countryaah, Cuba has been a socialist country with a plan-driven
economy since 1961. The country has also been affected by US
economic sanctions (often referred to as embargo or
blockade). The country received generous subsidies from the
Soviet Union, which paid well for Cuban sugar, including oil
supplies. With the fall of the Soviet Union, Cuba was hit by
very serious financial problems and a dramatic fall in
living standards, a crisis known as the "special period".
Cuba today has left much of the crisis behind. The
country has gained new business avenues and trading
partners. The authorities have implemented limited reforms,
but these have not produced expected growth. The sanctions,
combined with an ongoing crisis with Cuba's closest ally
Venezuela, have created a complicated and uncertain
situation for the Cuban economy.
Business and commerce
All three quarters of Cuba's economy is service-based,
while industry accounts for 21 percent of GDP, agriculture
accounts for just 4 percent. Health services and tourism are
the major sources of currency and are more important than
the once dominant sugar industry. Other export industries
include tobacco and beverages, mining (nickel and cobalt),
agricultural products (including citrus fruits), and
biotechnology (medicine). For a period, the export of
Venezuelan oil was also a significant source of income.
The state controls strategic parts of the economy. It
sets wages, prices and controls trading. Cuba has for years
been struggling with low productivity and achieving its
growth goals. The country depends on importing most of the
food it consumes, and wages for government employees are
rarely sufficient (real wages are well below the 1989
level). The opening for tourism, remittances from emigrated
Cubans and private businesses has given parts of the
population a more comfortable financial situation, but has
created economic differences. Cuba is ranked much higher on
the United Nations Human Development Index (HDI) than the
economy would suggest, which is probably due to a lot of
Since the 1990s, the authorities have sought to spread
the trade in several countries, but the US sanctions and
penalties make this difficult - among other things, a
billion dollars have been given to an international bank
that had relations with Cuba. In 2016, the most important
trading partners were China, Venezuela, Spain, Canada,
Brazil and Mexico. Under Raúl Castro, Cuba has renegotiated
its foreign debt and left 90 percent of Russia's major debt,
with roots in the Soviet era. During Barack Obama, some of
the sanctions against Cuba were eased, but Trump
administration has subsequently tightened these again.
The economic crisis in Venezuela is causing major
problems for Cuba. From 2016 to 2017, Venezuela went from
receiving 42.9 percent of Cuba's exports to 27.7 percent.
Agriculture and fishing
Agriculture employs 18 percent of Cubans, but accounts
for only 4 percent of GDP. Cuba has never managed to become
self-sufficient in agricultural products and is largely
dependent on imports.
When Fidel Castro fell ill and his brother Raúl Castro
became the country's top leader in 2008, the authorities
began giving farmers the right to use land that is broken.
The trial has so far yielded limited results. Coffee is
grown on the mountain slopes of the southeastern provinces,
and to a lesser extent in the middle parts, but production
is marginal compared to the time before the revolution.
Otherwise, citrus fruits are produced for internal
consumption and export (especially oranges and grapefruit).
The grasslands in the middle and eastern parts of the
country formed the basis for an extensive cattle industry.
The industry weakened in the years following the revolution
and further in the 1990s.
Fishing has provided the basis for a significant export
industry, and is still of importance. The annual catches in
the 1980s were about 200,000 tonnes, but in the period
2010-2013 was around a tenth of this. Cubas exports
shellfish to a certain extent.
Tobacco is an important export item, it is exported
especially in the form of the famous Cuban cigars. The
Vuelta Abajo area west of Havana is referred to as the
world's best area for tobacco production.
Sugar production reached 8.5 million tonnes in 1970,
accounting for 75 per cent of the country's exports in 1988.
In 2017, total production was less than two million tonnes.
Nickel, which is used to make stainless steel, is the
most important metal. Cuba has managed to increase
production during the crisis years, despite the fact that
the United States introduced punitive measures against a
Canadian firm that has been heavily in recovery (Sherritt).
Nickel is one of the country's most important export goods,
and Cuba has the world's third largest deposits. There are
also significant deposits of iron ore, cobalt and manganese.
Most of the mineral resources are found in the
mountainous regions of the southeast.
Oil and gas
Petroleum is mined off the north coast and around Ciego
de Ávila. Cuba aimed to increase its own oil production from
the 1980s and especially after the fall of the Soviet Union.
The production now covers a considerable part of the
country's consumption, but the oil is strongly
sulfate-containing, which limits its applications. The
country depends on imports, especially from Venezuela.
Except for the factories that processed agricultural
products such as sugar and tobacco, Cuba had little industry
before 1959. After the revolution, a number of industrial
plants, often on a large scale, were built with financial
and technical support from the Soviet Union and the other
countries in the Eastern bloc.
Production fell dramatically during the 1990s, when oil,
spare parts and wages, among others, were lost. In 2017,
industrial production remained at 68 per cent of the 1989
Much of the industrial production is aimed at building
and construction activities.
Cuba established a medical industry in the mid-1980s. The
biopharmaceutical industry has gradually become a
significant export industry, exporting to 40 different
There is also a certain food industry that produces
canned foods and various beverages, mostly for the internal
market, but Cuban space is exported to many countries.
