Figure 1.--Here we see a Cuban sreet vendor selling lecon asada (roast sucking pig) sandwiches. The sanwiches are afavorit in both Cuba and Puerto Rico. After Castro created a Communist economy, these and other popular foods virtully as well as many consumer goods virtually disappeared. The Communist economy was so inefficent that it has to depend on Soviet aid ans subsequently Venzuelan aid. During this period peope could be and were arrested if they tried to produce and sell food or other items on their own. It is not hard to understand economic failure when you crimanalize iniative. The fall of the Soviet Union ended Soviet aid. And if that was not bad enough, imported oil increased in price and the price of the major export (sugar) declined. Soviet aid was only partilly replazed by Venezuelan aid. Ultimately the Communists realized that they simply could not afford to pay every Cuban worker even a small sallary. Thus limited market reforms were institutd. Certain occupations were opened up to private activity. Something like 95 percent of Cubans still work in the boated state sector, but now we can see scenes like this on Cuban streets.

Cuba was one of the first Spanish colonies in the New World. Interest in the Spanish Main declined after the Spanish encountered wealthy Native American empires on the maiinlnd. Cortez's campaign to conquer the Aztec Empire began on Cuba. Efforts to develop agriculture flondered when Native American populations who the settlers hoped to enslave colapsed. The Cuban economy instead developed on livestock. Meat hides, and produce could be sold to o\pssing ships. And rearing livestock had the advntage that little labor was needed. Cuba did not participare in a major way in the Caribbean Sugar Boom (18th century). Tiny islands generated great wealth. Neigboring Santo Domingo (westrn Haiti) became the most valuable colonial possession in the world. Difficulties with the Dutch and Portuguese were a factor in Spain's failure to devlop a Cuban sugar industry and an economy based primaily on slave labor. A focus on gold and silver may have been another factor. This situation changed dramatically with the French Revolution (1789) and the Haitain Slave Revolt (1791). Cuba after the Napoleonic Wars quickly developed a massive, highly profitable sugar industry based on slave labor. Cuba was the last Caribbean island to develop a slave economy. Cuba becamw one of the world's primary sugar producers and the economy was based on sugar. Cuba entered the sugar industry just as the Royal Navy had launched a campaign to end the Atlantic Slave Trade. Cuba would be the last country in the Western Hemisphere to abolish slavery. The sugar planters had to adjust to operating with out slaves. And then the industry was devestated bt rgeSecond War for Independence (1895-99) obly enbded by the Spanish-American War (1898-99) and American invasion. The sugar industry recovered after the Warm but required ubstantial Ameican investment making the United a major factor in the Cubn econom. Cuba resumed massive exports. Fiedel Castro when he seized power saw sugar as a curse and demphasized the industry. He also pursued policies that gutted the rest of the economy. Business owners and moddle-class technicians fled. Nationalized industry instead of generating profits needed to be subsidized by the Government. Only Soviet assistance prevented a complete collapse of the Cuban economy. Much of the assistance was low-cost loans, loans that Cuba never repaid. Castro eventually realized that Cuba needed to earn foreign currency and it had natural advantages in the production of sugar. He rekluctantly switched policies, seeking to regenerate an industry he once hoped to significantly redice in size. And he even go the Soviets to subsidize the industry. With the collapse of the Soviet Union (1991), Cuban needed to generate export earnings even more. Denied Soviet subsidies such as low-price oil abnd subsidy payments, the sugar industry was unable to generate the needed export earings.

Native Americans

Spanish Colonial Economy

Cuba was one of the first Spanish colonies in the New World. Columbus landed on Cuba first, butv Hispaniola was the first Spanish colony and Cuba the second. Interest in the Spanish Main declined after the Spanish encountered wealthy Native American empires on the maiinlnd. Cortez's campaign to conquer the Aztec Empire began on Cuba. Efforts to develop agriculture flondered when Native American populations who the settlers hoped to enslave collapsed. The indigenous population of Cuba perished because of enslavement and European diseases. Africans were imported as slave labor. The Cuban economy instead developed on livestock. Meat hides, and produce could be sold to o\pssing ships. And rearing livestock had the advntage that little labor was needed. Cuba did not participare in a major way in the Caribbean Sugar Boom (18th century). Tiny islands generated great wealth. Neigboring Santo Domingo (westrn Haiti) became the most valuable colonial possession in the world. Difficulties with the Dutch and Portuguese were a factor in Spain's failure to devlop a Cuban sugar industry and an economy based primaily on slave labor. A focus on gold and silver may have been another factor. This situation changed dramatically with the French Revolution (1789) and the Haitain Slave Revolt (1791). Sugar became the primary Spanish crop. Cuba as a result of its insulsr geography, remained a Spanish colony when during the early-19th century, the criollos throughout Spanish America achieved independence on the mainland. Thus slavery continued for several decades. Cuba after the Napoleonic Wars quickly developed a massive, highly profitable sugar industry based on slave labor. Cuba was the last Caribbean island to develop a slave economy. Cuba becamw one of the world's primary sugar producers and the economy was based on sugar. Cuba entered the sugar industry just as the Royal Navy had launched a campaign to end the Atlantic Slave Trade. Cuba would be the last country in the Western Hemisphere to abolish slavery. The sugar planters had to adjust to operating with out slaves.

