Swapping Petroleum for Doctors and the Impact on the Cuban Economy of Cutbacks in Venezuelan Oil Deliveries
AbstractThis article reviews official statistics on Cuba’s oil-related transactions, trying to fill the gaps that affect the published data and to present a complete and consistent set of numbers for these transactions. On that basis, it examines the recent behavior of Cuba’s oil imports (mostly Venezuelan crude) and exports (mostly refined and blended oil products). It then seeks to quantify the effects on the Cuban economy of recent cutbacks in Venezuela’s oil shipments to the island, the possible impact of a complete elimination of transactions between the two countries. and the recent expulsion of Cuban doctors from Brazil,. Ecuador and Bolivia.
The article develops estimates of Cuban exports of professional service and the GDP of Cuba’s health sector. It finds that the two series are statistically correlated, suggesting that the surge in exports of services (and of GDP) since the turn of the century can be largely explained by growing exports of Cuban doctors and is not the result of data manipulation.
The article concludes with an evaluation of the hypothetical effects on Cuba’s balance of payments of eliminating the Accord with Venezuela. It considers two possibilities. In the first the fall in oil imports from Venezuela (and the corresponding reduction of medical exports) leads to severe energy shortages accompanied increased subsidies to state enterprises. The second possibility is for Cuba to buy oil in the world market, but this would require a large increase in the availability of foreign exchange.