COUNTRY COMPARISONS 

 

 
CUBA VS. DOMINICAN REPUBLIC
 
by  Robert Datta
 

                    

        

In this paper I will compare the economic systems of Cuba and the Dominican Republic.  The reason why I chose these two countries is very simple.  It is because they share quite a few similarities with the big difference being their economic system/ government structure.  I feel that in order to compare the qualities of both systems evident in two different countries, the countries have to be as similar as possible, so that major differing characteristics can be attributed to the economic system/ government structure and not some other factor(s).

     First off, I will give a description of the main characteristics and historical events of both countries.  Cuba is an island located between the Caribbean Sea and the North Atlantic Ocean.  The climate is tropical and follows a dry/wet season pattern (dry Nov.-April, wet May-Oct.).  The land is mostly rolling hills with rugged mountains in the southeast.  Natural resources for Cuba are as follows:  cobalt, nickel, iron ore, copper, manganese, salt, timber, silica, petroleum, and arable land.  Currently, Cuba is a Communist state, although many would argue that it is a mixed-system.  The president, Fidel Castro, has been in power since 10/2/76 (before that time he was prime minister from 2/59 to 2/24/76 when the office of prime minister was eliminated).  A brief historical overview of the country is as follows:  Cuba gained its independence from Spain on October 10, 1868 and also on May 20, 1902 from the US.  In 1959 Fidel Castro led a rebel army to victory and adopted a Communist regime largely because the USSR helped him during the rebellion.  After the collapse of the Soviet Union, Cuba endured a massive economic recession in 1990 due to lost annual funding estimated at 4-6 billion per annum.  In the recent years, Cuba’s economy has been improved largely due to an influx in tourism and increase in foreign investment.  Major problems with Cuba in the present are drug smuggling and illegal migration into the US.  The Dominican Republic is also an island located between the Caribbean Sea and the Atlantic Ocean.  It shares 1/3 of its space on Hispanola with Haiti.  It has a tropical climate and seasonal precipitation much like Cuba.  It shares a rugged landscape as well.  Although these features cover more percentage area than Cuba, it does have lots of fertile land (located mostly in valley regions).  Natural resources include nickel, bauxite, gold, silver, and arable land.  Presently, the Dominican Republic has a representative democracy with President Rafael Hipolito residing as chief of state (since Aug 16,2000).  Next is the brief historical overview for the Dominican Republic:  The French ruled the DR until 1809, and then the Spanish ruled it thereafter.  Haitians took it over in 1822 to unite Hispanola fearing that the French would take over again and reinstate slavery.  The Haitians retreated in 1844 due to rebellion over their rule in 2/27/1844.  The US occupied DR from 1916-1924 to secure the lands of plantation owners under the guise of protecting it from being annexed by Germany during WWI.  After the US left, lack of rule was pretty much the norm until in 1996 when open democratic elections brought about a new government.  Recently (in the past 10 years) the Dominican Republic, like Cuba has seen significant growth due to tourism instead of agriculture, which was the norm for both prior to this.  As one can see from the factual information listed above, Cuba and the Dominican Republic share many similar characteristics with the exception of their economic systems/ government structure.  This makes them good candidates for a comparison of economic systems.

 

The first figure chosen is for Cuba and it is obvious- Fidel Castro.  He was born in Oriente Province, Cuba on August 13, 1926.  Castro graduated from the University of Havana in 1950 with a degree in law.  He was also a member of the social–democratic Orthodox party in the late 40’s and early 50’s.  On July 26, 1953 he led an attack on the Moncada army barracks in an attempt to overthrow Cuba’s dictator at the time- Fulgencio Batista.  Fidel was sentenced to 15 years in prison for his attack.  He was pardoned in 1955 and released from prison early.  In December 1956 Castro launched a guerilla war against Batista and on January 1st 1957 Batista was overthrown and Fidel assumed power.  The figure for the Dominican Republic is a little less obvious.  It is Rafael Trujllo.  He was born on Oct. 24, 1891.  He was trained in the army by US Marines during the U.S. occupation and was army chief during the presidency of Horacio Vasquez.  Trujllo launched a coup against president Vasquez, much like Castro did to Batista.  The main difference is that Trujllo succeeded on the first try and ousted Vasquez in 1930.  Officially, he was president from 1930-1938 and 1942-1952, but he retained his power while not in office.  He became a dictator, much like Castro.  He killed thousands of Haitians to prevent repeated invasion attempts during the 20th century.  He was assassinated in 1961 after more than 30 years of dictatorship.

 

 Now I will begin the actual comparison of the two systems.  I will start with a description of Cuba’s system.  As is known by almost everyone on the planet, Cuba is a country that has a communist form of government.  What most don’t know is that it is more of mixed economy- incorporating aspects of both socialism and capitalism.  The system is comprised of a Council of Ministers that contains the leadership of all of the national-level ministries including the executive branch.  The Council of Ministers submits a draft national budget to the National Assembly of Popular Power (ANPP), which is elected directly by the unicameral national legislation.  The Cuban Communist Party (PCC) must approve candidates for the ANPP.  The Cuban Communist Party has the supreme authority to decide political, economic, and social issues.  There is a Party Congress much like that in the FSU.  It serves mostly as a place to introduce new proposals by the top PCC officials.  It doesn’t make its own policy.  It just ratifies decisions made previously by the PCC.  It meets every five years to review and adjust its policies and to map out a plan for the next five-year period.  The Central Committee oversees all party activities at the local level and is responsible for enforcing programs made by Congress.  Finally, there is the Politburo, which is appointed from people in the Central Committee.  It is the highest authority in the Cuban political system (along with the PCC).  It makes policy and “recommends” executive and legislative action to be done by the state.  Fidel Castro is essentially the head of the Politburo and thus the PCC.  He is basically the “Maximum Leader”.  While Cuba uses the classic five-year plan, controlling of prices, and production quotas, the kind of aspects we equate with socialism, in recent years it has leaned more towards a mixed economy by incorporating some capitalistic aspects into the economy.  Examples of such a transition are as follows:  In 1994 a liberalized farmers’ market was introduced.  It allowed farmers to sell above-quota production at market prices (much higher than they got in quota production) to reduce black market activity and to bolster production in general.  Also, to bolster tourism, Cuba introduced a convertible peso to be used for domestic use only.  The exchange rate is approx. 22 pesos for 1 US dollar (Jan. 2001 est.).  Although reforms have been made by Cuba in the capitalist direction in an attempt to boost the economy, it largely remains a socialist regime and at best a mixed one.

