Cuba’s economic freedom score
is 28.7, making its economy one of the world’s least free. Its overall
score is 0.2 point higher than last year, with deteriorations in trade
freedom, fiscal freedom, monetary freedom, and freedom from corruption
counterbalanced by an improvement in business freedom. Cuba is ranked
least free of 29 countries in the South and Central America/Caribbean
region, and its overall score is significantly lower than the regional
average.
Over the 20-year history of the Index, Cuba’s economic freedom has been stagnant near the bottom of the “repressed” category. Its overall score improvement has been less than 1 point over the past two decades, with score gains in fiscal freedom and freedom from corruption offset by double-digit declines in business freedom and investment freedom.
Despite some progress in restructuring the state sector since 2010, the private sector remains constrained by heavy regulations and tight state controls. Open-market policies are not in place to spur growth in trade and investment, and the lack of competition continues to stifle dynamic economic expansion. A watered-down reform package endorsed by the Cuban Communist Party has trimmed the number of state workers and expanded the list of approved professions, but many details of the reform remain obscure.
Over the 20-year history of the Index, Cuba’s economic freedom has been stagnant near the bottom of the “repressed” category. Its overall score improvement has been less than 1 point over the past two decades, with score gains in fiscal freedom and freedom from corruption offset by double-digit declines in business freedom and investment freedom.
Despite some progress in restructuring the state sector since 2010, the private sector remains constrained by heavy regulations and tight state controls. Open-market policies are not in place to spur growth in trade and investment, and the lack of competition continues to stifle dynamic economic expansion. A watered-down reform package endorsed by the Cuban Communist Party has trimmed the number of state workers and expanded the list of approved professions, but many details of the reform remain obscure.
Background
A one-party Communist state, Cuba depends on external assistance
(chiefly oil subsidies provided by Venezuela and remittances from Cuban
émigrés) and a captive labor force to survive. Property rights are
severely restricted. Fidel Castro’s 82-year-old brother Raul continues
to guide both the government and the Cuban Communist Party. Many workers
earn only poverty-level wages, agriculture is a shambles, mining is
depressed, and tourism revenue is volatile. Though the Communist
government maintains strict control of the economy, it recently loosened
restraints on local enterprises in an attempt to maximize their
commercial potential. Restrictions on foreign travel have been eased,
but the state continues to monitor it closely.
Rule of LawView Methodology
Property Rights 10.0 Create a Graph using this measurement
Freedom From Corruption 41.2 Create a Graph using this measurement
Official corruption remains a serious problem, with a culture of
illegality shrouding the mixture of limited private enterprise and a
vast state-controlled economy in a country where there is little respect
for the rule of law. Only state enterprises can enter into economic
agreements with foreigners as minority partners; ordinary citizens
cannot participate. Most means of production are owned by the state.
Limited GovernmentView Methodology
Government Spending 0.0 Create a Graph using this measurement
Fiscal Freedom 60.0 Create a Graph using this measurement
The top individual income tax rate is 50 percent. The top
corporate tax rate is 30 percent (35 percent for wholly foreign-owned
companies). Other taxes include a tax on property transfers and a sales
tax. The overall tax burden is 24.4 percent of GDP. Government spending
is around 67 percent of GDP, and public debt is around 35 percent of the
domestic economy. Despite reforms, the government continues to play a
large role in the economy.
Regulatory EfficiencyView Methodology
Business Freedom 20.0 Create a Graph using this measurement
Labor Freedom 20.0 Create a Graph using this measurement
Monetary Freedom 65.8 Create a Graph using this measurement
Despite reform measures introduced in recent years, private
entrepreneurship is limited and tightly controlled by the state. The
public sector remains the major source of employment, and state
intervention continues to distort the labor market. The government tries
to contain inflation directly by using price controls and regulating
the limited areas of free-market activity and indirectly by controlling
monetary expansion.
Open MarketsView Methodology
Trade Freedom 60.0 Create a Graph using this measurement
Investment Freedom 0.0 Create a Graph using this measurement
Financial Freedom 10.0 Create a Graph using this measurement
Cuba’s average tariff rate is 10 percent. The country’s planned
economy deters foreign trade and investment. The financial sector
remains heavily regulated, and access to credit for entrepreneurial
activity is seriously impeded by the shallowness of the financial
market. The state maintains strict capital and exchange controls.
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