2019 Index of Economic Freedom

Cuba

overall score27.8
world rank178
Rule of Law

Property Rights31.6

Government Integrity37.7

Judicial Effectiveness10.0

Government Size

Government Spending0.0

Tax Burden48.8

Fiscal Health15.6

Regulatory Efficiency

Business Freedom20.0

Labor Freedom20.0

Monetary Freedom65.6

Open Markets

Trade Freedom64.0

Investment Freedom10.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 11.5 million
  • GDP (PPP):
    • $148.0 billion
    • 0.9% growth
    • 1.9% 5-year compound annual growth
    • $12,920 per capita
  • Unemployment:
    • 2.6%
  • Inflation (CPI):
    • 5.5%
  • FDI Inflow:

Cuba’s economic freedom score is 27.8, making its economy the 178th freest in the 2019 Index. Its overall score has decreased by 4.1 points, precipitated by a steep plunge in fiscal health. Cuba is ranked 31st among 32 countries in the Americas region, and its overall score is well below the regional and world averages.

State control of the economy by the nearly bankrupt Cuban government is both pervasive and economically inefficient in one of the world’s last Communist dictatorships. Liberalizing pro-market reforms were adopted nearly a decade ago to raise productivity. They remain in effect, at least in theory, but no serious effort has been made to implement them. Much of the labor force performs low-productivity functions in Cuba’s bloated government sector. All courts are subject to political interference, and private property is strictly regulated. Excessive bureaucracy and the lack of regulatory transparency continue to limit trade and investment.

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Background

Miguel Díaz-Canel was named president when the late Fidel Castro’s 87-year-old brother Raúl stepped down in February 2018, but Díaz-Canel is merely a figurehead: Raúl retains the real power as head of the Communist Party and the Cuban military, and his family controls much of the economy. The Cuban people remain disillusioned, and diplomatic relations with the U.S. have soured. Without significant supplies of subsidized oil from nearly bankrupt Venezuela, Cuba’s dysfunctional economy is even more dependent on foreign exchange inflows from emigrants’ remittances and the tourism-generated foreign currency that the regime needs to survive. Low, state-dictated wages trap many workers below the poverty line. The agriculture sector is starved for investment, and the banking system is primitive.

Rule of LawView Methodology

Property Rights 31.6 Create a Graph using this measurement

Government Integrity 37.7 Create a Graph using this measurement

Judicial Effectiveness 10.0 Create a Graph using this measurement

Most means of production are owned by the state. Property seizures by police without legal justification are common. There is practically no separation among the judiciary, the National Assembly, and the Communist Party, which can appoint or remove judges at any time. Corruption is a serious problem that remains unaddressed. Widespread illegality permeates Cuba’s few private enterprises and vast state-controlled economy.

Government SizeView Methodology

The top income tax rate is 50 percent, and the top corporate tax rate is 30 percent. Other taxes include property transfer and sales taxes. The overall tax burden equals 41.5 percent of total domestic income. Over the past three years, government spending has amounted to 64.2 percent of the country’s output (GDP), and budget deficits have averaged 7.1 percent of GDP. Public debt is equivalent to 47.7 percent of GDP.

Regulatory EfficiencyView Methodology

Only limited private economic activity is permitted. Inconsistent and nontransparent application of regulations impedes entrepreneurship. State control of the formal labor market has led to the creation of a large informal economy. Prices are tightly controlled and regulated to contain inflation. Cuba has been very dependent on subsidized oil from Venezuela and Russia.

Open MarketsView Methodology

The combined value of exports and imports is equal to 31.6 percent of GDP. The average applied tariff rate is 8.0 percent. As of June 30, 2018, according to the WTO, Cuba had 50 nontariff measures in force. State-owned enterprises significantly distort the economy. Access to credit for private-sector activity is severely impeded by the shallow financial market. Despite a decade of incremental changes, the state remains firmly in control.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Canada77.70.0
2United States76.81.1
3Chile75.40.2
4Saint Lucia68.71.1
5Jamaica 68.6-0.5
6Uruguay 68.6-0.6
7Peru67.8-0.9
8Colombia67.3-1.6
9Panama 67.20.2
10Saint Vincent and the Grenadines65.8-1.9
11Costa Rica 65.3-0.3
12Mexico64.7-0.1
13Barbados64.77.7
14Dominica63.6-0.9
15The Bahamas62.9-0.4
16Guatemala 62.6-0.8
17El Salvador 61.8-1.4
18Paraguay 61.8-0.3
19Dominican Republic61-0.6
20Honduras 60.2-0.4
21Nicaragua 57.7-1.2
22Trinidad and Tobago57-0.7
23Guyana56.8-1.9
24Belize55.4-1.7
25Haiti52.7-3.1
26Argentina52.2-0.1
27Brazil51.90.5
28Suriname48.10.0
29Ecuador46.9-1.6
30Bolivia42.3-1.8
31Cuba27.8-4.1
32Venezuela 25.90.7
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