The Cuban Economy during the Special Period and Beyond

Despite the severe economic crisis Cuba suffered after the socialist camp collapse, or perhaps because of it, the scholarly literature on the island economy has boomed in recent years. The inclusion of well-trained Cuban scholars in edited collections published abroad and Cuban economists publishing their own edited volumes constitute welcome additions to the literature.¹

As more is published on the subject, it becomes increasingly difficult to cover all the main themes in a single volume by a single author, hence the proliferation of compilations and specific areas treated by a team of experts. These trends are illustrated by the seven books reviewed herein, virtually all of which focus on the economic restructuring under the Special Period (1990-2004) and its effects. Six of the books under review are edited compilations; four include Cuban economists and a useful interchange of ideas; one is published in Havana with only Cuban authors; and one deals with the sugar industry alone. In total there are sixty-eight authors and eighty-four chapters. Roughly 31 percent of the authors are Americans; 28 percent Cubans; 23 percent Canadian, European, and Latin American; and 18 percent Cuban Americans. Due to such magnitude and variety, as well as space limitations, painful decisions have been made. For instance, non-economic subjects in Azicri and Deal were omitted from consideration. More difficult was the decision to leave out the social effects of the crisis and economic restructuring on poverty, equality, personal consumption, social expenditures and services, as discussed in Domínguez et al. by Espina, Íñiguez and Pérez Villanueva, Togores and García (see also Álvarez and Máttar 2004; Mesa-Lago 2005a).

Five of the books do not have conclusions; various authors contribute two or more chapters in the compilations; and occasionally the same chapter appears in various books, in Spanish and English, or enlarged and updated versions. This essay merges the materials into seven major themes and introduces my own divergent views within the thematic divisions: (1) Cuba's restructuring and globalization, (2) de-dollarization and recentralization, (3) domestic macroeconomic evolution, (4) decline of the sugar agroindustry, (5) external sector and foreign investment, (6) tourism and remittances, and (7) economic reforms for the future.

Cuba's Restructuring and Globalization

The collapse of the socialist camp, combined with erroneous domestic economic policies in 1986-1990, provoked the worst economic crisis under the revolution, with a nadir in 1993 (a tightening of the U.S. embargo occurred in 1996, when the worst part of the crisis was over and the recovery was on the way). To confront a 35-percent decline in GDP, a 75-percent fall in foreign trade, and the termination of Soviet aid ($65 billion in 1960-1990, 60 percent of which were grants and non-repayable price subsidies), the government launched a supposedly temporary restructuring reform, euphemistically called The Special Period in Time of Peace, which is still in operation. Mostly enacted in 1993-1996, the reforms involve both domestic and external policies: legalization of the dollar and foreign remittances; decentralization of economic decisions and management both domestic and in external trade; transformation of state farms into cooperatives (UBPC), reopening of free agricultural...