The Relationship between the Authoritarian Government and the Economy in Cuba - Essay Example

Macro & Micro Economics Number: Paper: Micro & Macro Economics Introduction Cuba is a strong and a regime of authoritarian political influence. Cuba’s authoritarian political structure was set out in the late 1970s through adoption of new rules in order to enhance a strong legal system and establish an able decision-making government. Cuba is presently a single-party government, where total number of candidates is equal to the seats in National Assembly polls. The Communist Party critically examines all candidates of the National Election before the polls, in addition to inspecting possible appointees to the administrative, top managerial and professional posts (Brooker 235). During the period of 2003-2004, there had been adversities in the market-oriented economy. The Communist Party and the state were not abiding by their own rules and were deferring the main meetings in contrary to statutes and law of the country (Levitsky and Way 125). This resulted in slow growth in membership count of Communist Party. There was a political recession in these years where the government lost out on both state enterprise managing autonomy and trade liberalizations. Making rules and their implementations were de-centralized. Development of the Cuban economy has not only been slow, but also lacked strength and scope; this is because the Cuban government at times have been inefficient and incapable of expanding the economy. The authoritarian characteristic of the Cuban government contributed to stagnation of economy with an inclination towards policy development for the purpose of primarily protecting own power and developing economy of the country. Cuban economy has stagnated for three main reasons; rampant public spending, co-optation strategy and right system to impaired property. These are examined with economic indicators like, inflation rate and Gross Domestic Products (GDP). Political and economic stagnation started improving since the end of 2004 (Levitsky and Way 125). Figure 1: Economic information (Source: “Cuba”) Authoritarian Regimes In an authoritarian system of political rule, there is a single ruler or a group of leaders who exercise the power. This kind of government may hold elections, but citizens cannot opine on their methods of rule. The leaders do not endow citizens with freedom of speech, religion and press. The leaders come from aristocrat families or top military ranking officials. Cuba, China, Myanmar and Iran are such examples. No nation entirely falls in this category. It is inappropriate to categorize any country under this type of government by considering a single period time. (Source: Levitsky and Way 125) Political background and Economy of Cuba The best example of a country following authoritarian government is Cuba. Cuba has one supreme leader who acts as ruler of the country. Cuban does not enjoy the freedom of religion, speech or press. The leaders of the country are wealthy, while common mass is poor. The Cuban citizens do not enjoy the right to elect their leader by way of voting. The citizens do not play any active part in introduction of new law and order policies or procedures for progress of the country. The most important political transformation of Cuba took place during 1970s (Levitsky and Way 125). The number of political prisoners reduced drastically. State and parties were formalized in this era. In the year 1975, Communist Party of Cuba held the first meeting and party program were adopted. The new constitution came into force in 1976 (Schedler 65). The major political change since the year 1990 was reduction of influence in the state by the political party as this was never ending. This “loss of control” (Schedler 65) was relative to rise of many autonomous civilian societies and increased criminal activities in Havana due to free expression of intellectuals (Ezrow and Frantz 154). During the period 1990-1993, Cuba’s GDP fell drastically by 30%. International trade also slumped by three-quarters (Schedler 65). However, Cuban economy faced difficulties in these problems, which were pre-dated. The economy of Cuba had stopped growing since 1985. The per capita GDP fell 5% during 1985-1990 (Schedler 65). At this time, imports reduced by 8% and exports by 10%. These problems forced the government to term the economy as stagnant. Proper authorization of the direct foreign investment in tourism sector was taken into consideration in mid-1989, before collapse of communism in Europe (Schedler 65). So, it can be considered that Cuba’s economic changes were international since 1989, but domestic factors played vital role in the onset of changes in economic policies from an earlier stage (Schedler 65). Since 1990, the new economic policy was implemented with the characteristic to authorize foreign investment directly in sectors like, tourism, petroleum and natural gas, mining and other