War and Occupation (1895-1903)

The Spanish colonial economy and the sugar industry was devestated by the Second War for Independence (1895-99). Cuban resistance dusrupted Spanish control, but it was the the American invasion during the Spanish-American Ear (1898) that finally led to independence. American newspapers stoked anti-Spanish sentimnt with lurid tales of Spanish attrocities in Cuba. It was the sinking of the USS Maine that finally brought on war. The Spanish-American War (1898-99) resulted in an American invasion.

Independence (1903-59)

The sugar industry recovered after the inepensence War, but required substantial Ameican investment making the United a major factor in the Cuban economy. Cuba had not been a major player in the 17-18th century Caribbean sugar boom as it was a kind of backwater Spanish colony, but it became a key sugar producer in the 19th century. Cuba resumed massive exports. Most of the sugar was exported as the raw product, but Cuba also developed a rum industry. While sugar dominated the Cuban economy, there were other important crops. Tobacco was of some importance and Cuban cigars became became a preimum product in America and Europe. Mining was of some imprtance, especially nickel and cobalt--two metals which the United states does not produce in any quantity. The Moa Bay complex in eastern Cuba was actually developed during World War II by the United States to help supply America's arsenal of Democracy. There is also mngnese and some copper mining. Production of raw material also includes asphalt, bentonite, cement, chromite, clay, crushed stone, feldspar, gypsum, iron ore, lime, limestone, marble, salt, sand, steel, sulfuric acid, volcanic ash, and zeolite. After World War I, Cuba in easy reach of the United States began to develop a tourist industry which by the 1950s was of some importance. The attractions were beautiful unspoiled tropical beaches, sport fishing, and glitteting Havana nightlife, both clubs and casinos. Cuba after independence developed a thriving middle class achieving prosperity and an important degree of social mobility. Cuba had a substantial, affluent middle class and in the 20th century became one of the most affluent Latin American coiuntries. The proximity to the United States and U.S. investment led to rapid growth and Cuba's emergence as one of the most wealthy Latin American countries, albeit one with inequities. Cuban economic statictics were impressive, especially for the Caribbean but even compared to South American countries. Cuba ranlked high in most indices of well being. Cuba ranked in hemishric terms fifth in per capita income, third in life expectancy, second in both per capita car ownership and telephones, and first in the percaita number of televisions. The literacy rate was over 75 percent, high by regional standards--the fourth highest in Latin America. Health care standards were high. Cuba ranked 11th in the world in the number of doctors per capita. Private clinics and hospitals provided services for the poor, at least in the cuties. Cuba's income distribution compared favorably with other regional countries. Cuba's primary economic problem was poorly paid agricultural workers who only had seaonal work, developed into a kind of national underclass. To an extent this was an artifact of slavery. A related problem in the countryside were poor peasants with small plots engaged in subsistance farming. Neither health care services or schools were readily available in the countryside.

Communist Cuba (1959- )

Fidel Castro seized control of the democratic July 26 Movement and ousted dictator Fulgencio Batista (1959). He converted it into a personal political movement which helped him install a Communist dictatorship (1962). Castro when he seized power saw sugar as a curse and demphasized the industry. He also pursued policies that gutted the rest of the economy. Business owners and moddle-class technicians fled. Nationalized industry instead of generating profits needed to be subsidized by the Government. The result was economic decline and stagnation. Castro did substantially reduce the inequities in Cubam society, but he did so by making everyone poor. Only Soviet assistance prevented a complete collapse of the Cuban economy. Much of the assistance was low-cost loans, loans that Cuba never repaid. Castro eventually realized that Cuba needed to earn foreign currency and it had natural advantages in the production of sugar. He rekluctantly switched policies, seeking to regenerate an industry he once hoped to significantly redice in size. And he even go the Soviets to subsidize the industry. Despite massive Soviet Cold War subsidies, Communist Cuba languished in poverty and economic failure. With the collapse of the Soviet Union (1991), Cuban needed to generate export earnings even more. Denied Soviet subsidies such as low-price oil abnd subsidy payments, the sugar industry was unable to generate the needed export earings. The collapse of the Soviet Union ended the subsidies and forced the regime to make economic reforms. Cuba has managed to obtain some financial aid from oil-rich Venezuela. As a result of socialist economics, however, continues to be among the poorest countries in the region. Castro after a long period of silence because of ill health to tell an American reporter that "the Cuban model no longer works" (September 2010). Speaking with university students later, he back tracked and insisted he was not referring to socialism. The Cuban Government subsequently announced that it could no longer afford its massive payroll and that it is laying off 10 percent of state workers. It is unclear where those laid off will find jobs as the private sector is so restricted in Cuba.

Created: 4:37 AM 10/4/2012
Last updated: 4:14 AM 10/9/2014