Colonial and Republican period (1870–1959) Although Cuba belonged to the high-income countries of Latin America since the 1870s,
income inequality was high, accompanied by capital outflows to foreign investors. In the early half of the 20th century sugar, tobacco, and coffee exports, along with tourism from the U.S. provided the country with rapid growth. Before the
Cuban Revolution, in 1958, Cuba had a per-capita GDP of $2,363, which placed it in the middle of Latin American countries at the time, according to the Maddison Project. PBS American Experience quotes a better ranking for Cuba of 5th in the Western Hemisphere during the early 20th century, and gives high ratings for life expectancy, literacy and per capita ownership of automobiles, telephones, and television sets. According to the UN, between 1950 and 1955, Cuba had a life expectancy of 59.4 years, which placed it in 56th place in the global ranking. (As of 2026, it was 78.62 years, ranking 72nd in the world.) Its proximity to the
United States made it a familiar holiday destination for wealthy Americans. Their visits for gambling, horse racing, and golfing made tourism an important economic sector. Tourism magazine
Cabaret Quarterly described
Havana as "a mistress of pleasure, the lush and opulent goddess of delights".
Revolutionary era (1959–present) The
Cuban Revolution under the leadership of
Fidel Castro brought a sharp break with earlier economic, social and political policies in Cuba, introducing a planned state-run command economy, an alliance with the
Soviet Bloc, and a trade embargo by the United States that ended trade and tourism with that country. Cuba moved down the world income distribution after the revolution and as of 2012, per capita income appear to be below the peak of Cuba's pre-revolutionary levels.
Early economic planning (1959–1967) On 3 March 1959, Fidel Castro seized control of the Cuban Telephone Company, which was a subsidiary of the
International Telephone and Telecommunications Corporation. This was the first of many nationalizations made by the new government; the assets seized totaled US$9 billion. After the 1959 Revolution, citizens were not required to pay a personal
income tax (their salaries being regarded as net of any taxes). The government also began to subsidize
healthcare and education for all citizens; this action created strong national support for the new revolutionary government. The
USSR and Cuba reestablished their diplomatic relations in May 1960. When oil refineries like Shell, Texaco, and Esso refused to refine Soviet oil, Castro nationalized that industry as well, taking over the refineries on the island. Days later in response, the United States cut the Cuban sugar quota completely; Eisenhower was quoted saying "This action amounts to economic sanctions against Cuba. Now we must look ahead to other economic, diplomatic, and strategic moves." Using machinery and equipment provided by the Soviet Union and other socialist countries, from 1959 to 1963, the Cuban government attempted to implement
import substitution industrialization. By the late 1960s, Cuba became dependent on Soviet economic, political, and military aid. It was also around this time that Castro began privately believing that Cuba could bypass the various stages of socialism and progress directly to
pure communism. General Secretary
Leonid Brezhnev consolidated Cuba's dependence on the USSR when, in 1973, Castro caved to Brezhnev's pressure to become a full member of
Council for Mutual Economic Assistance (Comecon). Comecon deemed Cuba one of its underdeveloped member countries and therefore Cuba could obtain oil in direct exchange for sugar at a rate that was highly favorable to Cuba. In July 1970, after the harvest was over, Castro took responsibility for the failure, but later that same year, shifted the blame toward the Sugar Industry Minister saying "Those technocrats, geniuses, super-scientists assured me that they knew what to do to produce the ten million tons. But it was proven, first, that they did not know how to do it and, second, that they exploited the rest of the economy by receiving large amounts of resources ... while there are factories that could have improved with a better distribution of those resources that were allocated to the Ten-Million-Ton plan". During the Revolutionary period, Cuba was one of the few developing countries to provide
foreign aid to other countries. Foreign aid began with the construction of six hospitals in Peru in the early 1970s. Between 1970 and 1985, Cuba sustained high rates of growth: "Cuba had done remarkably well in terms of satisfying basic needs (especially education and health)" and "was actually following the World Bank recipe from the 1970s: redistribution with growth". Foreign aid expanded later in the 1970s to the point where some 8000 Cubans worked in overseas assignments. Cubans built housing, roads, airports, schools, and other facilities in
Angola,
Ethiopia,
Laos,
Guinea,
Tanzania, and other countries. By the end of 1985, 35,000 Cuban workers had helped build projects in some 20 Asian, African, and Latin American countries. The pre-Special Period was an era of low poverty. In the mid-80s, no more than 6% of Cubans were poor (poverty being defined as a state of not being able to satisfy basic needs with earned income). In comparison, the poverty rate throughout Latin America in that era averaged more than 40%, and in some countries more than 70%.
Special Period (1991–1994) during an extended period of economic distress. In 1991 an extended period of
economic crisis began in
Cuba primarily due to the
dissolution of the Soviet Union and the
Comecon. This era was referred to as the "Special Period in Peacetime", This loss of subsidies coincided with a collapse in world sugar prices. Sugar had done well from 1985 to 1990, crashed precipitously in 1990 and 1991 and did not recover for five years. Cuba had been insulated from world sugar prices by Soviet price guarantees. A
Canadian Medical Association Journal paper claimed, "The famine in Cuba during the Special Period was caused by political and economic factors similar to the ones that caused a
famine in North Korea in the mid-1990s because both countries were run by authoritarian regimes that denied ordinary people the food to which they were entitled to when the public food distribution collapsed and priority was given to the elite classes and the military."
