The economic context of Cuba

Main Sectors of Industry

Cuba heavily depends on its natural resources to run its economy. Despite its small size, Cuba is rich in natural resources. Nickel is highly important for the country, and cobalt is also abundant on the island, making Cuba one of the highest producers and exporters of both nickel and cobalt in the world. Cuba also has offshore oil and natural gas reserves, mainly in the northern part of the island. Agriculture represents 0.8% of GDP and employs 17% of the population. Its main crops are still sugar and sugarcane, which take up a third of the cultivated land. However, in the last six years alone, sugar production has fallen from more than 1.5 million tonnes a year to less than half a million tonnes. Tobacco is the country’s second largest export crop. Other agricultural products include citrus, coffee, corn, rice, potatoes, beans, bananas, soy, cotton, and livestock. According to the FAO, the estimated cereal production for 2023 stood at 290,000 tonnes, approximately half of the five-year average. This decline is attributed to insufficient agricultural inputs, restricted access to agricultural credit, and limited farmer access to credit. As per the national government, Cuba failed to meet seven key state order productions in 2023: rice for consumption, twisted tobacco for export, beef for the industry, fresh milk, coffee, eggs, and wood.

Industry represents 23.8% of GDP and employs 17% of the population. It focuses on agrifood, production of cement, textiles, tobacco, and agricultural machinery. Cuba also has significant mineral resources (particularly of nickel, cobalt, gold, and copper) and is currently conducting hydrocarbon exploration. The cigar industry is one of the leading industries in the country, and it is highly dependent on tourism, as tourists are the leading customers of the product. Overall, the manufacturing sector is estimated to account for 11% of the country’s value-added.

The main economic activity in Cuba is the services sector, which represents 74.6% of GDP and employs 66% of the active population. Its significance is strongly related to the development of tourism, which leads the service sector alongside retail. For a long time, tourism has been pivotal in preventing the economy from total collapse: although the tourism industry was hit the hardest during the COVID-19 pandemic, tourism rates have been significantly increasing, which positively impacts the economy as a whole. Nevertheless, Cuban officials reported that 2.4 million tourists visited the island in 2023, approximately 1.1 million fewer visitors than the projected 3.5 million. The education sector is highly valued, with a focus on universal access to education and a strong emphasis on academic achievement.

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Indicator of Economic Freedom

Definition

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:

28,1/100

World Rank:

176

Regional Rank:

31

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation