A Brief Introduction to How Cuba’s Economy is Structured

Formerly the Antonio Madero Professor for the Study of Mexico at Harvard University, Dr. Jorge I. Dominguez recently retired from academia. Throughout his career, he taught undergraduate and graduate students about international relations and politics in both Mexico and Cuba. Dr. Jorge Dominguez also authored several books relating to Cuba and Latin America, such as “Economic Issues and Political Conflict: U.S.-Latin America Relations.”

The economy in Cuba is a planned-socialist economy. This type of economy is like what was seen in the Soviet Union and was used by roughly one-third of the world following World War II. Along with North Korea, Cuba is one of the only examples of a planned-socialist economy that seeks to greatly constrain the role of markets left in the world.

In Cuba, the economy is mostly state-run. There is a government-sponsored education program that provides free education to citizens at all levels, along with a national healthcare program. Cuba also has subsidized utilities, entertainment, food, and housing programs in place that compensate for the low salaries of workers in the country. All of these programs have suffered from insufficient economic growth during the past decade.

Planned socialism focuses on state ownership of all resources and the central allocation of labor, unlike capitalism that focuses on private ownership of resources.

A planned-socialist economy has a great deal of control over labor. In fact, nearly 80 percent of Cuba’s workers are employed by a government-owned enterprise. The country also does not have a stock exchange. During the COVID-19 pandemic, Cuba started reducing its restrictions on economic activities. Most notably it announced that it would allow for small- and medium-sized private businesses in most sectors instead of relying solely on state-owned operations.

U.S. State Department Report Singles Out Cuba Medical Missions

Originally from Havana, Cuba, Dr. Jorge I. Dominguez was a longtime Harvard University faculty member who held responsibilities as professor and as vice provost for international affairs. With a strong focus on the social and political aspects of the island nation, Dr. Jorge I. Dominguez is author of books such as “US-Cuba Relations in the 1990s.”

A July 2021 Miami Herald article drew attention to the Biden administration’s stance to Cuba and the release of the State Department’s “2021 Trafficking in Persons Report.” The report provides a critique of Cuban government-coordinated medical missions. This is surprising, given that the previous Democratic administration under President Obama had a positive outlook on these medical missions. In 2014, as part of re-engagement with the nation, Secretary of State John Kerry vocalized support of Cuba’s medical missions for their effectiveness in combating Africa’s Ebola pandemic.

The more recent report reflects a shift from this stance, with Cuba described as having “capitalized on the pandemic” through what appears to be forced labor. Cuba has placed as many as 50,000 physicians in 60 countries. The U.S. government considers it exploitative because the Cuban government retains the vast majority of the physicians’ salaries, with doctors receiving only 5 to 25 percent of what they earn. As the report alleges it, this makes these activities a lucrative form of human trafficking that earns the Cuban government $8 billion annually.

While the Biden administration has made promises to reestablish travel to Cuba and once more allow family remittances, this work is moving slowly. One major concern is arrests by the dictatorship of artists and independent journalists. Another is the still-unresolved brain injuries suffered by US diplomats who had been serving in Havana,, and whether the Cuban government bears any responsibility for them.

Surge of US Migration Includes Dispossessed Venezuelans

Serving as Antonio Madero Professor for the Study of Mexico until his retirement, Dr. Jorge I. Dominguez was a member of the Harvard University faculty for more than three decades. Focused on international affairs, Dr. Jorge I. Dominguez continues to maintain a close watch on developments in Mexico.

As reported by NBC in June, migration to the US-Mexico border has increased significantly during the first half of 2021. While the majority of these migrants are still small farmers and low-wage earners from regions such as Central America, an increasing number come from Venezuela’s professionals ranks. They are engineers, physicians, and other highly educated individuals driven to seek out better opportunities amid the collapse of an economy integrally tied to the world’s largest oil reserves.

A material indicator of the trend is nearly 7,500 Venezuelans registered by U.S. Border Patrol agents at the border in June alone. This number is greater than that of the past 14 years combined, dating to when records started. In tandem with this, a large percentage of the estimated 17,000 Venezuelans who illegally crossed Mexico’s southern border in 2021 are part of a 6 million-strong exodus that has occurred since 2013, when Nicolas Maduro ascended to the presidency. Many had been living abroad for years before migrating northward.

Because of the political antagonism between the US and Venezuela, claiming asylum may be an option for migrating Venezuelans that is not available to other border crossers. In an echo of US policy to past refugees to the US from Cuba, the Biden Administration granted approximately 320,000 Venezuelans Temporary Protected Status in March 2021.

The Puzzle: Have Undocumented Mexican Migrants Vanished?

Hundreds of thousands of undocumented migrants from Honduras, Guatemala, and El Salvador have been apprehended attempting to cross into the United States in each recent year. In Fiscal Year (FY) 2019, such Central American apprehensions summed 623 thousand — 64 percent of total U.S. migrant apprehensions. Their number dropped in 2020 but high volatility, and high numbers, prevail in FY2021. If the number of such Central Americans seeking to enter the United States for the balance of FY2021 continues approximately at their highest FY2021 monthly numbers thus far, the total at Fiscal-Year end would be between 650 and 700 thousand (https://www.cbp.gov/newsroom/stats/southwest-land-border-encounters).

In FY2019, the number of apprehensions of Mexicans attempting to cross into the United States without proper documents was 237 thousand — 25 percent of the total. Their number rose a bit in 2020 and more substantially thus far in FY2021. If the number of undocumented Mexicans seeking to enter the United States for the balance of FY2021 continues approximately at its highest FY2021 monthly numbers thus far, the total at Fiscal-Year end would also be between 650 and 700 thousand. That remains well below the number of Mexicans apprehended in the peak year, FY2004 at 1.1 million, when they represented 92 percent of total U.S. migrant apprehensions while the 60,023 apprehensions of Central Americans were just 4.8% (https://www.dhs.gov/immigration-statistics/yearbook). In short, in this century the number of such Central American migrants has risen substantially while the number of such Mexicans has fallen substantially.

