Havana by the Daedong River: Cuba as North Korea’s Economic Model

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This study argues that the path Vietnam chose to take entails very significant policy changes before and after the reform measures were introduced, whereas Cuba’s gradualist approach puts less pressure on the Castro regime to engage in radical transformation. Although Cuba and Vietnam share their origins in communist autarky with powerful state-owned enterprises, the two countries embody very different economic development objectives. Vietnam sought to form comparative advantages as a means to enter global value chains. Cuba sought to carve out a competitive advantage for itself within a select (and growing) group of partners, establishing profitable trade and investment agreements that permitted the government to maintain control over its formal and shadow economies while fostering strategic industries. Cuba currently is party to 79 trade- and investment-related instruments, including major agreements such as the General Agreement on Trade in Services (GATS). The Cuban model may not be the wide economic opening and reform that the outside world is hoping for, but it presents to the North Korean regime a more contiguous path of market orientation.