Hugo Jales y Otros - Measuring The Role of The 1959 Revolution On Cuba's Economic Performance

ORIGINAL ARTICLE
Measuring the Role of the 1959 Revolution on

Cuba’s Economic Performance
Hugo Jales1∗ | Thomas H. Kang2 | Guilherme Stein3 |

Felipe Garcia Ribeiro4
1 Department of Economics, Syracuse
University, Syracuse, NY, USA This paper quantitatively measures the impact of the 1959
2 Escola Superior de Propaganda e Cuban revolution on the country’s GDP per capita and ex-
Marketing (ESPM-Sul) and Fundação de
ports. We use various policy evaluation methods to obtain
Economia e Estatística (FEE), Porto Alegre,
RS, Brazil a valid counterfactual of Cuba’s GDP per capita after the
3 Fundação de Economia e Estatística (FEE),
revolution using other Latin American countries as control
Porto Alegre, RS, Brazil
4 Department of Economics, Federal
candidates. We find evidence that, regarding both outcomes,
University of Pelotas, Pelotas, RS, Brazil the overall impact of the revolution was negative. We also
document a negative effect of the economic embargo im-
Correspondence
Hugo Jales, Department of Economics, posed by the United States and a sizable, positive effect of
Syracuse University, Syracuse, NY, USA
Cuba’s trade agreement with the Soviet Union.
Email: hbjales@syr.edu
Funding information KEYWORDS

Cuban Revolution, US embargo
1 | INTRODUCTION
This paper measures the effects of the Cuban revolution of 1959 on the economic performance of the island. We also
measure the effects of the end of Cuba’s trade agreement with the Soviet Union (Union of Soviet Socialist Republics -
USSR) in 1991. We study these events from the perspective of a policy evaluation problem. Our strategy consists of
constructing counterfactual paths for the outcomes of interest, namely Cuba’s GDP and measures of international trade,
using a carefully chosen weighted average of the outcomes of similar Latin American countries. These counterfactual
paths are designed to, under certain conditions, approximate the trajectory of Cuba’s outcomes had the country not
been subject to the observed economic, political, and diplomatic changes. To do so, we exploit various identification
strategies: Synthetic Control, Hsiao et al.’s (2012) panel data regression-based forecasting method, factor models,
and Differences-in-Differences. Our setup differs from the typical policy evaluation problem with a single treatment
because the revolution is confounded by changes in the country’s foreign policy. To further investigate the role of
diplomacy-mediated effects, we analyze the effect of the 1959 Cuban revolution on the country’s export patterns. We
1
2 JALES ET AL .
also exploit the timing of the introduction of the US embargo and the end of Cuba’s trade agreement with the Soviet
Union.
Overall, our estimated effects suggest that the combined effect of these policies was to reduce Cuba’s per capita GDP
in the long run. However, our results show that the effects of the revolution on Cuba’s economic performance are more
complex than they may initially appear, since we document heterogeneity of this effect over time. The contemporaneous
effect of these policies was relatively small. The institutional change also altered the country’s relations with the United
States and the USSR. This shift affected the correlation between Cuba’s economic performance and external shocks
such as the Oil Crisis. The special relationship with the USSR, combined with the isolation of international markets,
seems to have sheltered Cuba from the crisis suffered by other Latin American countries in the 1970s and the 1980s.
Later, once the trade agreement with the USSR ended, the effect becomes negative again and increases in magnitude.
We also find that the introduction of the embargo led to a significant change in Cuba’s pattern of international trade.
Several papers attempted to investigate the long run performance of Latin American economies taking the GDP per
capita as the main variable of analysis (Bulmer-Thomas, 2003; Coatsworth, 2005; Prados de La Escosura, 2007). Cuba,
however, is not present in most comparative studies, since the country does not have an official GDP series. Estimating
the economic performance of Cuba is not a trivial task, despite the substantial amount of work that has attempted to
tackle that problem (Alienes, 1950; CEPAL, 1958; Oshima et al., 1961; CEPAL, 1978; Brundenius, 1984; Perez-Lopez,
1987; Santamaría, 2000; Bértola and Ocampo, 2010; Bulmer-Thomas, 2012). Nevertheless, there is a sizable literature
on the economy of revolutionary Cuba. Carmelo Mesa-Lago and associates, among others, have called attention to
the deterioration of economic indicators in the revolutionary period. Ward and Devereux (2012) point out that the
revolution might have permanently decreased average consumption levels.
