Since the commencement of hostilities between Cuba and the US in the early 1960s, both governments have repeatedly attempted to influence private family transfers. Initially, both governments tightly controlled these transactions, implementing restrictive policies primarily directed at domestic monetary policy, in the case of Cuba, and bilateral financial transactions, in the case of the US. However, as economic and political dynamics evolved, Cuba's policy shifted more radically from overall prohibition to leveraging remittances. The US, on the other hand, has largely continued its initial policy approach of limiting remittance flows, although there has been a loosening relative to earlier regulations governing the amounts and channels that could be used by Cuban émigrés to send funds to their families.
This paper has attempted to show that Cuba has been partially successful in attracting and channeling remittances toward the State-controlled economy. The aggregate flow of remittances and their uses are highly sensitive to macroeconomic, political, and institutional factors. In terms of the political context, remittances remained at minimal levels during periods when the Cuban government actively discouraged contact with the Cuban émigré community. In macroeconomic terms, dollar legalization in 1993 was a critical first step in shifting remittance patterns. Institutional factors were decisive in ensuring that a significant majority of the resources flowed through official channels, both directly, through development of a dollarized financial architecture and indirectly, through the creation of consumer dollar stores.
However, not all policy tools utilized by Cuba to encourage remittance flows through official channels have been effective. Only a small proportion of net transfers have been channeled to interest-bearing dollar checking and saving accounts or currency exchange bureaus. In contrast, the government has been largely successful in two areas: official transfer mechanisms and consumer spending. The opening of State-run consumer markets for food and other goods has proven to be an effective means of attracting remittance flows to the official economy. In terms of magnitude, annual dollar sales have surpassed official remittance flows. Based on official data, a higher proportion of remittances are being sent through official channels, reaching at least 40% of total officially reported flows.
Nearly a decade after reforms were initiated, however, a sizable portion of remittances are still sent through non-official channels and circulate in the extra-official economy. Based on the Cuban government’s own reporting of the amount of net transfers, more than half of these total flows are still being sent through unofficial channels. Similarly, significant flows are not being spent in the State-run economy. Finally, once these resources enter the domestic economy they create impacts, many of which are unanticipated or exert countervailing pressures to the policy goals targeted by the government. A case in point is Cuba’s extra-official exchange rate with the convertible peso. As Cuba moves toward a unified exchange rate, the appreciation pressures exerted by remittance flows run counter to the country’s export and tourist-oriented development strategy.
US policy toward private family transfers to Cuban relatives on the island has shifted from prohibition of these transactions to capped allowances under tightly regulated procedures. Since the early 1960s, US policy has continued to maintain Cuba's international economic isolation, but it has become less effective over time. Because Cuba has expanded its trade and monetary relations with Western and Latin American countries, it has developed direct financial transactions mechanisms that provide viable third country channels for émigrés in the US to send funds. In light of the crisis sparked by the collapse of the Soviet Union, tightening measures instituted by the US have been largely ineffective in limiting the flow of remittances to Cuba. Indeed, during the US ban on remittances from 1994 to 1998, such flows continued and even grew.
While this paper has provided evidence and assessed the effectiveness of Cuban and US government policies on the pattern of remittance flows to Cuba, there remains a need for further analysis. First, this analysis is based largely on official estimates of the volume of remittance flows to Cuba. Yet, given the significant portion of family transfers that are sent through unofficial channels, further studies need to be undertaken on the overall magnitudes and the share transmitted through unofficial channels. Second, the evaluation of the effectiveness of Cuban government policy would be improved with a cost benefit analysis examining whether the gains in official remittance flows and uses outweigh the administrative and potential political costs for the Cuban government. Finally, further research needs to be conducted on understanding the motivations of Cuban émigré senders as well as the uses of remittances at the household level within Cuba.
References Antillas Express, Inc. [Online] “Envíos de Dinero a Cuba.” http://www.antillas-express.com/ [cited 16 July 2001]
Athukorala, Premachandra. 1993. Enhancing Developmental Impact of Migrant Remittances: A Review of Asian Experiences. New Delhi: International Labour Organisation, Asian Regional Team for Employment Promotion.
