Since the turn of the twentieth century, Cuba’s economy has been significantly impacted and shaped by a series of political events and social issues.
After gaining independence, first from Spain in 1898 and then from the United States military in 1902, Cuba experienced a period of instability and political corruption until Fidel Castro gained control of the island nation in 1959. In response to changes implemented by Fidel Castro’s government, the United States placed a trade embargo on Cuba in the early 1960s. Due to the embargo, which is still in effect today, Cuba has been unable to export goods to the United States, which given its close geographic proximity and easy shipping accessibility, should arguably be Cuba’s largest trading partner. Cuba also experienced a substantial economic decline in the early 1990s, when the former Soviet Union ended its thirty-year program of providing $4.0 – $6.0 billion in annual subsidies to Fidel Castro’s government.
Since 2011, Raul Castro’s government has begun to pass small, yet substantial economic reforms. Most notably, limited self-employment is now permitted in specific retail industries and private ownership of certain goods is now allowed. Over the long-term, such reforms could lead to the creation of a sizable middle-class and increased consumer purchasing power. Continued economic reforms could also prove to be an effective method for raising Cuba’s standard of living and lowering the nation’s high emigration level.
Sources:
The CIA World Factbook
Time Magazine