Download Economic Freedom Score Country Comparisons Freedom Trend 29.8

CUBA
Economic Freedom Score
25
World Rank:
177
Regional Rank:
29
Least
free 0
economy remains repressed by the systemic inefCtic uba’s
ficiency and institutional shortcomings characterisof a Communist regime. Dominated by state-owned
50
75
Most
100 free
29.8
Freedom Trend
31
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.
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.
How Do We Measure Economic Freedom?
See page 467 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
30
29
28
27
2012
2013
2014
2015
2016
Country Comparisons
29.8
Country
World
Average
60.7
Regional
Average
59.8
Free
Economies
83.9
0
20
40
60
80
100
Quick Facts
Population: 11.2 million
GDP (PPP): $134.3 billion
1.3% growth in 2014
5-year compound annual growth 2.5%
$11,950 per capita
Unemployment: n/a
Inflation (CPI): 5.3%
FDI Inflow: n/a
Public Debt: 32.1% of GDP
2014 data unless otherwise noted.
Data compiled as of September 2015.
171
CUBA (continued)
THE TEN ECONOMIC FREEDOMS
Score
RULE OF
LAW
Property Rights
Freedom from Corruption
Country
World Average
10.0
46.0
0
20
40
60
80
Rank
1–Year
Change
164th
65th
0
0
100
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.
Fiscal Freedom 52.1
GOVERNMENT
0.0
Government Spending
SIZE
174th
174th
0
20
40
60
80
–9.7
0
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. 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
EFFICIENCY
Business Freedom
Labor Freedom
Monetary Freedom
20.0
20.0
65.2
183rd
182nd
169th
0
20
40
60
80
0
0
+0.4
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. 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
MARKETS
Trade Freedom
Investment Freedom
Financial Freedom
64.6
10.0
10.0
153rd
172nd
174th
0
20
40
60
80
+0.8
+10.0
0
100
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.
Long-Term Score Change (since 1995)
RULE OF LAW
Property Rights
Freedom from
Corruption
172
0
+36.0
GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending
+4.5
0
REGULATORY
EFFICIENCY
Business Freedom –20.0
Labor Freedom
0
Monetary Freedom +2.3
2016 Index of Economic Freedom
OPEN MARKETS
Trade Freedom
Investment Freedom
Financial Freedom
+4.6
0
0