The Fall and Recovery of the Cuban Economy in the 1990s: Mirage or Reality?

Abstract

The collapse of the Cuban economy following the cessation of Soviet assistance gave way to a strong recovery in 1994-96. There are three possible explanations for this recovery: (i) that it never took place; (ii) that it reflected a surge in productivity resulting from stabilization and liberalization in 1993-94; or (iii) that it resulted from a favorable aggregate demand shock. The second explanation - the most persuasive - suggests that a strong and durable expansion will probably not be achieved on the basis of present policies, but that the benefits of a full liberalization of the economy are likely to be considerable.

Keywords: Cuba, growth, productivity, liberalization, transition

JEL Classification: O11, O4, O23, O47, O54, P27