 

The economy of the Dominican Republic is quite different from that of Cuba.  It can be characterized as a free-market capitalist economy.  The government has very little influence on the economy.  For the most part, it is the “invisible hand” of the market that keeps it in equilibrium.  In the past decade the Dominican Republic has seen a substantial growth in GDP.  The majority of this is due to tourism taking over agriculture as the country’s main source of revenue.  As a result, in 1994 the DR declined assistance from the IMF.  Even Hurricane Georges, which hit the country in 1998 did not have a substantial affect on the continued growth of the economy.  Much of the growth in the country in the recent years can also be attributed to decreased foreign debts.  In fact, payment of national debts in 2000 was only 1.5% of GDP.   The main problem in the country currently is income distribution.  Approximately ½ of the population gets less than 1/5 GNP and the richest 10% gets close to 40% of GNP.  To alleviate this inequality, in December of 2000 the MEJIA administration introduced a new tax system which heavily taxed the richest individuals/ corporations in the country to somewhat alleviate the uneven income distribution.  It is clear to see that the Dominican Republic’s economic system is fairly simple with free-market capitalism being the rule.  Also, increased tourism in the country has boded well for the economy and continued growth is witnessed and expected in the years ahead.

  For my detailed comparison, I have chosen exports and imports.  First off, I will start with Cuba.  Cuba produces items that are fairly “low-tec” due to its lack of skilled workers and appropriate resources.  As a result, most of what it exports is quite simple to produce.  Lists of items that Cuba exports are the following: sugar, nickel, tobacco, fish, medical products, citrus, and coffee.  It mainly exports to Russia (23%), the Netherlands (23%), and Canada (13%) (1999 est.).  Unfortunately, Cuba’s largest potential buyer of goods, the US, imposed an embargo against Cuba in 1961, which prevents them from reaping this market.  Cuba attributes its recession in the early 90’s in which GDP declined approximately 35%.  Imports for this country are easy enough to predict.  Since it is able to produce only fairly “low-tec” items, it has a high demand for “high-tec” items that it is unable to produce.  A list of the items that Cuba imports are as follows: petroleum, food, machinery, chemicals, semi-finished goods, transport equipment, and consumer goods.  The countries from which it primarily imports from are Spain (18%), Venezuela (17%), and Canada (8%) (1999 est.).  As one can clearly see from the evidence presented, Cuba, for the most part, exports easily produced goods and imports the hard to produce goods.

 

    The Dominican Republic exhibits similar characteristics with regards to exporting and importing.  They too import “high-tec” items and export “low-tec” ones.  The Dominican Republic exports ferronickel, sugar, gold, silver, coffee, cocoa, tobacco, and meats.  It exports mainly to the U.S. (66.1%), Netherlands (7.8%), Canada (7.6%), Russia (7.4%), U.K. (4.5%) (1999 est.).  It imports foodstuffs, petroleum, cotton and fabrics, and chemicals and pharmaceuticals.  It mainly imports from the U.S. (25.7%), Venezuela (9.2%), Mexico (4%), Japan (3%), and Panama (2.6%) (1999 est.).  As one can clearly see from the data listed above, the US is the country’s largest supplier of imported goods and the largest consumer of their exported goods.  Unlike Cuba, the Dominican Republic has been able to reap the benefits of trade with the US because they don’t have an embargo imposed upon them as Cuba does.  Also, it is evident that they produce “low-tec” goods for export and import “high-tec” goods because they lack skilled labor and materials needed to produce such goods.

  In conclusion, I believe that it is safe to say that both Cuba and the Dominican Republic have considerably different economic systems.  Cuba embraces the socialist ideal, while the Dominican Republic relies on the capitalism to achieve equilibrium in its economy.  Both countries have seen significant growth in the last decade due to tourism and foreign investment.  In recent years, Cuba has shifted more to a mixed economy to remain competitive in the world market.  It is to this shift that it owes much of its success today.  Perhaps this shift is a trend towards a fully capitalistic economy.  After all, Cuba has much to gain by making such a shift.  Proof of this can be seen in the limited changes made after Soviet collapse and withdrawal from the country.  Since such small changes produced a dramatic result (basically lifted Cuba out of a recession), who knows how well the country would respond to a dramatic shift such as a replacement of the entire system.  Then, of course, this assignment would be elevated to a new level in difficulty because there would be one less dissimilar country to choose from.

 

BIBLIOGRAPHY

1.)    WWW.CIA.GOV/CIA/PUBLICATIONS/FACTBOOK/GEOS/CU.HTML

2.)    WWW.CIA.GOV/CIA/PUBLICATIONS/FACTBOOK/GEOS/DR.HTML

3.)    WWW.HISPANIOLA.COM/DR/GUIDES/HISTORY.HTML

4.)    WWW.CUBAFACTS.COM/POLSYS/POLOVERVIEW.HTM

          

 

 

 

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