Cuba, unlike the United States, is governed by a single party Communist regime called the Communist Cuban Party (CCP). Communism prevents all free market trade because all property is publicly owned and controlled by the State government. Cuba, because of Fidel Castro’s role in almost prompting a nuclear war, has been in a trade embargo with the United States since the 1960’s; however, President Obama and Raul Castro in early 2016 lifted several parts of the embargo and began the long process of revitalizing relations between the United States and Cuba.
The Cuban economy, although it has many valuable exports regulated by the government, is extremely oppressive toward private entrepreneurs and foreign trade interactions. According to Heritage.Org, Cuba is ranked second most oppressive behind North Korea. Cubans are almost barred to leave and do not have permission to engage in foreign or privatized business. Free market trade is necessary for people to have the freedoms we have today in the United States.
The death of communist dictator, Fidel Castro, has the potential to affect the Cuban economy. Although Fidel Castro transferred power to his brother, Raul, he still had large influence over the political and economic decisions within Cuba. Raul Castro has attempted several reforms to convert to state-run capitalism, but large influence from Fidel has halted the effort. Carmelo Mesa Lago, a professor of economics at Pittsburgh University, says that Cuba is in its worst economic state since the 1990’s. She predicts that the Cuban economy will stay the same or worsen as time goes on. Statistics show that Cuba imports 70% of its food and industries, like sugar or nickel exports, are crumbling. The United States is a major source of Cuban food, but the trade embargoes from the United States’ government prevents Cuba from trading physical goods with the US and requires them to pay cash in nearly all exchanges. Predictions also involve US relations with Cuba. If President-elect Trump terminates relations with Cuba that President Obama established, Cuba will lose a large portion of foreign tourism. Losing foreign tourism will strain the Cuban economy greatly.
The Economist predicts that Cuban exports will rise slightly within the next two years will rise, but imports will quadruple in amount. GMU economics professor, Tyler Cowen, predicts that Cuba’s GDP is only $2,000 per capita, but after several decades, it will rise to be that of the Dominican Republic. Most economist predict that the change in Cuba’s economy, whether the change is towards capitalism or further decline, will take place slowly and will not be immediate, but gradually. United States politics and economic sanctions will play a great role in Cuban decisions.
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Miamiherald. Miami Herald, 1 Dec. 2016. Web. 02 Dec. 2016.
Solutions, EIU Digital. “Cuba.” Cuba Economy, Politics and GDP Growth Summary – The Economist
Intelligence Unit. The Economist, n.d. Web. 02 Dec. 2016.
Read more about what GDP means here: http://www.investopedia.com/terms/g/gdp.asp?scrlybrkr=f850398d