Command or Free market?
Cuba's economy has a lot of elements of a command economy. Some of the major elements are that most industries are run by and property of the government and the government has employed a substantial amount of the work force. However, even though the economy of Cuba is still very government controlled, the economy is slowly becoming more free. For example, ever since 2008, the Cuban government has been allowing more and more private businesses to set up in Cuba. This has helped raise Cuba's GDP, ca 20% of the GDP is now from privately owned businesses. (Pike, John)
How does Cuba answer the key economic question?
Since Cuba is a command economy, the Cuban government has a hard time answering the key economic question of meeting needs with limited supplies. A command economy government is often not able to supply their population with enough of the products they need, because they are not able to gauge the amount needed. This is due to the fact that almost all the businesses in the country are owned by one entity, which makes it hard for them to receive up-to-date information of their populations needs. This leads to there being too many of a product which isn't needed and too little of a product that is needed.
Right now, the needs of the population are often satisfied with the help of black markets. However, this is not a long term solution, as black markets often sell scarce goods for a higher price and many goods there are either fake or bad quality.
For Cuba, trading is mostly done only to acquire goods that they can't acquire alone. Most of the produced goods in Cuba are used to satisfy the needs of their population. (The Insurance Advice.)
What makes up Cuba's Gross Domestic Product (GDP) and other noteworthy data
GDP:
2013: 77.15 billion USD
2014: 80.66 billion USD
GDP growth rate:
2013 -> 2014: 4.54% increase
GDP per capita
2013: 11 500 USD
2014: 11 600 USD
Inflation prices:
2015: 4.6% increase
2016: 4.5% increase
Population:
2013: 11.27 million
Labour force
2013: 5.117 million
Unemployment rate:
2014: 2.7%
2015: 2.4%
Government spending:
2012: 31.91% of GDP
2013: 33.25% of GDP
Key industries:
Agriculture:
Sugar, tobacco, citrus, coffee, rice, potatoes, beans, livestock
Industries:
Petroleum, nickel, cobalt, pharmaceuticals, tobacco, construction, steel, cement, agricultural machinery, sugar
Imports:
2015: 13.48 billion USD
2016: 12.34 billion USD
Main import partners (2015):
Venezuela: 31.8%
China: 17.6%
Spain: 10%
Brazil: 4.8%
Main import products:
Petroleum, food, machinery and equipment, chemicals
Exports:
2015: 3.903 billion USD
2016: 3.428 billion USD
Main export partners (2015):
Canada: 17.7%
Venezuela: 13.8%
China: 13%
Netherlands: 6.4%
Spain: 5.4%
Belize: 4.7%
Main export products:
Petroleum, nickel, medical products, sugar, tobacco, fish, citrus, coffee
The United States of America has an embargo (an official trade ban) on Cuba
Public debt:
2015: 34.6% of GDP
2016: 32.7% of GDP
External debt:
2015: 26 billion USD
2016: 26.32 billion USD
Equity of Income:
The income is not distributed fairly in Cuba. People working in jobs that are from the government (like doctors, lawyers and police officers) earn a lot less than jobs from private organisations. This is because the government regulates the income of the people they hire, while private organisations can choose what they pay their employees. For example, in Cuba a can earn around CUC $60 a day (1 CUC = 1 USD), while a doctor only earns CUC $40 a month (Burke, James)
Government interference:
Since the Cuban government is a command economy, the government interferes a lot into markets. They control most of the production that happens in the country and also own most of the businesses. The Cuban government has enforced import and export levies, which are about 7.7%. The highest individual income tax in Cuba is 50%, while the lowest individual income tax is 10%. Anyone who has an income higher than 4000 USD is eligible for taxation. (The Heritage Foundation)
Cuba's economy has a lot of elements of a command economy. Some of the major elements are that most industries are run by and property of the government and the government has employed a substantial amount of the work force. However, even though the economy of Cuba is still very government controlled, the economy is slowly becoming more free. For example, ever since 2008, the Cuban government has been allowing more and more private businesses to set up in Cuba. This has helped raise Cuba's GDP, ca 20% of the GDP is now from privately owned businesses. (Pike, John)
How does Cuba answer the key economic question?
Since Cuba is a command economy, the Cuban government has a hard time answering the key economic question of meeting needs with limited supplies. A command economy government is often not able to supply their population with enough of the products they need, because they are not able to gauge the amount needed. This is due to the fact that almost all the businesses in the country are owned by one entity, which makes it hard for them to receive up-to-date information of their populations needs. This leads to there being too many of a product which isn't needed and too little of a product that is needed.
Right now, the needs of the population are often satisfied with the help of black markets. However, this is not a long term solution, as black markets often sell scarce goods for a higher price and many goods there are either fake or bad quality.
For Cuba, trading is mostly done only to acquire goods that they can't acquire alone. Most of the produced goods in Cuba are used to satisfy the needs of their population. (The Insurance Advice.)
What makes up Cuba's Gross Domestic Product (GDP) and other noteworthy data
GDP:
2013: 77.15 billion USD
2014: 80.66 billion USD
GDP growth rate:
2013 -> 2014: 4.54% increase
GDP per capita
2013: 11 500 USD
2014: 11 600 USD
Inflation prices:
2015: 4.6% increase
2016: 4.5% increase
Population:
2013: 11.27 million
Labour force
2013: 5.117 million
Unemployment rate:
2014: 2.7%
2015: 2.4%
Government spending:
2012: 31.91% of GDP
2013: 33.25% of GDP
Key industries:
Agriculture:
Sugar, tobacco, citrus, coffee, rice, potatoes, beans, livestock
Industries:
Petroleum, nickel, cobalt, pharmaceuticals, tobacco, construction, steel, cement, agricultural machinery, sugar
Imports:
2015: 13.48 billion USD
2016: 12.34 billion USD
Main import partners (2015):
Venezuela: 31.8%
China: 17.6%
Spain: 10%
Brazil: 4.8%
Main import products:
Petroleum, food, machinery and equipment, chemicals
Exports:
2015: 3.903 billion USD
2016: 3.428 billion USD
Main export partners (2015):
Canada: 17.7%
Venezuela: 13.8%
China: 13%
Netherlands: 6.4%
Spain: 5.4%
Belize: 4.7%
Main export products:
Petroleum, nickel, medical products, sugar, tobacco, fish, citrus, coffee
The United States of America has an embargo (an official trade ban) on Cuba
Public debt:
2015: 34.6% of GDP
2016: 32.7% of GDP
External debt:
2015: 26 billion USD
2016: 26.32 billion USD
Equity of Income:
The income is not distributed fairly in Cuba. People working in jobs that are from the government (like doctors, lawyers and police officers) earn a lot less than jobs from private organisations. This is because the government regulates the income of the people they hire, while private organisations can choose what they pay their employees. For example, in Cuba a can earn around CUC $60 a day (1 CUC = 1 USD), while a doctor only earns CUC $40 a month (Burke, James)
Government interference:
Since the Cuban government is a command economy, the government interferes a lot into markets. They control most of the production that happens in the country and also own most of the businesses. The Cuban government has enforced import and export levies, which are about 7.7%. The highest individual income tax in Cuba is 50%, while the lowest individual income tax is 10%. Anyone who has an income higher than 4000 USD is eligible for taxation. (The Heritage Foundation)
Above is a graph comparing the avarage percent of economic freedom in the world to the percentage of economic freedom in Cuba.
As you can see, Cuba is well below the average percentage. In fact, Cuba is the country with the third least amount of economic freedom. (Fig.1)
As you can see, Cuba is well below the average percentage. In fact, Cuba is the country with the third least amount of economic freedom. (Fig.1)