Cuba

Economic Freedom Score

50
25 75
Least Most
free 0 100 free
World Rank: 176 Regional Rank: 29 28.5

Chigher
ubas economic freedom score is 28.5, making its economy
one of the worlds least free. Its overall score is 0.2 point
than last year, with a notable decline in monetary free-
Freedom Trend
30
dom counterbalanced by gains in freedom from corruption
and fiscal freedom. Cuba is ranked least free of 29 countries 29
in the South and Central America/Caribbean region, and its
overall score is significantly lower than the regional average.
28
Cuba scores far below world averages in most areas of eco-
nomic freedom, and its economy remains one of the worlds 27
most repressed. The foundations of economic freedom are
particularly weak in the absence of an independent and fair
26
judiciary. No courts are free of political interference, and per-
vasive corruption affects many aspects of economic activity.
25
As the largest source of employment, the public sector 2009 2010 2011 2012 2013
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 Country Comparisons
allow restricted self-employment in the non-public sector, but
many details of the reform are obscure and little progress has Country 28.5
been observed. The private sector is severely constrained by
heavy regulations and tight state controls. Open-market poli- World
59.6
cies are not in place to spur growth in trade and investment, Average
and the lack of competition stifles productivity growth. Regional
Average 59.4
Background: A one-party Communist state, Cuba depends
on external assistance (chiefly oil provided by Venezuelas Free
84.5
Hugo Chvez and remittances from Cuban migrs) and a Economies
captive labor force to survive. Property rights are severely 0 20 40 60 80 100
restricted. Fidel Castros 81-year-old younger brother Raul
continues to guide both the government and the Cuban Com-
munist Party. Cubas socialist command economy is in peren- Quick Facts
nial crisis. The average worker earns less than $25 a month, Population: 11.2 million
agriculture is in shambles, mining is depressed, and tourism GDP (PPP): $120.3 billion
revenue has proven volatile. But economic policy is resolutely 2.7% growth in 2010
Communist, and the regime rejects any moves toward genu- 5-year compound annual growth n/a
ine political or economic freedom. $10,704 per capita
Unemployment: n/a
Inflation (CPI): 4.7%
FDI Inflow: $110.0 million
Public Debt: 35.4% of GDP
How Do We Measure Economic Freedom?
See page 477 for an explanation of the methodology 2011 data unless otherwise noted.
or visit the Index Web site at heritage.org/index. Data compiled as of September 2012.
181
CUBA (continued)
THE TEN ECONOMIC FREEDOMS
Country World Average Rank

RULE OF LAW Property Rights 10.0 165th

Freedom from Corruption 42.0 59th
0 20 40 60 80 100
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 Peoples Power and the Council of State. Corruption remains pervasive,
undermining equity and respect for the rule of law.

LIMITED Fiscal Freedom 62.7 158th

GOVERNMENT Government Spending 0.0 172nd
0 20 40 60 80 100
Cubas 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 Business Freedom 10.0 176th

EFFICIENCY Labor Freedom 20.0 176th
Monetary Freedom 67.4 146th
0 20 40 60 80 100
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 govern-
ment has implemented a measure to allow workers to hold more than one job. Monetary stabil-
ity is vulnerable to state interference, with prices subject to controls.

OPEN Trade Freedom 62.7 149th

MARKETS Investment Freedom 0.0 170th
Financial Freedom 10.0 170th
0 20 40 60 80 100
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 exten-
sive 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.

Score Changes
LIMITED REGULATORY
RULE OF LAW GOVERNMENT EFFICIENCY OPEN MARKETS

Property Rights 0 Fiscal Freedom +1.2 Business Freedom 0 Trade Freedom 0

Freedom from +5.0 Government 0 Labor Freedom 0 Investment Freedom 0
Corruption Spending Monetary Freedom 3.9 Financial Freedom 0

182 2013 Index of Economic Freedom