2016 Index of Economic Freedom

Cuba

overall score29.8
world rank177
Rule of Law

Property Rights10.0

Freedom From Corruption46.0

Limited Government

Government Spending0.0

Fiscal Freedom52.1

Regulatory Efficiency

Business Freedom20.0

Labor Freedom20.0

Monetary Freedom65.2

Open Markets

Trade Freedom64.6

Investment Freedom10.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 11.2 million
  • GDP (PPP):
    • $134.3 billion
    • 1.3% growth
    • $11,950 per capita
  • Unemployment:
  • Inflation (CPI):
    • 5.3%
  • FDI Inflow:
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Cuba’s economy remains repressed by the systemic inefficiency and institutional shortcomings characteristic of a Communist regime. Dominated by state-owned companies connected to the military and political elite, the economy continues to suffer from a lack of dynamism aggravated by cronyism, corruption, and bureaucracy. Non-state sectors have gradually expanded, but the absence of genuine political will for reform leaves business struggling within a poor regulatory framework.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 29.8 (up 0.2 point)
  • Economic Freedom Status: Repressed
  • Global Ranking: 177th
  • Regional Ranking: 29th in the South and Central America/Caribbean Region
  • Notable Successes: None
  • Concerns: Rule of Law, Labor Freedom, and Financial Freedom
  • Overall Score Change Since 2012: +1.5

Much-touted “free-market reforms” have largely involved only cosmetic changes. The rule of law remains subject to political influence and the overriding interests of the Communist Party. The judiciary’s autonomy is severely impeded by the centralization of power in the one-party state.

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Background

Fidel Castro’s 84-year-old brother Raúl leads both the government and the Cuban Communist Party. Violent repression of civil society and dissidents has increased dramatically in the past year. Restrictions on foreign travel have been eased, but certain Cubans are still barred from leaving. Cuba depends on external assistance such as remittances from Cuban émigrés and oil subsidies provided by Venezuela for the foreign exchange it needs to survive. With world oil prices dropping and instability in Venezuela increasing, Cuba is hoping for new revenue from liberalized U.S. rules governing American travel to the island. Workers’ wages are not enough to live on, the agriculture sector is starved for investment, and tourism revenue is volatile.

Rule of LawView Methodology

Property Rights 10.0 Create a Graph using this measurement

Freedom From Corruption 46.0 Create a Graph using this measurement

Corruption remains a serious problem, with widespread illegality permeating the limited private enterprises and the vast state-controlled economy. Freedom of movement is restricted. Only state enterprises may enter into economic agreements with foreigners as minority partners; ordinary citizens cannot participate. Most means of production are owned by the state. The Council of State completely controls the courts and the judiciary.

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. Taxation is not administered effectively. Overall tax revenue is estimated to equal about 37.3 percent of GDP. Inefficient public-sector spending remains high at over 60 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. The government still administers most prices and will face inflationary pressures as it proceeds with a plan to eliminate its dual currency system that has long been a source of economic distortions.

Open MarketsView Methodology

Cuba’s average tariff rate is 7.7 percent. The country’s centrally planned economy is a significant barrier to the free flow of international trade and investment. The financial sector remains heavily regulated and controlled by the state. Access to credit for entrepreneurial activity is uneven and further 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

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Regional Ranking

rank country overall change
1Chile77.7-0.8
2The Bahamas70.92.2
3Colombia70.8-0.9
4Saint Lucia70-0.2
5Saint Vincent and the Grenadines68.80.8
6Uruguay 68.80.2
7Barbados68.30.4
8Jamaica 67.5-0.2
9Peru67.4-0.3
10Costa Rica 67.40.2
11Dominica670.9
12El Salvador 65.1-0.6
13Panama 64.80.7
14Trinidad and Tobago62.9-1.2
15Guatemala 61.81.4
16Paraguay 61.50.4
17Dominican Republic610.0
18Nicaragua 58.61.0
19Honduras 57.70.3
20Belize57.40.6
21Brazil56.5-0.1
22Guyana55.4-0.1
23Suriname53.8-0.4
24Haiti51.30.0
25Ecuador48.6-0.6
26Bolivia47.40.6
27Argentina43.8-0.3
28Venezuela 33.7-0.6
29Cuba29.80.2
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