The death of longtime Cuban dictator Fidel Castro will send Cuba into a temporary state of flux. It’s unclear what the next Cuban or American regimes will mean for the island nation.
But one thing is certain according to George Mason University economist Tyler Cowen: even a truly capitalist Cuba will never become the Singapore of the Caribbean.
After Castro comes more economic stagnation, Cowen wrote Saturday in Bloomberg. Assuming the United States will lift its decades old embargo and based solely off of neighboring tropical nations, he argues, the economic forecast for Cuba still remains glum.
“The core problems of the region include high debt, weak commodity prices, lack of economies of scale and an inability to upgrade tourist facilities to compete with the U.S., Mexico and further-flung locales,” Cowen writes.
“Cuba cannot service its foreign debt, and losing most of its support from Venezuela has been a massive fiscal problem.”
Looking southeast, Cowen maintains that the best Cuba can do is emulate the Dominican Republic. With an annual per capita income of just over $6,000, the Caribbean country is hardly an economic powerhouse.
“The most optimistic forecast for Cuba is that, after a few decades of struggle and reorientation, it will end up at the income level of the Dominican Republic,” Cowen writes.
The professor notes that he based his projections on the assumption that Cuba will keep its planned economy and current exchange rate. When looking to possible goods to export, Cowen maintains his pessimism.
At first glance, with its balmy weather and accessible ports, Cuba seems well positioned to burst into global markets. But commodities like sugar and coffee won’t do the trick, Cowen says because Cuba will have a tough time competing with more established nations. CONTINUE