Abstract
Cuba’s long-term economic stagnation and its likely causes are recurrent in academic discussions both inside and beyond the country’s borders. This work points to low investment levels and especially the resource allocation mechanism behind them as a key reason for the island’s economic decline. It analyzes the interplay of several dimensions related to the problem, both domestic (low productivity, hypertrophied public administration) and external (international credibility and creditworthiness, remittances, foreign investment). It concludes that a radical change in the resource allocation mechanism should be at the center of economic reform, and more important, a temporary improvement in external conditions is no substitute for the former process.
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