Cuba's economic system is a planned economy, where the state owns most businesses, sets prices, and directs production, alongside some limited market elements. What type of economic system does Cuba have? It is mainly planned and state-controlled. The 2026 Index of Economic Freedom ranks Cuba 175th globally and last in the Americas, repressed, while Freedom House scores it 9, rated Not Free.
An Analysis of the Economic System of Cuba
What is the economic system of Cuba? The economy of Cuba is planned. The country’s economic system combines elements planned economy and some elements of a market economy.
In Cuba, the economy comprises businesses owned by the State. Where the government determines the production and distribution of specific goods and services. In Cuba, the State sets the prices
Socialism and communism are not economic systems, they are theories or social organizations. Economic systems are either: market economy, planned economy, or traditional economy.
What do the freedom indexes tell about the economic system of Cuba?
To determine if a country is mostly a market economy or a planned economy, it is useful to examine some economic indexes. For instance, according to the 2026 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, Cuba is ranked 175th globally and 32nd (last) in the Americas, indicating that the country has a repressed economy.
In a similar way, the 2026 Freedom House index evaluates the state of political rights and civil liberties globally. Generally, market economies tend to align more with democracy and freedom, while command economies tend to be characterized by greater state control and fewer democratic and civil liberty protections. Cuba gets a score of 9/100, which qualifies it as Not Free. Cuba is a country where the government controls what people do for political reasons, and people have limited freedom to choose (what, how much, and how to produce, whether to buy or not, selling price, etc.)
The Link Between Public Sector Employment and the Economic System of Cuba
An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Cuba, according to ILOSTAT and Cuban national statistics, the number of public sector employees as a percentage of the total workforce was approximately 77.0% (2010) and has remained high, with estimates suggesting around 67%–70% of the workforce in state employment as of 2021. In the country’s planned economy, the state controls the vast majority of employment. The bigger the public sector the closer is the economy to being a command economy.
The historical factors that have influenced the economic system of Cuba
The currently planned economic system of Cuba in the last century is the result of the country’s history of colonialism, revolution, and socialism. The Cuban Revolution of 1959 brought about a shift from a capitalist economy to a socialist one, with the government taking control of the means of production and distribution. This has resulted in a planned economy, with the government controlling virtually all sectors of the economy while only some private companies survive.
Sources
- List of countries by the public sector size
- ILOSTAT — Cuba
- 2026 Index of Economic Freedom — Cuba
- Freedom in the World 2026 — Cuba
Last updated: June 20, 2026
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