A caveat is necessary at this point: estimating the difference between the actual and the counterfactual GDP per
capita of Cuba is necessary but not sufficient to provide a comprehensive assessment of the revolution. There is an
important literature questioning whether the GDP per capita alone is an adequate measure of development, which
argues that such assessments should take a multidimensional perspective (Sen, 1999; Fukuda-Parr and Kumar, 2009).
Recent studies on long-run Latin American development have applied multidimensional approaches (Astorga et al.,
2005; Salvatore et al., 2010; Prados De La Escosura, 2015). Those works often contemplate education and health
variables, in line with the Human Development Index (HDI) or other related measures. The good performance on
schooling and health indicators in Cuba is precisely the point emphasized by some scholars (Brundenius, 1984, 2009).
On the other hand, major criticisms against the revolutionary Cuba include the lack of political freedoms and emigration,
issues often not reflected on development indices (Mesa-Lago, 2009; Santamaría, 2014).1 Although the relevance of
a broader evaluation is hardly disputable, a comprehensive assessment of the costs and benefits of the revolution is
beyond the scope of this project. Our work only intends to provide a counterfactual measure of economic performance
had the Cuban revolution not occurred.
Besides the literature on Latin American and Cuban growth and development, our results are also related to the
literature that seeks to measure the effects of changes in a country’s leader on the country’s economic performance
(Grier and Maynard, 2016; Jones and Olken, 2005; Besley et al., 2011; Easterly and Pennings, 2014). We also think of
our exercise as a case study that may shed some light on the interactions between democracy, trade openness, and
long-run economic growth (Barro, 1996; Rodrik et al., 2004; Acemoglu et al., 2005, 2014). Lastly, our results provide
indications of the effects of an economic embargo on a country’s output and trade, which is closely related to a vast
literature that documents the effects of international trade on economic growth (Billmeier and Nannicini, 2013; Frankel
1 TheHDI is closely related to the capability approach advanced by Amartya Sen and Martha Nussbaum, among others. In that approach, the expansion of
freedoms has a preeminent role, including political liberties, despite the HDI does not contemplate them. If one does not consider those issues, the HDI is not
more than an index of basic needs (Prados De La Escosura, 2015).
JALES ET AL . 3
and Romer, 1999; Heilmann, 2016).
2 | BACKGROUND
In a long run perspective, two major features stand out in Cuba. First, the island was specialized in sugar production for
nearly two centuries, a cycle that ended only with the demise of the USSR in 1991 (Santamaría, 2011). Secondly, Cuba
was not only dependent on a single crop but also relied to a large extent on a single partner country. Geopolitical changes
entailed shifting partners: the United States, the Soviet Union, and Venezuela more recently. Therefore, economic and
geopolitical issues significantly shaped Cuban choices in the last decades, including the revolutionary period.
The specialization of the Cuban economy in sugar production started in the late 18th century. In the mid-19th
century, Cuba was considerably ahead of other Latin American countries in terms of integration with the world economy
(Santamaría, 2011). In order to facilitate sugar exports, Cuba was the first Latin American country to build a railroad
system (Zanetti and García, 1998; Santamaría, 1995). The country became increasingly more dependent on the United
States, the major destination of Cuban exports already in the late 19th century (Santamaría, 2011). To protect American
interests in the island, the U.S. sent troops to support the war of independence against Spain. With the end of the
conflict in 1898, the U.S. occupied and ruled the island until 1902. After leaving Cuba, the U.S. continued to have a
prominent role in political matters, acting as the last arbiter in virtually every political conflict in Cuba during the first
half of the 20th century – on some occasions through military intervention (Aguilar, 1993; Pérez Jr., 2014).2 Political
instability was the norm rather than the exception. In addition to sugar price fluctuations, political struggles contributed
to the stop-and-go pattern of growth during that period (Santamaría, 2011).
