Poverty in Cuba,
Welfare in a Broke Country

Published Feb 2012

Globalization & poverty in Cuba

Transition to capitalism

The reasons poverty in Cuba has not been effectively tackled, despite very good prospects in recent years – up until the global recession - are mostly due to the way the government has dealt with reforming the economy of the country.

From a communist to a capitalist economy, this is a radical transformation that so far only one country has managed successfully: China. Let’s find out why in some respects Cuba’s strategy has paid off to protect its impoverished population and why joining the world economy has also made it more sensitive to global shocks that are aggravating poverty in Cuba.

See the following article if you're interested in the history of Cuba.

Globalization and poverty in Cuba

Welcoming Cuba into the world?

For the last 15 years or so globalization and the integration of Cuba into the world economy has changed many things. While many Cubans have been able to enjoy higher wages, there is still a substantial share of the population dubbed “at risk”.

They’re people who don’t have enough money to meet their basic needs for food and other amenities (i.e. electricity, school books, proper clothing). Those Cubans living in extreme poverty at least enjoy levels of social protection that are of a much better quality than in other developing countries. This generally includes some benefits, most importantly that of free education and health care.

In urban areas, there’s an estimated 15% living in extreme poverty in Cuba, although the statistics are at least 10 years old. Sure, compared to the rest of Latin America, Cuba is doing far better: the economic opening has allowed a number of Cubans to earn more and enabled many others to start their own small businesses.

Poverty in Cuba nowadays

After a few years of joining the world market, Cuba is still grappling with the unfair conditions of international trade that systematically benefits the developed world. Be it through the World Trade Organization (WTO) or the myriad of free trade agreements, rich countries have made it so that primary products are sold to them extremely cheap.

As a result, Cubans have seen their revenues decrease steadily over time. However, the Cuban experience has shown that an active social policy can be a great tool to fight exclusion and poverty. It's true that compared to other developing countries this particular government has had decades of experience in social policy under its belt. Cuba made it through numerous blockades and embargoes, including the fall of the USSR and massive reforms and integration into the world economy. Nonetheless, it now looks like the island might not survive the global crisis as unscathed as it did in the past.

Cuba and the global financial crisis

Urban life & slums in Cuba

In Latin America the global financial crisis hit the continent the hardest through plummeting exports (due to less demand from developed countries), tourism and foreign investment, among others. The crisis that started as a financial catastrophe in the West gradually spread as an economic one to the rest of the world. At the time Cuba was already a very open economy heavily dependent on tourism and exports. However, it did not take advantage of the period of growth in the early 2000s to improve its productivity, diversify the economy (i.e. reduce the over-reliance on 2-3 sectors) and thus become more independent from the rest of the world, say, by developing its own internal market.

Containing the crisis

The Cuban government managed to keep the inflation and economy under some control, but there was no way it could avoid a major banking crisis due to a slowing economy (of declining exports and foreign investment) and a growing fiscal deficit. Primarily, the biggest effect was that banks and the banking system as a whole had a crisis of liquidity and reserves. Simply put, banks had no money to meet their obligations in terms of loans and investments.

The irony remains that Cuba opened its economy because the country was broke and its socialist system too expensive, but because of the global crisis it has ended up worse off. What this means for poverty in Cuba is that the government is less and less able to pay for the social services its citizens are entitled to. Austerity measures were thus adopted, but the government thought it was just another of these small crises that happen periodically in capitalist economies. However, as Cuba has been unwilling to go for a deep reform of its economy (not even gradually over the last two decades) it is now faced with a major recession.

What does this mean for poverty in Cuba?

Many cuts in public services, less places for students in university (education is free), a reform of the pension system to save the government more money. At the same time Cuba has also been trying to save the poorest in the island by targeting its social assistance to segments of the population worst hit by the crisis. However, in the end this only attempts to help with the impacts of the recession rather than solving its root causes.

Edit: as of November 2010, the government has been actively working on overhauling the whole economic system and many foreign companies and governments are taking part in this development. The government hopes that by having a more dynamic economy it will be able to pay for its social services. It makes sense, just like China has been setting up new safety nets lately. Only time will tell…

From hunger to malnutrition

Malnutrition & child poverty in Cuba

Following the collapse of the USSR, Cuba was in a precarious situation in the world, i.e. a tiny country slightly too close for comfort to the US – the only remaining superpower – and one of the only socialist nations left. Cuba lost the vast financial support it used to have from Moscow, and the US took advantage of the situation by intensifying their blockade on the island. The government then launched a very thorough program aimed at coping with food shortages, which proved to be a success in aiding the population.

Learning social policy from socialists?

Seeing how the US struggles to draft effective public policy these days, it seems governments can at least learn from successful socialist countries’ ability to generate momentum for social policy through thoughtful and well-publicized programs. Just a thought.

Since the substantial growth of Cuba’s economy from 1996, food has been easier to come by. A variety of ways to produce and market food has appeared; from co-ops to small-scale and family farms. All have contributed to enriching Cubans' daily diet, and even junk food is now easy to find, with flourishing fast-food restaurants and street-food vendors.