Azicri, Max. 2000. Cuba Today and Tomorrow: Reinventing Socialism. Gainesville: University Press of Florida.
Banco Nacional de Cuba. 1996. Informe económico 1995. La Habana: BNC.
Barberia, Lorena; Johnson, Simon and Daniel Kaufmann. 1997.” Social Networks in Transition.” Davidson Discussion Paper No. 102, University of Michigan Business School, October 1997.
Birks, J.S. and C.A. Sinclair. 1979. "Migration And Development: The Changing Perspective of the Poor Arab Countries." Journal of International Affairs, 33:2: 285-309.
Camara de Comércio de Cuba. [Online] http://www.camaracuba.cubaweb.cu/. [cited 10 August 2002]
Caribe Express. [Online] http://www.caribeexpress.com/ [cited 10 August 2002]
Castro, Fidel Ruz. 1993. “Castro Gives Speech at Moncada Barracks Anniversary.”Latin American Network Information Center (LANIC) Castro Speech Database. [Online database] http://lanic.utexas.edu/la/cb/cuba/castro.html. [cited 22 June 2000]
Comellas, Miguel. 2001. “ DHL: Investing in Expansion." [Online] Granma International. 3 June 2001. http://www.granma.cu/ingles/junio3/25dhl-i.html. [cited July 12 2002]
Cox, Donald and Emmanuel Jimenez. 1990. "Social Objectives: through Private Transfers: a Review." The World Bank Research Observer. 5:205-218.
Cox, Donald, Zekeriya Eser and Emmanuel Jimenez. 1997. "Family Safety Nets during Economic Transition: the Study of Family Transfers in Russia.” in Poverty, Policy and Responses: the Russian Federation in Transition edited by Jeni Klugman. Washington D.C.: World Bank.
CUBAPOLIDATA Gateway to Cuba's Political and Military Data. “Cuban Armed Forces Review.” [Online] http://cubapolidata.com/cafr/cafr_business_activities.html. [cited July 12 2002]
DeSipio, Louis. 2000. “Sending Money Home… For Now: Remittances and Immigrant Adaptation in the United States.” Washington D.C.: InterAmerican Dialogue and The Tomás Rivera Policy Institute.
Díaz Briquets, Sergio and Jorge Pérez- López. 1997. "Refugee Remittances: Conceptual Issues and the Cuban and Nicaraguan Experiences." International Migration Review 31:2: 411-37.
Domínguez, Jorge I. 1978. Cuba: Order and Revolution. Cambridge: Harvard University Press.
Duany, Jorge. 2000. “Redes, Remesas y Paladares: La Diáspora Cubana desde una Perspectiva Transnacional.” Paper presented at Taller sobre Redes Económicas y Sociales, auspiciado por el Grupo de Trabajo sobre Cuba del Consejo de Investigación en Ciencias Sociales en Nueva York.
Eckstein, Susan. 1994. Back from the Future: Cuba under Castro. Princeton: Princeton University Press.
——— and Lorena Barberia. 2001.“Cuban-American Cuba Visits: Public Policy, Private Practices." A Report of the Mellon-MIT Inter-University Program on Non-Governmental Organizations (NGOs) and Forced Migration. Cambridge, MA: MIT, Center for International Studies, Inter-University Program on Non-Governmental Organizations (NGOs) and Forced Migration.
———. 2002. “Grounding Immigrant Generations In History: Cuban-Americans And Their Transnational Ties.” International Migration Review. Forthcoming.
Economic Commission for Latin America and the Caribbean (ECLAC).  2000. La Economía Cubana: Reformas Estructurales y Desempeño en los ’90. México D.F.: Fondo de Cultura Económica.
———. 2001. "Cuba: Evolución Económica durante 2000.” LC/MEX/L.465 Mexico: ECLAC.
Economist Intelligence Unit (EIU). 2001. Cuba Country Report February 2001.
Elbadawi, Ibrahim A. and Roberto Rocha. 1992. “Determinants of Expatriate Workers´ Remittances in North Africa and Europe.” Policy Research WPS #1038. Washington DC: The World Bank.
El Economista de Cuba. “La Espiral de la Recuperación.” [Online] El Economista de Cuba ONLINE: Dossier 2000. http://www.eleconomista.cubaweb.cu/2000/nro45/45_157.html. [cited 16 July 2002]
Garcia, Maria Cristina. 1996. Havana USA: Cuban Exiles and Cuban-Americans in South Florida, 1959-1994. Berkeley: University of California Press.
Granma. 4 March 1999. “Editorial: Who Are The So-Called Dissidents And Prisoners Of Conscience In Cuba? [Online] Reproduced as a Press Release By Republic Of Cuba’s Permanent Mission To The UN. Available Online: http://www.un.int/cuba/web/1999/990306.html Hamberg, Jill. 2001. "The Worst of Times and the Best of Times: Cuban Housing Policy since 1990." Unpublished paper draft.
ICC Corporation. 2002. “Cash 2 Cuba.” [Online] http://www.cash2cuba.com/remittance.do [cited 16 July 2002]
———. 2001. “Preciosfijos.com.” [Online] http://www.preciosfijos.com/ [cited 16 July 2002]
Instituto Nacional de Investigaciones Económicas (INIE). January 15 1999. IPS. No. 18.
Jatar-Hausmann, Ana Julia. 1999. The Cuban Way: Capitalism, Communism and Confrontation. West Hartford, Conn: Kumarian Press.
Jensen, Robert T. 1998. "Public Transfers, Private Transfers and the ‘”Crowding Out" Hypothesis: evidence from South Africa." Faculty Research Working Paper R98-08, John F. Kennedy School of Government, Harvard University.
Kaplowitz, Donna Rich. 1998. Anatomy of a Failed Embargo: US Sanctions against Cuba.
Boulder: Lynne Rienner Publishers, Inc.
La Despenalización del dolar, trabajo por cuenta propia y cooperativización de granjas estatales en Cuba : documentos y comentarios: Cuba en el mes. Dossier ; no. 3. 1993. Rodríguez, Caridad and Nelson P. Valdés [editors and compilers]. Albuquerque, New Mexico: Latin American Institute; Havana: Centro de Estudios sobre América, Sección de Información.
La Prensa. 11 June 1999. “Costa Rica será centro de transferencia de remesas familiares a Cuba.” [Online]. http://www.laprensahn.com/caarc/9906/c11003.html. [cited 22 June 2000]
Madrid-Aris, Manuel. 1997. “Growth and Technological Change in Cuba.” Cuba in Transition (Vol. 7:216-228). Association for the Study of the Cuban Economy.
Marquetti, Hiram Nodarse and Anicia García Alvarez. 1998. “Proceso de reanimación del sector industrial: principales resultados y problemas.” In Centro de Estudios para la Economía Cubana (CEEC) (Eds.), Balance de la Economía Cubana a finales de los 90s (pp.19-60). La Habana, Cuba: Universidad de La Habana.
Marazul Tours. “Memories: the History and Philosophy of Marazul Tours.” [Online] http://www.marazultours.com/. [cited 22 June 2000]
Martín, Consuelo and Guadalupe Pérez. 1997. Familia, Emigración y Vida Cotidiana en Cuba. La Habana: Editora Política.
Martínez, Milagros et al. Los Balseros Cubanos: Un estudio a partir de las salidas ilegales. La Habana, Editorial de Ciencas Sociales, 1996.
Mesa-Lago, Carmelo. 1981. The Economy of Socialist Cuba: a Two-Decade Appraisal. Albuquerque: University of New Mexico Press.
MoneyGram. 2002. [Online]: http://www.moneygram.com/consumer/. [cited 15 May 2002]
Monreal, Pedro. 2000. “Migraciones y Remesas Familiares: Notas e Hipótesis sobre el Caso de Cuba.” Unpublished paper.
Morley, Morris H. 1987. Imperial State and Revolution: The United States and Cuba, 1952-86. Cambridge: Cambridge University Press.
Morris, Emily. 2000. “Interpreting Cuba’s External Accounts.” Cuba in Transition (Vol. 9:145-148). Association for the Study of the Cuban Economy.
New York Times. 5 January 1999. “US Ready to Ease Some Restrictions in Policy on Cuba.”
Nuñez Moreno, Lilia. 1998. “Impactos Del Sector Informal En La Estructura Social Cubana” Presented at the XXI Latin American Studies Association Meeting. Chicago, IL.