Why did the number of Mexicans apprehended while seeking undocumented entry into the United States drop so much during this century? What are the implications for current U.S. policy debates regarding international migration?

            Contrary to Donald Trump’s words during the 2016 campaign about waves of undocumented Mexicans seeking to enter the United States, by 2016 Mexican apprehensions had fallen to 266 thousand. Trump did not cause the post-2004 drop that happened before his election.

            Did enhanced enforcement cause that drop? Enhanced enforcement, including border wall building, rose substantially before the current century. From the mid-1980s to the start of this century, border patrol funding quintupled and its staffing more than doubled. Border wall building took off during the Clinton administration, continuing under his successors. Its impact transformed the long-standing seasonal, cyclical, or circular migration flow into a more permanent inflow. In the past, many Mexicans entered the United States for a time and voluntarily returned to Mexico. Thus, enhanced enforcement worsened the problem that it had been designed to solve. The walls implied that, once inside the United States, stay! Moreover, if enforcement were the explanation, the number of apprehensions should have risen, not fallen.

            Did interdiction fail? Were more Mexicans crossing the border undetected? The U.S. Border Patrol estimates that the number of undetected migrants fell from about a million at the start of the century to about a hundred thousand by the start of the Trump presidency. The Total Interdiction Rate rose from 49 percent in 2006 to 75 percent in 2016, according to the Border Patrol. Even if these numbers reflect some wishful thinking, failed interdiction is unlikely to account for the reduced number of undocumented Mexican migrants captured. The rate of interdiction rose but the number of those apprehended fell (https://www.dhs.gov/sites/default/files/publications/17_0914_estimates-of-border-security.pdf).

            Was it effective deterrence? Perhaps enhanced enforcement – including likely death if crossing the desert – deterred prospective undocumented migrants. Scholars at El Colegio de la Frontera Norte (www.colef.mx/emif) have found some effect. From 2005 to 2010, border enforcement increased. The proportion of repatriated Mexicans who reported an intention to re-enter the United States dropped from 81 to 60 percent; by 2019, it fell to 40 percent – a proportion with which the U.S. Border Patrol concurs. Nevertheless, because the number of Mexicans that the United States repatriated fell markedly during the century’s second decade, the deterrence effect does not account for many fewer undocumented Mexican attempts to breach the border. For example, Mexicans returned or removed from the United States fell from 748 thousand in FY2009 to 180 thousand in FY2019 (https://www.dhs.gov/immigration-statistics/yearbook/), thus the number of deterred would-be migrants fell approximately from 142 thousand to 108 thousand over the decade.

            Had Mexico become a paradise? Did conditions within Mexico improve such that the “push” factors for migration vanished? Mexico’s economy crashed during the 1980s, fueling migration northward. Thereafter the growth rate of gross domestic product in constant prices was positive every year across five presidencies from 1989 to 2018, except in 1995, 2001-2002, and 2008-2009 (https://unstats.un.org/unsd/snaama/Downloads). This solid performance may have reduced the push to emigrate. The Mexican economy crashed again during the 2020-2021 Covid-19 pandemic, likely driving the increased immigration during this recent period.

However, from 2006 to 2018 Mexico’s homicide rates per hundred thousand population tripled (https://www.macrotrends.net/countries/MEX/mexico/murder-homicide-rate). It remained at this higher level in 2019-2020. Mexico’s homicide rate exceeded Guatemala’s. (From 2004 to 2019, the number of Guatemalan migrants rose eighteen-fold.) Mexico’s sustained rising homicide rate implies much higher Mexican emigration, which did not happen.

The U.S. legal regime changed. Mexican lawful U.S. permanent resident migration dropped from an average of 275 thousand per year during the 1990s to 171 thousand in 2000, barely changing thereafter. There were 174 thousand in FY2016, 156 thousand in FY2019, but only 31 thousand in FY2020 (https://www.dhs.gov/immigration-statistics/special-reports/legal-immigration), the latter drop likely stimulating undocumented crossing attempts.

However, the U.S. legal regime and its implementation for temporary Mexican workers and their families changed. Their number jumped (in thousands) from 81 in 2000 to 517 in 2010, 843 in 2016, and 897 in 2019. The magnitude of the increase in temporary workers approximately matches the decline in both Mexican apprehensions and immigrants as U.S. permanent residents (the pandemic renders the FY2020 numbers noncomparable).

            That still does not explain why the number of Mexican migrants did not increase more. Notwithstanding skyrocketing criminal violence, including but not limited to homicides, the number of Mexican migrants merely stabilized but did not grow.

For this puzzle, consider a demographic explanation. In 1970, the number of live births per woman was 6.75 in 1970, falling to 3.75 in 1990 and 2.40 in 2010. Those born in the 70s and 80s generated the net Mexican emigration of 2.3 million in 2000, a number that had fallen by three-quarters in 2010. From the 1970s to the last decade, the proportion of Mexican women using contraception more than doubled, nearing three-quarters of the total. That is why more Mexicans did not show up at U.S. borders in this century. If they ain’t born, they ain’t coming.

            The U.S. debate over migration should be re-focused. Adapt the U.S. legal regime to evolving migration circumstances for the Central Americans and empower people in their own countries to take charge of their reproductive lives.

 Jorge I. Domínguez

*Bio: Retired as the Antonio Madero professor for the Study of Mexico at Harvard University. Website: https://jorgeidominguez.com

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