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May 16, 2014 0 Comments

Cuba and the China Model Articles / Opinion Editorials


Since coming to power, Cuba’s President Raúl Castro unleashed a series of important, albeit limited, economic reforms to revitalize the stagnant Cuban economy.  Many analysts use the shorthand “Chinese model” to describe the nature and direction of the reforms, yet while there are apparent similarities, a closer analysis shows significant differences. 

Cuba’s current leaders appear to have acknowledged the failure of the command economy to provide prosperity through increased productivity and growth, but so far reforms are modest, slow and tentative. 

This is not the first time Cubans have used market mechanisms to increase output. With the collapse of the socialist bloc, for instance, Cuba’s economy contracted by an estimated 40 percent and the regime opened itself up to markets, some private initiative, foreign investments and dollar legalization to survive. By the late 1990s, Venezuela’s Hugo Chávez government replaced the Soviet Union as Cuba’s new benefactor and as a result Fidel Castro again reverted to a centralized economy.  According to University of Pittsburgh economist Carmelo Mesa-Lago Venezuela’s annual subsidies now amount to an estimated $13 billion a year.  For Raúl Castro the task involves preparing for the prospect that Venezuelan support might collapse and scrapping an economic model seemingly incapable of generating real growth and sustaining Cuba’s population.  

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