Oficina Nacional de Estadísticas. 2000. Anuario Estadístico de Cuba 2000. La Habana: ONE.
Orozco, Manuel. 2000. “Remittances and Markets: New Players and Practices.” Washington D.C.: InterAmerican Dialogue and The Tomás Rivera Policy Institute.
Pérez- López, Jorge. 1995. Cuba's Second Economy: From behind the Scenes to Center Stage. New Brunswick: Transaction Publishers.
Peters, Phillip. 2000. The Farmer’s Market: Crossroads of Cuba’s New Economy. Arlington, VA: Lexington Institute.
Puri, Shivani and Tineke Ritzema. 1999. "Migrant Worker Remittances, Micro-Finance and the Informal Economy: Prospects And Issues." International Labor Organization Working Paper 21. Washington, D.C.: ILO.
QuickCash. [Online] http://quickcash.cubaweb.cu/esp/login.asp. [cited 22 June 2000]
Republic of Cuba. Ministry of Foreign Relations (MINREX). “Servicios Consulares.” [Online] http://www.cubaminrex.cu/consulares/serv_consintro.htm. [cited 16 July 2002]
Robinson, Karina. 2002. “Fortress Cuba?” [Online] The Banker, August 2002. http://www.thebanker.com/art3jun02.htm. [cited 16 July 2002]
Russell, Sharon Stanton. 1986. "Remittances from International Migration: A Review in Perspective." World Development 14:6: 677-696.
Sánchez Egózcue, Jorge Mario. 2000. "Cuba: Estabilización y Tipo de Cambio.” Comercio Exterior 50:1: 38-54. Smith, Peter. 1996. Talons of the Eagle: Dynamics of US-Latin American Relations. New York: Oxford University Press.
Sullivan, Mark P. and Maureen Taft-Morales. 2002. "Cuba: Issues for the 107th Congress." Report for Congress. Order Code: RL 30806. Washington D.C.: Library of Congress Congressional Research Service.
Swamy, Gurushri. 1981. “International Migrant Workers Remittances: Issues and Prospects." World Bank Staff Working Paper No. 481. Washington D.C.: World Bank.
Taylor, Edward J. 2000. “Do Government Programs "Crowd In" Remittances?" Washington D.C.: InterAmerican Dialogue and The Tomás Rivera Policy Institute.
Torres, Federico. 2001. “Migrants’ Capital for Small-Scale Infrastructure and Small Enterprise Development in Mexico.” Presented as a draft on October 9. 2001. Washington D.C.:World Bank.
Transcard Canada Limited. “Financial Growth.” [Online] Transcard Canada Limited http://www.transcardinter.com/investors/financial_growth.html. [cited 22 June 2000]
United States Department of Justice, Immigration and Naturalization Service (INS).[Online] Statistical Yearbook 1998. http://www.ins.usdoj.gov/graphics/aboutins/statistics/. [cited 22 November 2000]
US Congress. 1992. Title XVII -- Cuban Democracy Act Of 1992. [Online] US State Department Cuba Archive. Available: http://www.state.gov/www/regions/wha/cuba/democ_act_1992.html. [Cited 28 June 2000]
———. 1996. Cuban Liberty and Democratic Solidarity Act of 1996. [Online] US State Department Cuba Archive. Available: http://www.state.gov/www/regions/wha/cuba/helms-burton-act.html. [Cited 28 June 2000]
US Department of the Treasury, Office of Foreign Assets Control. 1963. "Cuba Assets Control: Regulations and Related Documents." Title 31 Code of Federal Regulations Chapter V Part 515--Cuban Assets Control Regulations. Pages 1-13. Washington D.C.: Treasury Department.
