SEATTLE — An island nation located off the coast of the United States in the Caribbean Sea, Cuba is an important socialist economy in Latin America with great economic and financial potential. Despite steady economic recovery over the past few decades, poverty in Cuba still exists, owing to deficiencies in infrastructure, healthcare, transport, food security and housing.

According to a report by Reuters, Cuba’s sugar industry has grown by 22.6 percent, and its agricultural sector has expanded by about 4.8 percent.

Cuba’s recent history has been clamorous due to the revolution that took place between 1953 and 1959. Since the late Fidel Castro came to power during this period, the country has been governed by a planned or command economic model, with minimal amounts of private ownership and an overall centralized economic planning system. The socialist system in Cuba has been criticised for its financial mismanagement.

However, over the years, weaknesses in the bureaucratic system, coupled with low productivity and efficiency levels, have exacerbated some of the country’s economic and financial hindrances.

Owing to Cuba’s almost overreliance on agriculture as its primary export, trade has been severely influenced by the growth of primary industries. This has somewhat diminished the returns and values gained from a majority of Cuba’s main exports as compared to other countries.

Over the years, the U.S. embargo and international economic sanctions have diminished the strength of trade and aggravated poverty in Cuba. The country has been deprived of access to important goods and services. Recent efforts to form a renewed and normalized relationship between the United States and Cuba may be important to boosting Cuba’s trade capacities in the future.

Moreover, Cuba also suffers from a problem of an aging population. More than 20 percent of the population is already above the age of 60. Fertility rates are also low due to the changes in the population and the imbalance in demographics.

Poverty in Cuba is also impacted by the country’s high Gini coefficient value due to the prevailing income inequality. A high proportion of the country’s income is generated by a very small portion of the population.

Unfortunately, the rate of poverty in Cuba is also not official. A 1996 government study concluded that over 20.1 percent of the people living in the country seemed to lack basic necessities. Extreme poverty rates in the country remain a pressing issue due to low real incomes.

Since the 1990s, improvements in education in Cuba have been increasing the level of development in the country. Given the socialist model of the country, education and healthcare are subsidized by the government. Boosting literacy rates and ameliorating the quality of public education are some of the key priorities of the government.

In order to address some of the financial issues in the country, the government is planning to regulate the exchange and currency rates. Cuba’s current dual currency and exchange rate system is resulting in many inefficiencies in the system and impacting the solvency of foreign reserves for state-owned enterprises in the country.

Due to Cuba’s financial and social bulwarks and the economic crises that have befallen Venezuela, many question the socialist framework the country is built on. Many countries in Latin America have been governed by socialism for decades.

To conclude, alleviating poverty in Cuba is essential for the long-term economic development of the country. The solutions to some of the country’s major problems lie in solving its economic, financial and social issues.

– Shivani Ekkanath

Photo: Flickr