Download Economic Freedom Score - The Heritage Foundation

Cuba
Economic Freedom Score
25
World Rank:
176
Regional Rank:
29
Least
free
uba’s economic freedom score is 28.5, making its economy
Chigher
one of the world’s least free. Its overall score is 0.2 point
than last year, with a notable decline in monetary free-
50
75
Most
0
100 free
28.5
Freedom Trend
30
dom 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.
29
28
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.
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.
How Do We Measure Economic Freedom?
See page 477 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
27
26
25
2009
2010
2011
2012
2013
Country Comparisons
28.5
Country
World
Average
59.6
Regional
Average
59.4
Free
Economies
84.5
0
20
40
60
80
100
Quick Facts
Population: 11.2 million
GDP (PPP): $120.3 billion
2.7% growth in 2010
5-year compound annual growth n/a
$10,704 per capita
Unemployment: n/a
Inflation (CPI): 4.7%
FDI Inflow: $110.0 million
Public Debt: 35.4% of GDP
2011 data unless otherwise noted.
Data compiled as of September 2012.
181
CUBA (continued)
THE TEN ECONOMIC FREEDOMS
Country
RULE OF LAW
World Average
Rank
Property Rights 10.0
Freedom from Corruption 42.0
165th
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 People’s Power and the Council of State. Corruption remains pervasive,
undermining equity and respect for the rule of law.
LIMITED
GOVERNMENT
Fiscal Freedom 62.7
Government Spending 0.0
158th
172nd
0
20
40
60
80
100
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
EFFICIENCY
Business Freedom 10.0
Labor Freedom 20.0
Monetary Freedom 67.4
176th
176th
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 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
MARKETS
Trade Freedom 62.7
Investment Freedom 0.0
Financial Freedom 10.0
149th
170th
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 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.
Score Changes
LIMITED
GOVERNMENT
RULE OF LAW
Property Rights
Freedom from
Corruption
182
0
+5.0
Fiscal Freedom
Government
Spending
REGULATORY
EFFICIENCY
+1.2
0
Business Freedom
Labor Freedom
Monetary Freedom
2013 Index of Economic Freedom
OPEN MARKETS
0
0
–3.9
Trade Freedom
Investment Freedom
Financial Freedom
0
0
0