Cuba Study Group issues report on Cuba’s private sector

This month, the Cuba Study Group released a report authored by Ricardo Torres, an economist specializing in the Cuban economy who has written for Progreso Weekly in the past. The report, titled “Cuba’s Private Sector: Pressure Valve or Engine of Development?”, explores the role of the private sector in Cuba.

Here is a quick summary of the report. For the complete text, click here.

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Is Cuba’s private sector merely a safety valve during times of crisis, or can it become the driving force of deeper transformation?

That is the central question addressed in our new report, Cuba’s Private Sector: Pressure Valve or Engine of Development?, authored by economist Ricardo Torres Pérez. The study offers a rigorous and up-to-date analysis of a sector that has become essential for understanding Cuba’s economy today.

Drawing on official data and the recent evolution of both small and medium-sized enterprises (MSMEs) and self-employment, the report examines their growth amid the island’s ongoing crisis, the barriers that still limit private enterprise development, and its prospects for the near future.

What Does the Data Reveal?

The private sector has become a central player in Cuba’s economy, but its development hinges on questions that lack clear answers. How far will the state allow it to advance? What conditions are needed to unleash the private sector’s potential as a driver of sustainable growth?

The findings highlighted in the report include the following:

• Private economy expands against the tide: The private economy has expanded against all odds, with more than 11,000 MSMEs approved since 2021. These enterprises, together with self-employed workers, have generated more than 570,000 jobs since 2012, despite the ongoing economic crisis.
• Private sector leads in retail: Private enterprises have surpassed the state sector to become the leading player in retail trade in 2024.
• Positive fiscal impact: MSMEs and the self-employed contributed 23% of national tax revenues in 2024.
• Persistent structural obstacles: Cuban entrepreneurs face challenges including legal uncertainty, limited access to credit, and a tax burden heavier than that applied to foreign investors.
• Limited global reach: Although the private sector has shown potential to innovate and compete in external markets, official restrictions—such as the requirement of state intermediaries for foreign trade—hamper its international expansion.
• The central dilemma: Authorities continue to treat the sector with mere “tolerance,” yet economically it represents a promising option for boosting production and employment.
• Reforms pending: The study emphasizes that public policies act more as constraints than stimuli. It recommends eliminating bureaucratic barriers, expanding authorized activities, allowing foreign investment in MSMEs, and reforming the tax code to grant domestic private firms at least the same treatment as foreign investors.
• The role of the United States: The report warns that additional restrictions would primarily harm private entrepreneurs and strengthen state companies. Conversely, authorizing financing and direct investment in MSMEs could help consolidate the sector and bring greater dynamism to the Cuban economy.  

Ricardo Torres Pérez is an economist, researcher, and adjunct professor at American University in Washington, D.C. He holds a Ph.D. in Economics from the University of Havana, where he also taught at the Center for the Study of the Cuban Economy (CEEC) and served as editor of the series Miradas a la Economía Cubana. He has been a visiting fellow at institutions such as Harvard, Columbia, and Sorbonne Nouvelle, and his research focuses on economic development and structural reforms in Cuba and Latin America.