2013 Index of Economic Freedom

Cuba

overall score28.5
world rank176
Rule of Law

Property Rights10.0

Freedom From Corruption42.0

Limited Government

Government Spending0.0

Fiscal Freedom62.7

Regulatory Efficiency

Business Freedom10.0

Labor Freedom20.0

Monetary Freedom67.4

Open Markets

Trade Freedom62.7

Investment Freedom0.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 11.2 million
  • GDP (PPP):
    • $120.3 billion
    • 2.7% growth
    • $10,704 per capita
  • Unemployment:
  • Inflation (CPI):
    • 4.7%
  • FDI Inflow:
    • $110.0 million
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Cuba’s economic freedom score is 28.5, making its economy one of the world’s least free. Its overall score is 0.2 point higher than last year, with a notable decline in monetary freedom counterbalanced by gains in freedom from corruption and fiscal 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.

Cuba scores far below world averages in most areas of economic freedom, and its economy remains one of the world’s most repressed. The foundations of economic freedom are particularly weak in the absence of an independent and fair judiciary. No courts are free of political interference, and pervasive corruption affects many aspects of economic activity.

As the largest source of employment, the public sector accounts for more than 80 percent of all jobs. A watered-down reform package endorsed by the Cuban Communist Party in April 2011 promised to trim the number of state workers and allow restricted self-employment in the non-public sector, but many details of the reform are obscure and little progress has been observed. The private sector is severely 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 stifles productivity growth.

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Background

A one-party Communist state, Cuba depends on external assistance (chiefly oil provided by Venezuela’s Hugo Chávez and remittances from Cuban émigrés) and a captive labor force to survive. Property rights are severely restricted. Fidel Castro’s 81-year-old younger brother Raul continues to guide both the government and the Cuban Communist Party. Cuba’s socialist command economy is in perennial crisis. The average worker earns less than $25 a month, agriculture is in shambles, mining is depressed, and tourism revenue has proven volatile. But economic policy is resolutely Communist, and the regime rejects any moves toward genuine political or economic freedom.

Rule of LawView Methodology

Property Rights 10.0 Create a Graph using this measurement

Freedom From Corruption 42.0 Create a Graph using this measurement

The government adheres to socialist principles in organizing the state-controlled economy, and most means of production are owned by the state. Citizens may own land and productive capital for farming and self-employment. The constitution explicitly subordinates the courts to the National Assembly of People’s Power and the Council of State. Corruption remains pervasive, undermining equity and respect for the rule of law.

Limited GovernmentView Methodology

Cuba’s top income tax rate is 50 percent. The top corporate tax rate is 30 percent (35 percent for companies with entirely foreign capital). Other taxes include a tax on property transfers and a sales tax. Overall tax revenue is estimated to be equivalent to about 20 percent of GDP. Taxation is erratic and not effectively administered. Inefficient public-sector spending remains high at over 70 percent of total domestic output.

Regulatory EfficiencyView Methodology

Regulatory efficiency remains poor, and private entrepreneurship is limited. The application of regulations is inconsistent and non-transparent. State control of the labor market has spurred creation of a large informal sector. In an attempt to reduce labor market rigidity, the government has implemented a measure to allow workers to hold more than one job. Monetary stability is vulnerable to state interference, with prices subject to controls.

Open MarketsView Methodology

The trade regime remains largely non-transparent, and imports and exports are dominated by the state. Foreign investment must be approved by the government, which exercises extensive control of economic activity. 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.

Country's Score Over Time

Bar Graph of Cuba Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Cuba to other economic country groups

Regional Ranking

rank country overall change
1Chile790.7
2Saint Lucia70.4-0.9
3The Bahamas70.12.1
4Uruguay 69.7-0.2
5Colombia69.61.6
6Barbados69.30.3
7Peru68.2-0.5
8Costa Rica 67-1.0
9Jamaica 66.81.7
10El Salvador 66.7-2.0
11Saint Vincent and the Grenadines66.70.2
12Dominica63.92.3
13Panama 62.5-2.7
14Trinidad and Tobago62.3-2.1
15Paraguay 61.1-0.7
16Guatemala 60-0.9
17Dominican Republic59.7-0.5
18Honduras 58.4-0.4
19Brazil57.7-0.2
20Belize57.3-4.6
21Nicaragua 56.6-1.3
22Guyana53.82.5
23Suriname52-0.6
24Haiti48.1-2.6
25Bolivia47.9-2.3
26Ecuador46.9-1.4
27Argentina46.7-1.3
28Venezuela 36.1-2.0
29Cuba28.50.2
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