Junk food in Cuba

Even if obesity is on the rise in Cuba, the abundance of fruits and vegetables that the country produces should make it easy for the government to promote healthy diets. Let’s just hope it realizes the importance of prevention in public health. Smokers and people who are overweight represent a burden on welfare systems as treating their diseases – especially cancers – is incredibly expensive. Along with the global financial crisis, the government has decided to shift its focus from the universal supply of food to everyone (food stamps) to concentrating on the poorest in its population.

Healthcare and poverty in Cuba

Urban environment in Cuba

The full-blown welfare state

Since the independence of Cuba, the government has completely taken care of Cubans’ healthcare, meaning that the provision of healthcare has been (almost) fully state-funded, universal and free. "Almost", because Cubans still have to pay (ridiculously) small fees for prescriptions.

As many doctors fled the country after independence, Cuba had to make a choice of either re-training proper doctors or going for the development of local health care providers – aka “barefoot doctors” – whose training amounts to somewhere between a nurse and a fully-qualified doctor.

Building a healthcare system

Many developing countries at the time opted for the barefoot doctors, with an emphasis on basic hygiene and vaccinations. In most of them, including China, mortality decreased substantially but the state of medicine and training of doctors has remained very poor even after these countries started developing much more. For more complex diseases or infections, their doctors are generally clueless.

On the other hand, Cuba's healthcare program “attacked” all fronts of medicine; from mass vaccinations and public health policies for sanitation and clean water to the establishment of hospitals following international standards. Additionally, there were huge efforts to bring health care to rural areas of Cuba where ¾ of the population was living. All in all this took about 20 years to build, and by the early 1980s there was an extensive network of polyclinics providing primary care nationwide. Each polyclinic could treat up to 30,000 patients and had services spanning from general medicine to gynecology, dentistry and psychology.

From the 1980s, growing criticism over the lack of continuity in healthcare led the government to launch a new wave of development that focused on training general practitioners to become family doctors. These would be very much local-based GPs that follow patients all their lives, thus better understanding the bigger picture of their conditions (e.g. social and financial issues, family factors in chronic diseases). Cuban officials may openly recognize many of their people were assassinated during the revolution; however they do love their country and fellow citizens - as long as they’re socialists, that is.

Post-1989 Cuba: chaos and recovery

The US blockade of Cuba - that followed the fall of the USSR - resulted in massive shortages of medicines as well as vital supplies and heavy equipment. As a result, the budget of the ministry of Health to import medical supplies was cut threefold. Shortly after, the population’s food consumption dropped by 30% and insufficient funds for infrastructure led to an increase in water-related diseases. A wave of new diseases appeared as well, nearly all related to malnutrition and lack of vitamin intake. Poverty in Cuba was sky-high and the number of people trying to leave the country was just as high.

With the improvement of the economy around 1996, poor health and poverty in Cuba slowly started to shrink again. There are nevertheless continuous shortages of medicines today in Cuba. The government has been trying to alleviate the problem by developing the sector of herbal and Chinese medicines, while providing training to local doctors in these “new” fields. More recently, Cuba has been boosting its own pharmaceutical sector which has allowed it to produce as much as 2/3 of all types of drugs prescribed in the country. The only issue so far remains in purchasing raw “ingredients” from abroad.

Government poverty in Cuba

On the brink of bankruptcy

The share of the Cuban population over 65 years old is set to double in the next twenty years. This means two things:

  1. people are getting healthier and enjoying a longer life, in line with life expectancies seen in developed countries;
  2. healthcare costs will soar like never before simply because the older the population grows, the more care is needed.

The government is well aware of that and is currently looking for a solution to avoid going bankrupt. Hence, it’s now focusing on combating non-contagious chronic illnesses such as heart diseases and promoting messages to fight obesity and smoking.

On top of that, the government also has to spend resources on maintaining its decades-old infrastructure and equipment in hospitals and polyclinics. The blockade sure doesn’t makes things easy as the country could find treatments and equipment for much cheaper on international markets. But hey, that forces them to be more creative, right?

Bright future for poverty in Cuba?

What does the future hold for Cuba and its children?

New efforts & reforms

A lot has been done since the independence of the country, and yet poverty in Cuba is far from being a marginal issue. The government is constantly eager to improve the efficiency of its social policy inasmuch as it can afford to.

The problem of very low incomes will mostly be helped by developing and restructuring the economy. As for the degradation of the infrastructure as a whole and the lack of housing, they call for more investment from the government or new partnerships with private actors.

New strategies to fight poverty in Cuba

Also, the Cuban government - in its very communist tradition - needs to learn to involve its population in the development of the country, rather than persisting in thinking about policy in a top-down manner. This will help improve the efficiency and interaction with the government as well as better address the needs of the poor. Moreover, the blockade only serves to encourage problems with malnutrition and high food prices as you find that every other shops has little else to sell other than beans or cigarettes.

Yet, on the whole, the government has been doing quite well in its fight against poverty in Cuba, especially when compared to other developing countries. What's more, in terms of gender equality, more economic opportunities are offered to women as well as quality family planning services. The result has been unequivocal: infant mortality was cut by three over the past decades and life expectancy increased rapidly too.


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