With access to goods and services from the United States curtailed in the context of Cuba’s economic seclusion, the Castro government had little choice but to pursue an internally focused approach to development. This strategy helped Cuba to develop three characteristics that will interact with open trade and investment to foster high levels of economic growth and development in post-embargo Cuba. These are 1) low levels of inequality; 2) a highly educated population; and 3) a diversified basket of potential exports, including high-skill intensive goods and services.
Two of these characteristics – low levels of inequality and a highly educated population – were highlighted by Princeton’s Dani Rodrik as pre-existing conditions necessary for foreign investment to produce economic growth and development in developing countries. Rodrik developed this theory through case studies of South Korea and Taiwan, in which he countered the neoliberal argument that these Asian Tigers grew rich through trade and investment alone. Instead, according to Rodrik, foreign investment worked only in tandem with low levels of economic inequality and high levels of education, which were produced through policies of the Korean and Taiwanese governments before investment barriers were reduced.