Why isn’t Cuba replicating Vietnam’s economic success?

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Former Vietnamese President Truong Tan Sang waves to students during his September 2015 visit to Cuba. Photo by Yenny Muñoa/CubaMINREX

Vietnam has regularly been identified as a suitable economic model for Cuba to follow once it accelerates market-oriented reforms.

The characterization makes sense, considering both countries have communist governments, limited natural resources, and fraught histories with the United States. Vietnam has experienced economic growth every year since it initiated socialist-oriented market reforms known as Doi Moi in 1986. The reforms established a resilient economy propelled by large state-owned enterprises partnering with global brands, a growing private sector, diversified exports, a solid tourism industry, and a suitable environment for manufacturing. Those economic accomplishments happened without Vietnam sacrificing its single-party rule.

So why isn’t Cuba replicating the Doi Moi playbook?

Geography and culture play important roles. It’s impossible for Cuba to replicate Vietnam’s economic strategy because the island has less land, people, and resources, said author and former Mexican Secretary of Foreign Affairs Jorge Castañeda. Vietnam also benefits from its industriousness, he added.

“In economic terms, [Vietnam] is a much bigger, more populated country with different traditions,” Castañeda said. “The Cubans don not seem to be organized that way, and it’s a much smaller and poorer country.”

Cuba’s ties to its neighbors also discourage it from adopting Vietnam-style reforms, said Enrique Pumar, chair of Santa Clara University’s sociology department. He said Cubans are likely to expect more from economic reforms than the Vietnamese because they compare themselves to Western European and North American societies, especially the exile community in Florida. Vietnam doesn’t compare itself that way, since its diaspora community lives further away and many of its neighbors are less prosperous.

“[The Vietnamese] say ‘we are doing ok’ when comparing themselves with Cambodia and Laos. Maybe even with some provinces in southern China,” Pumar said. “But the comparison for Cubans is very different because it has always been the United States and Europe, and not necessarily Latin America.”

Castañeda added that Cuban-Americans have so far been reluctant to, and limited from, formally investing in Cuba. “That’s where a lot of the investment would come from, and it’s not coming,” Castañeda said.

While Raúl Castro initiated economic reforms such as allowing some private sector activities and leasing government-owned land to farmers, transformative changes are unlikely to happen while his inner circle remains in power, Pumar said. He noted that Vietnam and China only made significant changes after revolutionary leaders Ho Chi Minh and Mao Zedong died. “If you compare post-communist societies, these societies do not make meaningful changes until the revolutionary leader and his inner circle are out of the picture,” Pumar said.

Castañeda said whoever succeeds Raúl Castro in February 2018 will probably come from his inner circle, making significant economic reforms unlikely.

Even though Cuba hasn’t completely embraced Doi Moi, the Castro government has studied the economic model privately with Vietnam for years. Castañeda says the discussions haven’t improved the Cuban economy, but praising Doi Moi helps the Cuban government make economic reforms without political reforms.

“Maybe one of the reasons why they haven’t gone further – or they have backtracked rather systematically – is precisely because if they go too far they will lose control,” Castañeda said. “It’s what Fidel Castro always used to say about Gorbachev.”

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  1. Daily Briefing - December 15, 2017 - Cuba Trade Magazine - December 15, 2017

    […] The Vietnam scenario: Vietnam has regularly been identified as a suitable economic model for Cuba to follow once it decides to accelerate market-oriented reforms. The Asian country’s reforms established a resilient economy propelled by large state-owned enterprises partnering with global brands, a growing private sector, diversified exports, a solid tourism industry, and a suitable environment for manufacturing. And they happened without Vietnam sacrificing its single-party rule. So why isn’t Cuba trying to replicate Vietnam’s strategy more aggressively? (Cuba Trade) […]