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Cuban Economics Essay

4980 words - 20 pages

Introduction

Modern Cuba is a country born of struggle. The revolutionary movement that formed the modern day government has remained in power for more than forty years. Indeed, the Cuban government is perhaps one of the most stable governments in the region. This fact is made even more evident by the recent fall of democracy in Haiti. However, the past ten years has seen a marked change in Cuban economic policy. Ostracized from the international community and faced with an embargo imposed by the United States, Cuba has turned to various sources of economic reform in order to survive in a global market.

Background (1959 – 1991)

During the early period after the revolution, Cuba’s primary economic base was based upon one agricultural resource: sugar (Packenham, pg. 137). Without a diversified agricultural or industrial base, Cuba was forced to become dependent on the only superpower that shared its political ideology, the Soviet Union. Indeed, Cuban trade with the Soviet Union reached a level of 69 percent in 1978, a level equivalent to the amount of trade conducted with the United States prior to the revolution (Packenham, pg. 139).

As Cuba entered the 1980’s, it was plagued with the same problems that had plagued it since its inception: dependence on one agricultural produce and on one major trading partner. In the estimate of Carmelo Mesa-Lago, most of the Cuban growth from 1960-1984 came as a result of the $40 billion in Soviet aid (“Cuban Economy”, pg. 187). Leading up to the collapse of the Soviet Union, the Cuban economy was in a terrible condition.

In 1986, the economic growth in planned prices was only 1.4 percent compared to a planned rate of 3 percent. Labor productivity fell 1.6 percent and the prices of Cuban exports dropped. Leading into 1987, the Cuban economic growth rate was reduced to an estimated 0.5 to 1 percent (Mesa-Lago, “Cuban Economy”, pgs. 187, 210). During this time period, Cuba depended on the Soviet Union for 98 percent of its oil and seventy-five percent of its total energy needs (Theirot, pgs. 258).

Despite Cuban economic woes, the Cubans did enjoy some success in other areas. First, the redistribution of wealth was responsible for reducing malnutrition. Second, the Cuban government established a national health care system that rivaled even developed countries. Third, the Cuban government developed a multilevel educational system that resulted in the near complete elimination of illiteracy. And fourth, the Cuban population was infused with a strong sense of nationalistic pride (Theirot, pgs. 257-258).

At the social level, the Cubans managed to address some of the basic problems plaguing other Third-World countries such as hunger, health, and education. However, at the economic level, Cuba still had a long way to go and the need to address economic issues became urgent on the eve of the fall of the Soviet Union. It is this environment of economic decline and...

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