Cuba Document Archive | Cuban Internal Affairs


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BY WILLIAM LEOGRANDE (World Politics Review, APRIL 2014)

In his article, LeoGrande analyzes the new foreign investment law that was passed during a special assembly of the Cuban assembly and calls it a “key component of President Raul Castro’s program to ‘update’ the economy.” Motivated by a crisis in the external sector, Cuban leaders are looking for a way to boost direct foreign investment with the new law, which offers substantially better terms to foreign investors than the 1995 law it replaces.

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The Ley de la Inversión Extranjera (Foreign Investment Law) was enacted in March 2014 to encourage sustainable development in Cuba, while still preserving national sovereignty. The law permits, with certain restrictions, foreign investment in most sectors of the economy on competitive terms. It also clarifies foreign investors’ rights and opportunities in Cuba, including assurances that their investments will not be expropriated without due monetary compensation.

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In this paper, Vidal Alejandro and Pérez Villanueva examine the benefits and costs of the eventual devaluation of the official exchange rate for the Cuban peso, the main measure the Cuban government will employ to achieve the goal of monetary unification in 2016. After evaluating possible policy responses and alternatives regarding devaluation, the authors conclude that the best strategy for the Cuban reform is gradual devaluation. Note: This paper is currently only available in Spanish. An English translation is forthcoming.

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Soft Landing in Cuba?: Emerging Entrepreneurs and Middle Classes

By Richard Feinberg (Brookings Institution, November 2013)

This report from the Brookings Institution considers the growing Cuban private sector that is creating a larger and larger middle class. As the government allows for greater access to private property, many small businesses have developed and become widely successful. This study proposes a four-step process for helping small businesses become major international players by adding to household incomes, generating large profits, creating domestic chains, and eventually building alliances with state firms to attract foreign partners.

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Cuba after Communism: The Economic Reforms That Are Transforming the Island

By Julia E. Sweig and Michael Bustamante (Foreign Affairs, July/August 2013)

In this article, authors Sweig and Bustamante consider Raál Castro’s efforts at opening Cuba and reforming its economy. They argue that migration reform, a newly progressive tax code, and the government’s new acceptance of small businesses indicate that the nation is strategically opening its doors to greater domestic and international opportunity. They also consider how these seemingly positive efforts may affect the still-closed political system.

Link to full text via Council on Foreign Relations

Socialism with Cuban Characteristics: Part I

By William M. LeoGrande (World Politics Review, April 2013)

From the World Politics Review, this editorial examines Cuba’s economic reforms following the collapse of the Soviet Union. It considers much of the legislation that has been put in place since Raúl Castro has been in power, which has deregulated the Cuban economy and increased opportunities for a private sector. It also details what problems still stand in the way of remedying the nation’s economic troubles.

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Socialism with Cuban Characteristics: Part II 

By William M. LeoGrande (World Politics Review, April 2013)

This continuation of the previous editorial moves beyond what already has been done and considers what now should be done to aid the ailing Cuban economy. It also considers the political ramifications of economic reform and whether or not it will lead to democratization or, instead, will cause further disillusionment among the Cuban people.

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The New Cuban Economy: What Roles for Foreign Investment?

By Richard Feinberg (Brookings Institution, December 2012)

This study from the Brookings Institution explores Cuba’s historic role in preventing foreign direct investment while considering the possibility of expanding globalization and international markets into the island’s economy. It estimates that Cuba’s unification with core global financial institutions could make the nation much more profitable and bring much-needed funding to its citizens.

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Reforming Cuban Agriculture: Unfinished Business

By Philip Peters (Lexington Institute, October 2012)

This study traces the history of Cuban agricultural reform from its first efforts in the mid-twentieth century to modern attempts by Raúl Castro. Reform is key to improving the Cuban economy, which relies heavily on importing food. Changes to agricultural policy have not proved to be effective, so this article considers why this is the case and what further efforts can be made to mediate the situation.

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Cuba’s Entrepreneurs: Foundation of a New Private Sector

By Philip Peters (Lexington Institute, July 2012)

This article examines the history and future of Cuba’s entrepreneurial sector in the face of recent reforms encouraging economic growth through small businesses. In an effort to cut costs and boost economic productivity, the Cuban government has supported entrepreneurs and the creation of a non-state sector that will incorporate all of the new businesses being created. The article also includes suppositions about what new industries could emerge in Cuba’s socialist economy based on this new legislation.

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A Viewer’s Guide to Cuba’s Economic Reform

By Philip Peters (Lexington Institute, May 2012)

In this article, Philip Peters clarifies what economic work is being done in Cuba and what the outside world can and cannot expect as a consequence. He explains that socialism in the country is not being eliminated, but redefined to increase private initiative and boost the weak economy. He also gives recommendations for what the government must do to continue to support growth, including how it must politically evolve.

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Reaching Out: Cuba’s New Economy and the International Response

by Richard Feinberg (Brookings Institution, November 2011)

From the Brookings Institution, this report details how Cuba has expanded its international relations and recovered much of its global presence after the collapse of the Soviet Union. As a result, it has become a magnet for foreign investment, but much of the money that should be increasing the economy’s productivity is being halted by an outdated economic model. This report considers how much of the world is aiding Cuba, but because it is shut out of the IMF and World Bank, it cannot truly reform its economic structure.

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