The sugar industry was already facing difficulties when the 1929 crisis hit the Cuban economy. In 1930, the U.S.
passed the Smoot-Hawley Act, which increased duties on Cuban sugar and deepened the economic crisis (Santamaría,
2011; Pérez Jr., 2014). Social conflicts intensified on the island, which resulted in a military coup against the repressive
rule of Gerardo Machado in 1933. Carlos Manuel de Céspedes, a compromise figure, became the new president, but
political turmoil continued. Three weeks after the fall of Machado, a mutiny of low-rank military converted into a
coup, after receiving circumstantial support from radical civilians (Pérez Jr., 2014). The new government, led by Ramón
Grau San Martín, and supported by the sergeant’s leader, Fulgencio Batista, adopted measures that initially disturbed
American interests, leading to offstage actions of the U.S. to undermine the new regime.3 Batista eventually withdrew
his support to the civilian radicals and formed another government more aligned with the U.S. in 1934. Soon after, Cuba
signed a commercial treaty with the U.S. that guaranteed a market for the sugar industry, contributing to Cuba’s recovery.
Batista’s rule provided some stability in Cuban politics.4 In 1940, the country enacted a progressive constitution and
Batista was officially elected president.
Despite the political changes during the period, the economic structure remained similar: Unlike other Latin Ameri-
can countries, the Cuban response to the crisis in the 1930s and the Second World War reinforced specialization in sugar
(Santamaría, 2014). Schooling, health, and consumption indicators showed that the there was a substantial increase in
living conditions between the decades of 1930 and 1950 (Astorga et al., 2005; McGuire and Frankel, 2005; Santamaría,
2000, 2011; Ward and Devereux, 2012). In 1944, the opposition came into power, but widespread corruption became
2 The Platt Amendment was a provision on the Cuban Constitution required by the U.S. as a condition to end the occupation in 1902. Besides restricting
the sovereignty of Cuba in the conduct of foreign and trade policies, the provision allowed American intervention in the island to maintain “a government
adequate for the protection of life, property, and individual liberty”. The amendment was invoked several times: the U.S. military intervened in 1906-9, 1912,
and 1917. In the early 1920s, American diplomacy intervened in Cuban government matters, as a condition to authorize a loan request needed to halt the
crisis in Cuban external accounts (Pérez Jr., 2014).
3 Summer Welles, the U.S. ambassador, played a crucial role to convince Batista to form a new government (Pérez Jr., 2014).
4 Batista was not the president before 1940, but he was the de facto ruler of the country.
4 JALES ET AL .
apparent after nearly a decade (Pérez Jr., 2014). Moreover, economic and social indicators deteriorated on the island in
the early 1950s (Santamaría, 2011). The resulting political conflict created an opportunity for Batista, who toppled the
government in another coup in 1952. The new government partly curtailed civil rights and freedom of expression. In the
late 1950s, Batista’s coalition was also caught in corrupt activities, while the economy was collapsing (Pérez Jr., 2014).
Moreover, Cubans did not believe in the ability of politicians to meet their expectations (Pérez Jr., 2014; Santamaría,
2011).5 Even in that context of social stress, Cuba was one of the richest countries in Latin America in the late 1950s
(Mesa-Lago, 2009; Santamaría, 2014).
On the eve of 1959, Fulgencio Batista left Cuba, fleeing from the attacks of guerrilla forces led by Fidel Castro.
Before overthrowing Batista’s dictatorship, Fidel Castro had already headed an uprising against the government in July
1953. The movement did not succeed and the survivors were imprisoned. An amnesty allowed Castro’s departure to
Mexico, where he organized a return that resulted on another failed plot in 1956. Castro then established a guerrilla in
the mountains of Sierra Maestra. The movement recruited more people to take up arms in the following years, and the
conflict escalated. In 1959, the rebel forces finally took the government over and the revolution began.
