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The Cuban Economy: A Current Evaluation and Proposals for Necessary Policy Changes

Discussion Papers

No.217

by Omar Everleny Pérez Villanueva
December 2009

ABSTRACT

Politicians, social scientists and general readers have noted in both Cuban and international academic forums and periodicals that the well-being enjoyed by the Cuban people in the 1980s has been seriously compromised since the economic crisis of the 1990s. Even for the most skeptical of observers it is clear that this worsening of conditions can be attributed not only to external factors, such as the breakup of the international socialist system, the tightening of the US blockade, and the worldwide economic crisis suffered by underdeveloped countries, but also to internal factors that have kept the country from taking full advantage of the human and material potential available on the island.

Although Cuba is currently experiencing an economic recovery from the collapse in GDP in the mid 1990s following the collapse of its ties with the Socialist Bloc, it continues to maintain high import coefficients due to longstanding structuraldifficulties. The country is highly dependent on food imports as a result of a deficient agrarian policy. It imports energy to a lesser but still significant extent, and it still requires many intermediate inputs for the productive process. Cuban industry and agriculture continue to suffer from low levels of efficiency and productivity.

Institutional reforms in the mid-1990s allowed the population to diversify its sources of income. The growing role of market forces in the once state-dominated economy and the strategies being pursued by people for generating income have led to slow, but growing, social differentiation. This process continues, despite measures taken to counteract it through different programs related to the so-called Battle of Ideas.

The duration of the Special Period points to the contradiction between time elapsed in the development of social processes and time as experienced by real human beings. Addressing the social inequalities unintentionally generated over the course of the Special Period, as the country attempted to implement profound and necessary economic changes with the least possible social cost, should be a priority.

To prepare for the challenges that the country will have to face in the future, we will analyze the economic situation in Cuba using a set of indicators that will tell us about the current economic state of the country and about the social and economic well-being of the Cuban people in the present and recent past.

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