In 1959, Fidel Castro placed a ban on all foreign car imports, making it impossible for Cuban citizens to purchase new cars made elsewhere. As Cuba has a relatively negligible auto industry of its own, citizens have been making due with the cars of that decade ever since. To this day their streets are known for their staggering amounts of classic cars, with old Buicks, Plymouths, and 1950’s Chevys littering the streets on the regular.
Fidel Castro’s brother, Raul, has since lifted the ban, though the state-owned monopoly over the auto industry has made it possible for the government to hike up the prices of new foreign-made cars to unbelievable rates. Cars that are listed on company websites as costing $30,000 are going for an astounding $220,000 in the island nation, a price that is even more astounding given that the average Cuban citizen makes about $20-25 a week.
Cuba’s economy is a planned economy that is primarily dominated by state-run enterprises. Most of the nation’s industries are run by the government and the majority of the workforce is employed by the state. In 2000, the public sector employment hit around 76%, private sector employment (which consisted mainly of the self-employed) making up about 23%. In 1981, those numbers were 91% to 8%.
The Cuban government currently sets most prices and rations goods to its citizens. Unfortunately, all of that government planning has not been to the betterment of the country’s economy. In 2012, the country’s public debt was 35.3% of its GDP. Its inflation was close to 5.5%, but its GDP growth was at only 3%.
Cuban housing and transportation costs are relatively low, and Cubans do receive free education, health care and food subsidies. While corruption is commonplace, the rate of corruption is apparently lower than many other countries in Latin America.
Since the Cuban revolution, the economic embargo enacted by the United States, and the collapse of the Soviet Union, Cuba has endured hard economic times but proven to be resilient. Its GDP declined by 33% between 1990-1993 when it lost Soviet subsidies and the sugar prices crashed, but Cuba retained high levels of healthcare and education throughout those difficult times.
Before the Cuban revolution, income equality was widespread and accompanied by capital outflows to foreign investors. Sugar sales between Cuba and the United States enabled for the speedy growth of the Cuban economy, and before the Cuban Revolution Cuba was thought to be one of the most “advanced” and successful countries in Latin America. In the 1950’s Cuba was actually as economically successful as Italy and was considerably richer than Japan. Cubans enjoyed the same socioeconomic status as the Spanish and Portuguese, whatever that means. Its income per capita was significantly higher than that of numerous American states including Mississippi and South Carolina.
Tourism was one of Cuba’s most prominent economic sectors, as Americans liked to visit to gamble and golf. However, wealth that came from this and many other successful industries was shared among the few, while most of Cuban population was characterized by chronic unemployment and deep poverty. That and the fact that US companies came under control of many of the country’s banks, natural resources, and electric power industries.