Cuba has long regarded tourism as not ideologically
compatible with socialism. Since 1987, the sector has grown
gradually. In 2018, the country received 4.7 million
visitors, a number that includes Cuban emigrants visiting
the homeland. It is an important source of jobs and the
authorities aim to be a "locomotive" for the rest of the
Exports of (health) personnel
The most important source of currency is the export of
qualified personnel, mainly health workers.
50,000 Cuban doctors and health workers work abroad at
any time through government agencies, and are present in 67
countries. The root of the project is Cuban
"internationalism" where, under Fidel Castro, auxiliary
workers were sent to much of the world. In recent years, the
state has increasingly paid for these services.
As of 2000, Cuba has agreed with Venezuela to switch
health services to oil. Cuban authorities have agreements on
the export of health services with Brazil, with around
10,000 doctors and health workers in this country. The
crisis in Venezuela and political changes in Brazil create
uncertainty about this business and how lucrative it will be
in the future.
The transport network is well developed, but is
characterized by many years of economic crisis. Cuba got
railways as early as 1837, before it came to Spain, ie the
colonial power that controlled Cuba. Today there is a
well-developed state-run railway network of just under 5000
km, but it is characterized by poor maintenance. Cuba has
signed an agreement with Russia to modernize the railway.
The road network has a length of around 13,000 km with a
fixed tire, and a motorway crosses the island from Pinar del
Río in the northwest via Havana to Santiago de Cuba in the
southeast. The main port cities are Havana, Cienfuegos,
Santiago de Cuba, Nuevitas and Matanzas.
A major investment under Raúl Castro (2008-) has been the
construction of a free trade zone with a port in Mariel,
built with Brazilian investments. The country's strategic
location in the Gulf of Mexico, opportunities for receiving
so-called Postpanamax ships, created, along with the relief
of the Barack Obama embargo, expectations that this could be
the beginning of a Cuban trade and industrial adventure.
However, the embargo persists and has been tightened under
Donald Trump, and so far there is little activity at the new
During the colonial period, Cuba was a
commodity-producing economy characterized by monoculture and
slave labor. Tobacco became an important export commodity
and one had a short-lived coffee boom, but sugar was to
become the dominant product.
The indigenous people of Cuba were almost exterminated
during the colonization in the first half of the 16th
century, and the plantation system the Spaniards
established, based on the labor force of African slaves.
From the second half of the 18th century, the country's
economy accelerated. The trade monopoly and dependence on
Spain was weakened by the British occupation of Havana
(1762-1763), which brought businessmen from North America
into Cuba, as well as economic reforms under Spain's King
Charles 3. In Haiti, the revolution (1781-1804) led to a
collapse in coffee and sugar production, and capital instead
drifted towards neighboring Cuba. There was a dramatic
increase in slave imports from Africa; by 1825, the black
population was in the majority.
Although Cuba was a Spanish colony until as late as 1898,
North American economic interests were heavily inland until
the late 1800s. Cuba was occupied by the United States
(1898-1902) and then turned into a protectorate under its
neighboring country, but even after the status of
protectorate ceased in 1934, economic dependence remained
Cuba was considered one of the richer countries in Latin
America and the Caribbean. Cuba was the world's largest
sugar producer in the 1920s, and received significant labor
immigration from Spain, among others. However, the contrast
between modern Havana and poverty and the distress that
characterized most of the country was great. The monoculture
made it very vulnerable to fluctuations in sugar prices.
Seasonal work created a demand for labor during the harvest,
but unemployment was high most of the year.
The post-revolution economy
Fidel Castro's revolution of 1959 led to a reshaping of
the country's economy, including land reform and extensive
nationalization. The revolution was declared socialist in
The 1960s were marked by tumultuous and ever-changing
attempts to develop. The socialism model still allowed
private small businesses. Towards the end of the decade, the
authorities tried a series of ultra-radical experiments that
included the nationalization of the latest small businesses,
and that a number of goods and services were made free of
In 1972, Cuba joined the Soviet- dominated trade
cooperation Comecon, and largely followed Soviet economic
management principles, which were more pragmatic than the
many followed in the previous radical experiments. Market
relations and material incentives were accepted to a limited
extent, especially in the period 1980-1986 where one had
privately owned farmer's markets where prices were
determined by supply and demand.
The economic dependence on the Soviet Union was high.
Although Cuba had made an investment law (1982), the start
for new industries such as medicine (1986), and opened to
tourism (1987), increased dependence and towards the end of
the decade, 85 per cent of foreign trade with Comecon
countries. When the Soviet Union collapsed, the authorities
implemented painful reforms such as legalizing previously
banned US dollars. New sources of income were added, such as
money transfers from emigrated Cubans, and the authorities
invited investors to build tourist facilities. They also
opened to private small businesses in certain selected
industries, but this process stagnated and was partially
reversed in the 2000s.
It was not until around 2010 that Cuba to a greater
extent opened up to private companies owned by Cuban
nationals, and then within a group of pre-specified
categories of businesses. Around 70 per cent of the
workforce still works for the public sector, and the private
sector must be regarded as complementary. Today, however,
the private sector is recognized by the authorities as a
"natural" part of a socialist economy, while in the 1990s it
was viewed more as a foreign element or a necessary and
perhaps transient crisis response.