enterprises. In absence of competitive transparent bidding, concessions were granted to certain enterprises. Investments can be done by the foreign firms in partnership with state enterprises and should hire Cuban labours from agencies of the government (Schedler 65). Handicraft and agricultural private markets have been approved and authorized by the government. (Source: Schedler 65) Domestic policies and impact The Batista government and its structure in Cuba, preceding Fidel Castro, were transforming into almost a capitalist government as that in America. At that time, Cuban population was financially unstable and Castro came up as the solution. With the support of lower classes, the government and officials acquired power. Castro along with his supporters reflected the views of a socialist reform. Although the government in power was turning towards capitalism, there still was a base of communism. In this manner, Castro got an easy access to a new socialist rule best suited for Cuba. Castro focused on education and importance of strengthening public opinion and power. He used his popularity among Cubans in order to sustain power as well as to demonstrate various ways of improving their lifestyles after coming to power. Castro’s ways of improving Cuba included arts with education. He had to cut down on urban transport systems, food shortages and reduce value of peso. During the regime of Castro, nearly all Cubans were literate under the age of 30. This was a huge step towards economic development. Market Economy Level of socio economic development Level of poverty in Cuba had risen from 6.3% in 1985 to 14.7% in 1995 and to 20% in 2002. Poverty level was marked by Cubans with family income below $4 per month. By 2004 end, the median monthly salary of Cuba was 354 pesos, which is $14 per month (Schedler 65). Following tourism, remittances are Cuba’s important source of foreign exchange. Since Diaspora of Cuba is white, the blacks are less benefited from this income source. Organization and competition of the market Even though the market has grown lawfully, yet there is very limited competition in the market. The private sector produces approximately 11%; semi-private cooperatives produce 36% and state farms contribute the rest (Schedler 65). These agricultural producers compete in free markets, which comprise a modest fraction of output. Self-employed and lawful micro-enterprises are kept within 200,000 by the enormous excise taxes. The state enterprises regulate major aspects of the economy. All banks are state owned and there is no capital market (Schedler 65). Economic Performance The per capita GDP in 2000 was 26% less than that in 1985. The per-capital GDP had grown at around 2% annually. Growth in 2004 was made on account of benefits derived from the recovery of tourism sector with more than 2 million visitors visiting the state and also international high nickel prices (Schedler 65). The government had shut down 45% sugar mills of the country in 2002. Cuba’s staple production is sugar, which is at lowest level of production (Schedler 65). (Source: Ezrow and Frantz 54) Conclusion Cuba has always followed the economic strategy that depends on natural resources and not human capital. It is the largest producer and exporter of sugar and sugar cane derivatives. It now earns foreign currencies from tourism. Yet, Cuba can consider harnessing the human capital and generate a complete different strategy of growth. Cuba can team up biotechnology scientists with companies like, Pfizer and Bayer, commensurate talents of auto mechanics for pivotal and complex tasks of manufacturing works and obtain comparative advantages from intellectual properties like, painting and music, for improving exports. Human capital of Cuba is a structural factor and may play an important role. The Cuban population is healthy and highly educated. For decades, “internationalism” was a means to acquaint intellectuals and leaders with the broad trends worldwide. In order to resize the democratic politics, social foundations should be taken into consideration. Cuba and its prosperity towards democracy of social-market remain uncertain and distant. So to conclude, it can be said that competitive authoritarianism should not be a ‘mere way station on the road to further democracy’. Works Cited Brooker, Paul. Non-Democratic Regimes: Theory, Government and Politics. Basingstoke: Palgrave Macmillan. 2009. Print. “Cuba.” Bertelsmann Transformation Index, Bertelsmann Transformation Index, 2006. Web. 13 May 2014. Ezrow, Natasha and Erica, Frantz. Dictators and dictatorships: Understanding authoritarian regimes and their leaders. Basingstoke: Palgrave Macmillan. 2011. Print. Levitsky, Steven and Lucan, Way. Competitive authoritarianism: hybrid regimes after the cold war. New York: Cambridge University Press. 2010. Schedler, Andreas. Electoral authoritarianism: The dynamics of unfree competition. New York: Lynne Rienner Publisher. Print. 2006. Read More