Cuba’s capitalist evolution: Injecting capitalism into a communist economy

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Cuba’s capitalist evolution: Injecting capitalism into a communist economy

The economy has reached an inflection point. Change is coming that suggests the socialist republic will not only survive but, relatively speaking, could thrive, so long as investors are patient. Chloe Hayward reports on efforts to inject capitalism into the state-controlled economy.

A complex web: Cuba’s financial system

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CUBA’S LEADING NEWSPAPER, Granma International, publishes ‘Fidel’s reflections’ daily. On September 28, as the US financial crisis unfolded, Castro wrote: "No-one can doubt the destiny of the developed capitalist world and the fate it promises to billions of people on the planet."

Fidel’s words have a particular resonance, given what’s going on in the US. Change is afoot in the world’s biggest economy. So too in Cuba, where Fidel’s brother, Raul, is now at the helm.

Raul, like his brother, is a socialist at heart. But he is more pragmatic than Fidel. In his first July 26 speech, marking the revolution’s anniversary, Raul said the government was "conscious of the great quantity of problems that Cubans face". Earlier that month Raul started to embrace overdue economic change – Cubans can now stay in hotels and own cellphones, computers and other consumer goods. Wages have increased and now differentiate between skill levels to help give incentives to workers. Raul’s top priority is to deal with agricultural inefficiency. Now more farmers can get 10-year land leases. The all-encompassing ration system could, for the first time since 1962, be reduced.

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