With the collapse of the Soviet Union in 1991 and free market reforms in China that has enabled it to become the world’s second-largest economy, there are only a few nations that still retain command economies. Among these are Cuba and Vietnam, which are now transitioning to free market models. Mihaylo professors discuss the outlook for these economies.
In December 2014, President Barack Obama announced a major foreign policy breakthrough with Cuba, including normalization in relations and efforts to lift the trade embargo in effect since 1961. With an aging Communist regime on the island nation and virtually no support from its former Soviet sponsors since the early 1990s, most observers believe the new Obama policy will pave the way for a transition from a staunchly Communist command economics model to a free enterprise system in the only Communist country in the Western Hemisphere.
“As Cuba begins to experiment with capitalism in the form of private business ventures in limited areas and as the government employee ranks diminish, individuals will begin to develop an entrepreneurial initiative that may develop into larger private businesses,” Mihaylo Marketing Professor William Hernandez Requejo says. “At this early stage in the Cuban experiment, all marketing is done by word of mouth. It will be interesting to see how this develops over the next generation.”
While Hernandez Requejo believes the island nation has economic potential, he also contends the future is uncertain. “With a population of over 11 million, and with a very healthy and highly educated and literate consumer base with tremendous needs for modernization, Cuba represents a new market in the Caribbean,” he says. “Cuba desperately needs a wide variety of goods and services. While many think immediately of vacation resorts and tourism, others exist such as renewable energy, telecommunications, pharmaceuticals, medicine, infrastructure development and construction and housing. How the U.S. approaches this neighbor to the south will be paramount as to whether it will succeed in becoming once again ‘the Pearl of the Antilles.’”