Does the Embargo Affect Cuba's GDP?
The UN is virtually the only data source on Cuban GDP as the government does not consistently publish this figure. I graphed each country's real per capita output using UN data, and added Puerto Rico even though it is fully integrated with the US economy (not really a trading partner so much as another state).
Cuba - red; Jamaica blue; Dominican - green
While Puerto Rico is alone at a much
higher level, the other three islands form a tight group. Cuba starts
the period (1970 - 2008) midway between Dominican Republic and Jamaica
but ends the period ranking first. Dominican Republic grows along with
Cuba and only Jamaica fails to progress over the 38 years.
It seems reasonable to expect that
Cuba’s worst circumstances for growth would be under the embargo along
with no majority trading partner. And yet in the most recent period,
with exactly those conditions and a tightened embargo, Cuba has seen its
highest growth.
This argues against the idea of
economic harm from restraint of trade. Jamaica is free to trade with
everyone in the world, has an English language advantage in US markets
and is even a member of the Commonwealth since 1962, and yet has seen a
steadily deteriorating growth rate for over half a century. Dominican
Republic and Puerto Rico are more typical in that they had fluctuating
positive growth over the decades although Puerto Rico clearly has an
economic advantage in being fully integrated with the US.
The
structural shift from agriculture to manufacturing and eventually to
services is associated with higher long term GDP growth in countries
across the Caribbean and across the globe. In other words, less
agriculture is strongly correlated with higher national income. The interesting point about Cuba is that it fits so very neatly into this world-wide
economic pattern: modest income and a gradual shift away from
agriculture. This means that the idea of unique and significant harm to
Cuba from the American embargo is highly implausible. Its economic
performance matches so many other American trading partners with a
similar industrial structure that the embargo has clearly not singled out Cuba.
So
the ultimate question regarding the impact of the embargo is whether
Cuba's economy would have soared if it had been allowed to continue
selling sugar and cigars to the US for decades. The global experience
shows that trade with the US would not suffice. Many other countries do varying amounts of trade with the US, and their economic performance shows absolutely no correlation with trade volume.
Likewise trade in agricultural and manufactured goods with any other country would not suffice. Instead it seems that Cuba could have fared better had it transformed its economy more quickly toward the international export of services. Aside from Caribbean islands with oil related wealth such as Trinidad and Aruba, the best economic performance has occurred in those islands that focused on tourism, finance and insurance services.
Likewise trade in agricultural and manufactured goods with any other country would not suffice. Instead it seems that Cuba could have fared better had it transformed its economy more quickly toward the international export of services. Aside from Caribbean islands with oil related wealth such as Trinidad and Aruba, the best economic performance has occurred in those islands that focused on tourism, finance and insurance services.
