the Cuban economy receiving around $6 billion annually. In 2013 Carmelo Mesa-Lago said, "If this help stops, industry is paralysed, transportation is paralysed and you'll see the effects in everything from electricity to sugar mills". From an economic standpoint, Cuba relies much more on Venezuela than Venezuela does on Cuba. As of 2012, Venezuela accounted for 20.8% of Cuba's GDP, while Cuba only accounted for roughly 4% of Venezuela's. Because of this reliance, the most recent economic

crisis in Venezuela An ongoing socioeconomic and political crisis began in Venezuela during the presidency of Hugo Chávez and has worsened during the presidency of successor Nicolás Maduro. It has been marked by hyperinflation, escalating starvation, disease, c ...

, with inflation nearing 800% and GDP shrinking by 19% in 2016, Cuba is not receiving their amount of payment and heavily subsidized oil. Further budget cuts are in the plans for 2018, marking a third straight year.

Taxes and revenues

As of 2009, Cuba had $47.08 billion in revenues and $50.34 billion in expenditures, with 34.6% of GDP in public debt, an account balance of $513 million, and $4.647 billion in reserves of foreign exchange and gold. Government spending is around 67 percent of GDP, and public debt is around 35 percent of the domestic economy. Despite reforms, the government plays a large role in the economy. The top individual income tax rate is 50 percent. The top corporate tax rate is 30 percent (35 percent for wholly foreign-owned companies). Other taxes include a tax on property transfers and a sales tax. The overall tax burden is 24.42 percent of GDP.

Income and wealth

Its

income distribution In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes e ...

compared favorably with that of other Latin American countries during the 19th century. However, "available data must be viewed cautiously and assumed to portray merely a rough approximation of conditions at the time," according to Susan Eckstein. There were profound

social inequalities Social inequality occurs when resources within a society are distributed unevenly, often as a result of inequitable allocation practices that create distinct unequal patterns based on socially defined categories of people. Differences in acce ...

between city and countryside and between whites and blacks, with trade and unemployment problems. In 2021, Cuba ranked 83rd out of 191 on the

in the high human development category.

References

Citations

Sources

External links

Cuba's Economic Struggles
from th
Dean Peter Krogh Foreign Affairs Digital Archives

''The Road not taken: Pre-Revolutionary Cuban Living Standards in Comparative Perspective''
Marianne Ward (Loyola College) and John Devereux (Queens College CUNY) * Archibold, Randal

(February 2015), ''

The New York Times ''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...

'' * Cave, Danien
"Raúl Castro Thanks U.S., but Reaffirms Communist Rule in Cuba"
(December 2014), ''The New York Times''. "Mr. Castro prioritized economics. He acknowledged that Cuban state workers needed better salaries and said Cuba would accelerate economic changes in the coming year, including an end to its dual-currency system. But he said the changes needed to be gradual to create a system of 'prosperous and sustainable communism.
Centro de Estudios de la Economía Cubana
{{DEFAULTSORT:Economy Of Cuba