Cuba’s Economy during the Special Period, 1990-2010

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Cuba’s Economy during the Special Period, 1990-2010

Archibald R. M. Ritter October 12, 2010

Distinguished Research Professor Emeritus,

Economics and International Affairs,

Carleton University,

Ottawa, Canada

Cuba struggled through the difficult “Special Period” resulting from the ending of Soviet subsidization, with some successes, some failures, some major on-going challenges and some more ambitious policy responses in late 2010.

Following the termination in 1990 of the subsidization inherent in Cuba’s “special relationship” with the Soviet Union, Cuba experienced an economic “melt-down”. In response, Cuba’s leadership instituted a variety of “pro-market” institutional and policy reforms. By 1995, the Cuban economy had begun a process of recovery. During the 2000s, the reform process was close to paralysis, despite overwhelming needs for change. Under the leadership of Raul Castro from mid-2006 to 2010, some modest reforms were implemented, and in September 2010, a downsizing of the state sector and expansion of the small-enterprise sector was announced.

Since 1990, Cuba’s socio-economic performance has been mixed, with some positive results but also with continuing problems. Some elements of the crisis were resolved effectively and some sectors of the economy performed reasonably well, (tourism, nickel, petroleum extraction and electricity generation, health and education.) Other dimensions of the crisis, such as the monetary and exchange rate pathology, the sugar agro-industrial complex, manufacturing, food production and levels of investment remained weak. Despite strong economic growth performance from 2000 to 2008 – made possible with the support of Venezuela – real wages and living standards had not recovered to the levels of the 1980s. Interesting reform initiatives were begun in September 2006.

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