Marianne Ward and John Devereux "The Road not Taken: Pre-Revolutionary Cuban Living Standards in Comparative Perspective" (The Journal of Economic History, March 2012, 104-133)
We examine Cuban GDP over time and across space. We find that Cuba was once a prosperous middle-income economy. On the eve of the revolution, incomes were 50 to 60 percent of European levels. They were among the highest in Latin America at about 30 percent of the United States. In relative terms, Cuba was richer earlier on. Income per capita during the 1920s was in striking distance of Western Europe and the Southern United States. After the revolution, Cuba slipped down the world income distribution. Current levels of income per capita appear below their pre-revolutionary peaks.
Cuba's income per capita was 50 to 60 percent of Western European levels and was about the same as Italy’s income. Cuban labor productivity was higher than in Italy at 55 to 65 percent of the Western European economies. Cuban consumption was relatively high as a share of GDP, and Figure 2 shows that Cuban consumption was roughly 70 percent of the consumption levels in most European economies, while exceeding Italy’s consumption by a considerable margin.
In sum, the comparative income data suggest that Republican Cuba was a middle-income country, comparable to Argentina and Uruguay in Latin America and Italy in Europe. We suspect that these conclusions would not surprise contemporary observers from the 1950s, when many believed that Cuba was a middle-income economy. In the early 1940s Henry Wallich wrote, "Although exact data are lacking, it seems safe to say that among all tropical countries, Cuba has the highest per capita national income."
Similarly, the World Bank in 1951 reported:
The general impression of the members of the mission, from observations and travels all over Cuba, is that living levels of the farmers, agricultural laborers, industrial workers, storekeepers, and others are higher all along the line than for corresponding groups in other tropical countries and in nearly all other Latin American countries.
Contemporary observers were also impressed by Cuban consumption levels and by their similarities to the United States. For example, the U.S. Department of Commerce noted:
No observer with experience in Latin America can fail to be impressed by the variety, quantity, and quality of the merchandise displayed in the provincial towns and cities of the island. While such items as mechanical refrigerators, gas ranges, and television sets are prominently displayed, the strongest impressions are those formed by inspection of the stores carrying housewares, apparel, and foodstuffs.
On most measures, especially televisions, Cuba ranks at the highest or close to the highest in Latin America.30 Cuba also ranked high on health indicators. In 1955 Cuba’s infant mortality rate was the lowest in Latin America and was similar to rates in developed economies.
<...> the Great Depression was a catastrophe for Cuba. The fall in Cuban income during the Great Depression is akin to the income declines suffered by combatants such as France and Belgium in World War II.
Cuban society seems to have never recovered from the shock. From the early 1930s, extreme political instability and social polarization characterized the republic. President Gerardo Machado became president in 1925 with great hopes but then lost power in 1933. The ensuing political upheaval ended with the coup by Fulgencio Batista, which set in motion the course of events leading to revolution, communist rule, and the demise of the republic.
<...> it is worth remarking that after 1925 Cuban growth was much slower than in the other countries of Europe and the Western Hemisphere. Cuba’s income per capita grew by only 3 percent between 1925 and 1955 compared to 28 percent in Argentina, 23 percent in Chile, and 55 percent in the United States.
Cuban income per capita fell from 45 percent of the U.S. level in 1925 to 27 percent in 1955, while output per worker fell from 54 to 32 percent of the U.S. level. The striking change, however, is in the comparisons with European countries. Cuban income per capita for 1925 was 80 percent of the European average and exceeded Italy’s by a wide margin. Moreover, output per worker was closer still to European levels. As in 1955 Cuba, Argentina, Chile, and Uruguay in 1925 had the highest incomes in Latin America, while pre-oil Venezuela was a relatively poor economy. Clearly, incomes in Cuba and the Southern Cone economies were similar to incomes in Western Europe.
During the early 1920s outside observers often considered Cuban living standards to be comparable to the poorer Southern States in the United States. Based on data for U.S. income in 1929, Cuban per capita income was similar to income in South Carolina and Mississippi, the two poorest Southern States. <…>
Our finding of high relative Cuban incomes in the 1920s is supported by recent comparative work. Using trade data, Xavier Tafunell shows that Cuba’s capital formation in equipment and machinery accounted for onequarter of the Latin American total in 1920! Cuba had the highest level of investment in machinery per inhabitant in Latin America for the period from 1890 to 1930.61 Similarly, Tafunell and Albert Carreras find that Cuba had the highest level of machinery imports and the second highest level of capital goods imports per capita in Latin America in 1925.
Tafunell shows that Cuban consumption of cement per capita in 1913 was the highest in Latin America, with Argentina and Uruguay close behind. By 1929 Cuban cement consumption per capita was second highest in Latin America behind only Uruguay. Finally, estimates of energy consumption in Latin America and the Caribbean in the early twentieth century show Cuba among the leader group along with Argentina, Uruguay, and Chile. Taken as a whole, this body of evidence suggests that Cuba was in the front rank of Latin economies during the first quarter of the twentieth century.
Yet, the 1925 comparisons should be viewed cautiously. Given the infirmities of the Cuban data and the conceptual difficulties associated with extrapolations, our estimates of relative Cuban living standards for the 1920s are meant only as rough guides. Nonetheless, once we accept that Cuba experienced slow growth between 1925 and 1955 as compared to the United States and Europe, this means relative Cuban incomes were much higher for the earlier years. The only question then is how much higher.
The case for the regime therefore rests on its achievements in healthcare and education and on possible improvements in income distribution. The successes of the revolution in these areas are real. For example, Cuba has infant mortality rates below those of the United States and other developed economies. To evaluate the successes, however, we have to compare current outcomes to the counterfactual of what would have occurred had the revolution failed. We suspect that overall healthcare outcomes would not have been much different given the remarkably low levels of infant mortality in Republican Cuba.