Economic transformations in Cuba: a review

Abstract

After Raul Castro’s accession to the presidency of Cuba, the country has witnessed the most far-reaching process of economic reforms for more than five decades. The government has expanded the private and cooperative sectors, has passed a new foreign investment law, restructured most of its old debt and has sought to end the long-standing dispute with the USA. Yet economic performance has been poor and the country faces significant challenges and contradictions arising from the reforms. This paper analyses the macroeconomic environment and the changes introduced by the Cuban government over the period 2007–15. While successful at restoring macroeconomic equilibria, restrictive macroeconomic policies have hurt economic growth, whereas growth- and efficiency-enhancing measures are yet to produce results. Moreover, transformation of the economic model is slow because of its many internal contradictions. The paper also discusses some of the main impediments to future change.