How Exceptional Is the Cuban Economy?
There were good reasons why in 1990 Cuba’s economy was expected to collapse along with the Soviet economic bloc. Economic dependency on Council for Mutual Economic Assistance (COMECON) trade and finance was extreme: in 1989, the Cuban economy was an open one, with an imports-gross domestic product (GDP) ratio of 35 percent, and the COMECON trade bloc accounted for around 80 percent of all trade. The bloc also provided the external financing to cover a large current account deficit, amounting to more than 10 percent of GDP.1 Of total exports, sugar accounted for 80 percent, and the COMECON preferential sugar price was around three times the world market price, a benefit worth around 12 percent of GDP. The extent of Cuban dependence on COMECON thus meant that when the trading bloc collapsed around one quarter of GDP was immediately wiped off Cuba’s national income, even before the effects of economic dislocation were added, as import capacity fell by 70 percent between 1990 and 1993 (see figure 3.1).
KeywordsGross Domestic Product Transition Economy Domestic Economy Real Gross Domestic Product Foreign Partner
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- 2.U.S. sanctions barred lending to Cuba from the relevant regional multilateral institution, the Inter-American Development Bank (IDB), as well as from the International Monetary Fund (IMF) and the World Bank (WB). Cuba has received only very small amounts of official financing, mainly from UN agencies. Ritter describes the external financial support available to other countries as the means of “jump-starting” the economies. See Archibald R. M. Ritter (ed.), The Cuban Economy (Pittsburgh, PA: University of Pittsburgh Press, 2004), p. 10.Google Scholar
- 17.“Second economy” described and explained in Jorge F. Pérez-López, Cuba’s Second Economy (New Brunswick, NJ: Transaction Books, 1995).Google Scholar
- 19.Education, health, and welfare services undoubtedly suffered, but mortality rates and educational performance indicators suggest that universal provision was maintained. A comparison between the trends in the UNDP Human Development Report (UNDP, Transition 1999: The Human Cost of Transition [New York: UNDP, 1999]) highlights the Cuban exception in this respect, with a very much smaller deterioration in health indicators despite the decline in total resources available.Google Scholar