Country Profile: Cuba - American Memory - Library of Congress

Library of Congress – Federal Research Division Country Profile: Cuba, September 2006
a long and healthy life, having access to education, and a decent standard of living—Cuba
ranked an impressive fifth in Latin America and the Caribbean in 2003.
Nevertheless, because government financial resources have contracted dramatically, the
extensive and generous social safety net developed by socialist Cuba is currently incapable of
providing the protection for which it was designed. Cuba can no longer afford to provide the
extremely liberal social and economic benefits that, in addition to full employment, traditionally
included generous social entitlements such as early retirement (at age 60 for men, 55 for women)
and a broad array of partially or wholly subsidized social services, such as public transportation
and meals in government-owned cafeterias. Demographic trends further aggravate the erosion of
the safety net. With a rapidly aging population, the demands placed on the social safety net have
multiplied as the number of elderly has increased.
As much as 99 percent of the population (or at least 95 percent of the urban population and 78
percent of the rural population) is reported to have access to safe water, one of the highest figures
in Latin America. Cuba’s potable water is derived primarily (72 percent) from underground
sources. Of the water supplied, 94 percent receives treatment. In 2000 an estimated 38 percent of
the population had access to sewerage systems and 55 percent to septic tanks and latrines. At the
end of 2005, the country’s water distribution and sanitation systems reportedly were in dire need
of repair.
ECONOMY
Overview: Cuba has a state-controlled economy with the exception of a tiny and shrinking openmarket
sector. Since Fidel Castro seized power, a vast and cumbersome bureaucracy not
conducive to innovation, productivity, and efficiency has managed Cuban affairs. Since its
collapse in the 1990s following the abrupt withdrawal of Soviet funding, the Cuban economy has
been recovering slowly and remains feeble. The sugar industry, traditionally the economy’s
mainstay, is in decline, and the country now relies more on the nickel and tourism industries, as
well as a barter arrangement with Venezuela under which Cuba supplies doctors and teachers in
exchange for crude oil and petroleum products at a discounted rate. In the absence of large
amounts of capital and access to markets and in the face of continued U.S. trade sanctions,
Cuba’s economic situation is unlikely to improve substantially. During 2005, however, the surge
in the availability of foreign exchange—as a result of new financing from China, trade
agreements with Venezuela, and the continued strong growth of international tourism—enabled
the government to increase state investment in projects such as repairing the critically dilapidated
infrastructure and to increase wages and benefits.
In addition to the formal economy, Cuba has a large informal, or second, economy. Informal
economic activities include agriculture, where private farmers control a portion of the land; the
sale of certain personal services; and, beginning in the early 1990s, farmers’ markets and artisan
markets. Currently, about 300 farmers’ markets reportedly operate in Cuba. Other economic
activities outside of state control include illegal activities such as black-market operations and
unauthorized use of government resources. For example, there are extensive informal markets in
the exchange of homes, which are often secured by making illegal payments through
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