———. 1988. “31 CFR Part 515 Cuban Assets Control Regulations 53 FR 47526.” Issued: November 23, 1988. ACTION: Final Rule [Online]. Available: http://www.lexisnexis.com/universe. [cited 28 June 2000]
———. 1989. Cuban Assets and Control Regulations: 31 CFR Part 515. 54 FR 24282
Issued: June 6, 1989 [Online] ACTION: Notice [Online] Available: http://www.lexisnexis.com/universe. [cited 28 June 2000]
———. 1989. “Federal Register Vol. 60, No. .203.” [Online] Available: http://www.lexisnexis.com/universe. [Cited 28 June 2000]
———. 1991. Cuban Assets and Control Regulations: 31 CFR Part 515. 56 FR 49846
Issued: October 2, 1991 ACTION: Notice [Online] Available: http://www.lexisnexis.com/universe. [Cited 28 June 2000]
1 The Rosemary Rogers Working Paper Series, and the research upon which they are based, are supported by a generous grant from the Andrew W. Mellon Foundation.
2 Lorena Barberia is the Cuba Program Associate at the David Rockefeller Center for Latin American Studies (DRCLAS), Harvard University. The author wishes to thank the Mellon-MIT Inter-University Program on Non-Governmental Organizations and Forced Migration for funding a 1998 grant for “The Uses of Remittances and Their Effects on Informal Economic Activity in Cuba” and a 2001 grant for “The Ties That Bind: the Role of Refugees in Building Trans-National Family and Bilateral Relations” (the latter received with Professor Susan Eckstein) as well as NGO sponsorship from Jeff Crisp, Head Evaluation and Policy Analysis Unit at UNHCR, and Ana Julia Jatar Hausmann,, Senior Fellow at the Inter-American Dialogue. This paper is based on lectures presented by the author at MIT and DRCLAS in 2001. The author is indebted to Sharon Stanton Russell for comments on the manuscript.
3 Based on a survey of Latinos on Latino Television Portrayals, DeSipio (2000) reports that 40.4% of Cuban émigrés reported sending remittances to their homeland, an average higher than Mexicans, Puerto Ricans and South Americans and below rates reported for the highest groups in Central America and the Dominican Republic. These probability ratios were further confirmed by logistic regression analysis.
4 The author conducted these interviews as part of joint research project with Susan Eckstein aimed at examining social and economic transnational ties. For more information about other aspects of these ties, see Eckstein and Barberia (2001).
5 In her extensive review of remittance research, Russell (1986) points out that policy measures by European labor-sending governments aimed at affecting migrant decisions to maximize the flow of remittances back home have been relatively well documented and evaluated.
6 Foreign currency-denominated bonds allow migrants to invest in their home country using their labor earnings without losses due to foreign exchange differentials.
7 Most mandatory schemes have been unsuccessful; the exception is South Korea (Puris and Ritzema 1999).
8 Using data from 1962 to 1979, Swamy (1981) found that the number of migrant workers abroad and their wages together explained over 90% of the variation in the flow of remittances. Neither the relative rates of return on savings in the host or home countries, nor incentive schemes, had a significant impact on total flows.
9 A wider body of research has examined the effects of indirect determinants such as the political, economic, and institutional environment in the homeland country on remittance flows. Researchers have argued that government policies in the sending country, which affect political and economic conditions in the homeland, may alter a migrant’s propensity to remit. For example, Elbadawi and Rocha (1992) and Wahba (1991) argue that government macroeconomic policies that stimulate foreign direct investment flows, such as low black market exchange rate premiums and low rates of inflation, also lead to an increase in remittances.
10 Most of the literature aimed at examining private family income transfers in the context of developing countries has been limited to examining interactions that take place between families within a country without reference to their immigrant status. For more work in this area, see Cox and Jimenez (1990); Cox, Eser, and Jimenez (1998); Jensen (1998); and Barberia, Johnson, and Kaufmann (1997). Taylor (2000) provides an overview and assessment of the impact of this research on the role of transnational remittances.
11 As Jorge I. Domínguez states, “Cuban entrepreneurs had close connections with the United States and because by this time they could certainly be presumed to oppose government policies, the survival of the revolutionary government required that the management of Cuban enterprises be passed to loyal revolutionaries, however bureaucratically incompetent (1978:147).”
12 The total amount of money in circulation in August 1961 was 1,187 million pesos. A total of 497.6 million pesos or 42% was confiscated (Domínguez 1978:229).
13 According to Mesa-Lago (1981:47), “the monetary surplus steadily increased in the 1960s and in 1970 reached a peak of 86% over the population income; in other words, the total income of the population exceeded by almost twofold the value of available supply.”