Malnutrition resulted in an outbreak of diseases. The Cuban economy began to improve again following a rapid improvement in trade and diplomatic relations between Cuba and Venezuela following the election of
Hugo Chávez in Venezuela in 1998, who became Cuba's most important trading partner and diplomatic ally.
Living conditions in 1999 remained well below the 1989 level. Due to the continued growth of tourism, growth began in 1999 with a 6.2% increase in GDP. Growth then picked up, with a growth in GDP of 11.8% in 2005 according to government figures. In 2007 the Cuban economy grew by 7.5%, higher than the Latin American average. Accordingly, the cumulative growth in GDP since 2004 stood at 42.5%. Starting in 1996, the government imposed
income taxes on self-employed Cubans. Every year the United Nations holds a vote asking countries to choose if the United States is justified in its economic embargo against Cuba and whether it should be lifted. 2016 was the first year that the United States abstained from the vote, rather than voting no, "since 1992 the US and Israel have constantly voted against the resolution – occasionally supported by the Marshall Islands, Palau, Uzbekistan, Albania and Romania". In its 2020 report to the United Nations, Cuba stated that the total cost to Cuba from the United States embargo is $144 billion since its inception.
Post-Fidel Castro reforms (2011–2021) In 2011, "[t]he new economic reforms were introduced, effectively creating a new economic system", which the
Brookings Institution dubbed the "New Cuban Economy". Since then, over 400,000 Cubans have signed up to become entrepreneurs. the government listed 181 official jobs no longer under their control—such as taxi driver, construction worker and shopkeeper. Workers must purchase licenses to work for some roles, such as a mule driver, palm-tree trimmer, or well digger. Cuba maintains nationalized companies for the distribution of all essential amenities (water, power, etc.) and other essential services to ensure a healthy population (education, health care). Around 2000, half the country's sugar mills closed. Before reforms, imports were double exports, doctors earned £15 per month, and families supplemented incomes with extra jobs. After reforms, more than 150,000 farmers could lease land from the government for surplus crop production. Before the reforms, the only real estate transactions involved homeowners swapping properties; reforms legalized the buying and selling of real estate and created a real estate boom in the country. In 2012 a Havana fast-food burger/pizza restaurant, La Pachanga, started in the owner's home; it served 1,000 meals on a Saturday at £3 each. Tourists can now ride factory steam locomotives through closed sugar mills. In 2008, Raúl Castro's administration hinted that the purchase of computers, DVD players, and microwaves would become legal. Monthly wages remain less than 20 U.S. dollars. Mobile phones, which had been restricted to Cubans working for foreign companies and government officials, were legalized in 2008. To remedy Cuba's economic structural distortions and inefficiencies, the Sixth Congress approved an expansion of the internal market and access to global markets on 18 April 2011. A comprehensive list of changes is: , Cuba, 2011 • expenditure adjustments (education, healthcare, sports, culture) • change in the structure of employment; reducing inflated payrolls and increasing work in the non-state sector • legalizing 201 different personal business licenses • fallow state land in
usufruct leased to residents • incentives for non-state employment, as a re-launch of self-employment • proposals for the formation of non-agricultural cooperatives • legalization of the sale and private ownership of homes and cars • greater autonomy for state firms • search for food self-sufficiency, the gradual elimination of universal rationing and change to targeting the poorest population • possibility to rent state-run enterprises (including state restaurants) to self-employed persons • separation of state and business functions • tax-policy update • easier travel for Cubans • strategies for external debt restructuring On 20 December 2011, a new credit policy allowed Cuban banks to finance entrepreneurs and individuals wishing to make major purchases to make home improvements in addition to farmers. "Cuban banks have long provided loans to farm cooperatives, they have offered credit to new recipients of farmland in usufruct since 2008, and in 2011 they began making loans to individuals for business and other purposes". The system of rationed food distribution in Cuba was known as the
Libreta de Abastecimiento ("supplies booklet"). ration books at bodegas still procured rice, oil, sugar, and matches above the government average wage of £15 monthly. Raúl Castro signed Law 313 in September 2013 to set up a
special economic zone, the first in the country, in the port city of
Mariel. The zone is exempt from normal Cuban economic legislation. The
convertible peso (CUC) was no longer issued from 1 January 2021 and ceased circulation on 30 December 2021. In February 2019, Cuban voters approved a new constitution granting the right to private property and greater access to free markets while also maintaining Cuba's status as a socialist state. In June 2019, the 16th ExpoCaribe trade fair took place in Santiago. Since 2014, the Cuban economy has seen a dramatic uptick in foreign investment. In December 2018, the official Cuban News Agency reported that 525 foreign direct investment projects were reported in Cuba, a dramatic increase from the 246 projects reported in 2014.
Modern Cuban economy (2021–present) Cuba's GDP dropped more than 10% from 2018 to 2024. The modern Cuban economy continues to face challenges related to an
ongoing energy crisis, foreign trade sanctions, and limited
tourism. The Cuban economy was negatively affected by the
COVID-19 pandemic from 2020 to 2022, with sudden drops in remittances and tourism. In February 2021, the Cuban government authorized private initiatives in more than 1,800 occupations. In 2020, the country's economy declined by 11%, the country's worst decline in nearly 30 years. Cubans have faced shortages of basic goods as a result. The halt of Venezuelan oil shipments, following the
United States' intervention in Venezuela in January 2026, worsened Cuba's severe energy crisis. ==Population and migration==