The Cuba Comparison



Most speculation about a reform path for North Korea centers on China, with Vietnam also attracting increasing interest. But José Luis León-Manríquez has written an interesting paper for the Korea Economic Institute that compares North Korea and Cuba (“Similar Policies, Different Outcomes: Two Decades of Economic Reforms in North Korea and Cuba”). The comparison is of interest because the two countries both experienced huge shocks with the dissolution of the Soviet Union—indeed, Cuba’s was worse—and both operate against the headwind of a US embargo (again, arguably worse for Cuba because of its location and the obvious gains that would come from lifting it). The two countries are also similar in the challenges posed by political transitions and in their familial political structure, with Fidel ceding power to Raul and Kim Jong-il anointing his son.

Despite the title of the piece, a careful reading suggests that the two countries did not in fact pursue altogether similar policies. Cuba responded to the shock of the early 1990s—the so-called “special period”—with measures to increase foreign exchange earnings. Like the North Koreans, the Cubans had difficulty in export processing zones. But as early as 2000, Cuba received foreign direct investment of nearly $500 million, largely in tourism and mineral extraction. The latter positioned Cuba to take advantage of the global commodity boom of the 2000s, particularly in nickel. Although extremely well-endowed with raw materials, and despite some Chinese investment, North Korea missed the boat almost altogether.

The second difference was in the extent of marketization. Like North Korea, Cuba pursued halting stop-go reforms for decades. But the Cuban government also showed greater willingness to take risks. For example, in 2002 the government closed down nearly half of Cuba’s sugar mills. North Korea has been more hesitant to admit the necessity of reallocating resources (see, for example, the ongoing issues in the steel sector). In 2007, Cuba pushed forward almost exactly as North Korea was moving in the opposite direction by formally releasing workers from the state sector and encouraging the formation of private businesses. In North Korea, such measures have been much more halting. As we show in Witness to Transformation, the exit of labor from the state sector in North Korea has been de facto rather than de jure and subject to ongoing harassment.

US analysis of the 6th Party Congress in Cuba generally underlined the partial nature of the reforms and the disappointments on the political front in particular. For those working on North Korea, however, the Guidelines published in advance of the Congress seem bold and the idea of an entire Party Congress devoted to the question of reform almost unthinkable. The Cubans have even gone so far as to issue a booklet outlining the reforms for the public. To hold up Cuba as a model of where North Korea should go is in itself a pretty depressing commentary.

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