Cuba’s Economic Transition: Successes, Deficiencies, and Challenges

Abstract

Cuba’s economic transition began formally on 23 June 1990 when the Political Bureau of the Cuban Communist Party issued the following statement: ‘The solid stability of the country, together with intelligent policies, attract the confidence of foreign investors and open the way for cooperation in the form of joint ventures. This does not clash with our socialist system; rather it means speedier use of potential resources.’² Days earlier, on Cuba’s premier beach, Varadero, President Fidel Castro publicly inaugurated the first hotel built jointly between a foreign investor and a Cuban state enterprise since the Cuban government seized all foreign-owned tourist enterprises in 1960. The foreign partners had the funds, management expertise, and marketing skills that Cuban enterprises lacked, he said. Somewhat hesitantly, he added: ‘We do not know how to run a hotel, how to handle tourism and — I don’t know if I should use the word or not — how to make the most money from tourism, how to exploit tourism.’³

This essay is part of a project sponsored by the Inter-American Dialogue. The purpose of this essay is to reflect on the process of economic reforms in Cuba, connecting the Cuban experience to those of other communist or once-communist countries. These other experiences are analyzed by companion papers, whose authors are cited from time to time. I also make a special effort to cite Cuban sources wherever possible. I am grateful to the Weatherhead Center for International Affairs, Harvard University, for its general support of my work. I am also grateful to Shahid Javed Burki, Daniel Erikson, Jeffry Frieden, and Omar Everleny Pérez Villanueva for comments on earlier versions. All mistakes are mine alone.