The revolutionary government implemented several institutional changes, with emphasis on collectivization mea-
sures and policies of economic diversification through industrialization and planning. Although the U.S. recognized
the revolutionary government, the U.S. administration felt unease with the unfolding events on the island. The collec-
tivization process began in May 1959, with the enactment of the First Agrarian Reform. As a result, moderates left the
revolutionary government and the U.S. presented a formal protest in June. The first contacts with the USSR started
in the second half of 1959, culminating with the visit of the Soviet deputy prime minister Mikoyan, in February 1960
(Dominguez, 1993).
The deterioration of the relationship between Cuba and the United States sped up over the course of 1960. In the
second half of 1960, the government accelerated the collectivization process (Mesa-Lago et al., 2000). Castro sought
industrialization in order to reduce Cuba’s dependence on sugar exports. The government nationalized foreign-owned
industries and created a Central Planning Board. As a result, within a few years, the state was the largest employer,
wages were regulated, and private investment was insignificant (Bulmer-Thomas, 2012). Cuba and the USSR signed
a trade agreement in 1960.6 This situation led to the imposition of a partial trade embargo by the United States in
October, as a response to the nationalization of American investments on the island (Pérez Jr., 2014).
In 1961, the U.S. severed diplomatic relations with Cuba and gave covert support to the “Bay of Pigs invasion”
undertaken by anti-Castro groups. The operation failed and strengthened Castro’s position. In that context, Castro
stated for the first time that the Revolution was socialist. In the following year, the U.S. tightened its policies toward
Cuba through the implementation of a full embargo. In 1962, the Organization of American States (OAS) ousted Cuba.
In the same year, the U.S. committed not to invade Cuba in exchange for the removal of Soviet missiles from the island.
Those episodes deepened the isolation of the country in the Western World (Mesa-Lago et al., 2000).
Economic policies shifted several times during the 1960s. The attempt to reduce the dependence on sugar and
boost industrialization failed. After an external crisis in 1963, the government reemphasized sugar exports, now justified
as an instrument to diversification (Dominguez, 1993; Santamaría, 2014). In the following year, USSR and Cuba signed
an agreement that eventually ensured above-market sugar prices. The Cuban economy had set itself free from the
U.S. just to become dependent on the USSR. After the Missile Crisis, Cuban-Soviet relations were not without strains.
However, relations improved after Castro tacitly supported the Soviet invasion of Czechoslovakia in 1968.
In the early 1960s, there was a dispute over which economic model to adopt: Ernesto Guevara’s radical view
5 Dye and Sicotte (2004) argue that changes in the U.S. trade policy put additional pressure over Batista, which would have contributed to the political turmoil.
6 The agreement committed the USSR to purchase one million tons of sugar each year and to supply inputs such as oil and chemicals (Mesa-Lago et al., 2000)
JALES ET AL . 5
differed from the Soviet line (Mesa-Lago et al., 2000).7 In the meantime, a second Agrarian Reform expropriated
middle-sized farms in 1963. Guevara’s opinion eventually prevailed: even restaurants, bars, and street food outlets
became state-owned in 1968. In labor markets, the government emphasized moral incentives to replace material ones
(Dominguez, 1993; Mesa-Lago et al., 2000). Despite the government achieving relative success in providing access to
social services for the poor, those policies led to low productivity and widespread inefficiency. As moral incentives did
not work as expected, the military engaged directly in productive activities. The emphasis on sugar continued: in the
Prospective Sugar Plan (1965-70), the government set the ambitious target of 10 million tons of sugar in 1970. The
efforts failed: the country reached a production of 8.5 million tons (Dominguez, 1993; Mesa-Lago et al., 2000). 8
The failure of the radical model led the government to adopt a Soviet model of planning from 1971 to 1985. In the
early 1970s, world sugar prices increased and contributed to Cuba’s economic recovery. The limited decentralization
contributed to an increase in investments, while there was a modernization of the sugar industry, despite the deteriora-
tion of external accounts (Santamaría, 2014). According to Bulmer-Thomas (2012), even with the fall in world prices
after reaching a peak in 1975, Cuba benefited from its special arrangements with the USSR. In fact, the Soviet Union
replaced the U.S. as the major trade partner of Cuba after the revolution: the island continued receiving high prices for
sugar exports and subsidies for oil imports. However, the Cuban economy stagnated with the fall of terms of trade in the
late 1970s (Dominguez, 1993).9 On the other hand, the special condition of the Cuban economy partially shielded the
country from the Latin American debt crisis in the early 1980s.
