Download Economic Freedom Score Country Comparisons Freedom Trend 29.6

CUBA
Economic Freedom Score
25
World Rank:
177
Regional Rank:
29
Least
free 0
uba’s economic freedom score is 29.6, making its economy
Chigher
one of the world’s least free. Its overall score is 0.9 point
than last year, with a slight deterioration in monetary
50
75
Most
100 free
29.6
Freedom Trend
31
freedom outweighed by improvements in three of the 10 economic freedoms, including trade freedom, fiscal freedom,
and freedom from corruption. 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.
In recent years, the government has made measured concessions to encourage more entrepreneurship and private-sector
growth. Communist Party–endorsed reforms to cut government payrolls and expand approved professions have not
been broad enough to ensure any meaningful advancement in
overall economic freedom. The state continues to interfere in
most economic activity. Price controls are pervasive, and the
two-tiered exchange rate regime continues to distort prices.
Despite membership in the World Trade Organization, the
economy remains relatively cut off from the international
marketplace. Only state enterprises are allowed to engage in
international trade and investment. The state uses an oppressive regulatory environment to suppress entrepreneurial
activity and controls most means of production. Shallow
credit markets impede access to credit for business activities.
BACKGROUND: A one-party Communist state, Cuba depends
on external assistance (chiefly oil subsidies provided by Venezuela and remittances from Cuban émigrés) and a captive
labor force to survive. Property rights are severely restricted. Fidel Castro’s 83-year-old brother Raúl continues to
lead both the government and the Cuban Communist Party.
Workers’ wages are not enough to live on, the agriculture sector is starved for investment, and tourism revenue is volatile.
Under Raúl Castro, violent repression of civil society and of
dissidents has increased dramatically. Much-touted “freemarket reforms” have proven to be cosmetic changes in what
remains a socialist state. Restrictions on foreign travel have
been eased, but certain Cubans are still barred from leaving.
How Do We Measure Economic Freedom?
See page 475 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
30
29
28
27
26
2011
2012
2013
2014
2015
Country Comparisons
29.6
Country
World
Average
60.4
Regional
Average
59.7
Free
Economies
84.6
0
20
40
60
80
100
Quick Facts
Population: 11.2 million
GDP (PPP): $130.0 billion
2.8% growth in 2013
5-year compound annual growth 2.3%
$11,610 per capita
Unemployment: n/a
Inflation (CPI): 6.0%
FDI Inflow: n/a
Public Debt: 37.5% of GDP
2013 data unless otherwise noted.
Data compiled as of September 2014.
179
CUBA (continued)
THE TEN ECONOMIC FREEDOMS
Score
RULE OF
LAW
Country
World Average
Property Rights 10.0
Freedom from Corruption 46.0
0
20
40
60
80
Rank
1–Year
Change
165th
63rd
0
+4.8
100
Although the perceived level of corruption has traditionally been far lower in Cuba than in
other Latin American countries, it remains a considerable systemic problem. Low salaries for
public officials and the dual exchange rate provide incentives for illicit enrichment. Only state
enterprises may enter into economic agreements with foreigners as minority partners. Most
means of production are owned by the state.
Fiscal Freedom 61.8
GOVERNMENT
Government Spending 0.0
SIZE
165th
176th
0
20
40
60
80
+1.8
0
100
Cuba’s top individual income tax rate is 50 percent, and its top corporate tax rate is 30 percent.
Other taxes include a property transfer tax and a sales tax. The overall tax burden equals 20.5
percent of domestic production. Public expenditures account for 60.2 percent of the domestic
economy, and public debt is equal to about 38 percent of gross domestic product.
REGULATORY
EFFICIENCY
Business Freedom 20.0
Labor Freedom 20.0
Monetary Freedom 64.8
182nd
182nd
172nd
0
20
40
60
80
0
0
–1.0
100
Private entrepreneurship exists only on a very small scale. The inconsistent and non-transparent application of regulations impedes the creation of new businesses. The rigid, statecontrolled labor market has helped to create a large informal economy. The government tries
to contain inflation directly by using price controls and regulating the limited areas of freemarket activity and indirectly by controlling monetary growth.
OPEN
MARKETS
Trade Freedom 63.8
Investment Freedom 0.0
Financial Freedom 10.0
154th
176th
174th
0
20
40
60
80
+3.8
0
0
100
Cuba’s average tariff rate is 8.1 percent. The country’s centrally planned economy is a barrier to the free flow of international trade and investment. The financial sector is tightly controlled by the state. Over a dozen foreign banks have opened representative offices, but they
are not allowed to operate freely. Credit is not allocated on market terms, and capital markets
remain underdeveloped.
Long-Term Score Change (since 1995)
RULE OF LAW
Property Rights
Freedom from
Corruption
180
0
+36.0
GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending
+14.2
0
REGULATORY
EFFICIENCY
OPEN MARKETS
Business Freedom –20.0
Labor Freedom
0
Monetary Freedom +1.9
Trade Freedom
+3.8
Investment Freedom –10.0
Financial Freedom
0
2015 Index of Economic Freedom