After 1985, the crisis of the socialist bloc had enduring consequences for the Cuban economy. Unlike other socialist
countries that introduced more market mechanisms in that period, the Cuban government restored anti-market
measures in a process called “Rectification” in 1986. With the demise of the USSR in 1991, Cuba lost the support from
the socialist bloc, while the U.S. strengthened the embargo.10 The subsequent severe crisis led to modest pro-market
changes between 1993 and 1996 (Mesa-Lago, 2005). A partial economic recovery followed, but the government
attempted to reverse the reforms, recentralizing the economy in 2003-4 (Mesa-Lago et al., 2005; Mesa-Lago, 2005). In
comparative terms, economic growth was dismal in the decade of 1990, investments and terms of trade decreased and
there was a deterioration of external accounts. According to Mesa-Lago et al. (2005), a similar diagnosis holds for social
indicators, with increasing poverty, inequality, and unemployment.
In the words of Santamaría (2014), the end of the USSR also marked the end of two hundred years of specialization
in sugar production. Tourist earnings became Cuba’s most important source of revenue (Bulmer-Thomas, 2012). In
2004, Cuba signed bilateral agreements with Venezuela: the island began to receive subsidized oil while providing
medical and educational services to Venezuela. Those services surpassed tourism among service exports. As the new
major partner, Venezuela compensated for the fall of the Soviet Union in terms of aid and cheap oil, but not in terms of
providing a large a market for the sugar industry (Santamaría, 2014). That explains why sugar lost its prominence after
two centuries of specialization. Although Canadian investment in mining achieved positive results, that was not enough
to compensate the losses in the Cuban economy after 1991.
Fidel Castro was the head of the government from 1959 to 2006. His brother Raúl assumed as acting president in
2006 and formally succeeded him in 2008. Economic growth was decelerating when the world crisis in 2009 hit the
island, which aggravated the situation (Mesa-Lago and Vidal-Alejandro, 2010). Raúl Castro pursued more pragmatic
7 The Guevarists, partly inspired by Mao’s policies in China, supported full collectivization and the use of moral incentives at work, bearing in mind the construc-
tion of a “New Man”. The Libermanists had an orthodox understanding that market mechanisms and material incentives should be used to some extent during
the transitional period (Mesa-Lago et al., 2000).
8 The initial target was 7.5 million tons, but Castro suddenly increased the target without any preceding study (Mesa-Lago et al., 2000).
9 Recession, unemployment, and the demonstration effects of the tourist boom in the late 1970s might partly explain the Mariel port episode of emigration in
1980 (Mesa-Lago et al., 2000).

10 TheU.S. Congress approved the Torricelli Act (1992) and the Helms-Bruton Act (1996), which restricted business relations and aid and created additional
problems to the Cuban economic crisis after the fall of the socialist bloc.
6 JALES ET AL .
policies, but changes have occurred at a slow pace (Mesa-Lago and Pérez-López, 2013). The death of Fidel Castro and
the improvement of U.S-Cuban relations in 2016 deserve mention. However, it is soon to evaluate the effects of those
changes.
As the leader of a socialist experiment on a tiny island only 90 miles away from the nearest U.S. coast, Fidel Castro
remains one of the most important political figures of the 20th century. Some scholars highlight the achievements of the
Cuban society in public health and education (Brundenius, 1984, 2009). On the other hand, more critical evaluations
call attention to the abuse of human rights during Castro’s time in power. Mass emigration and exile are also among the
major criticisms against the revolutionary regime (Santamaría, 2014).11
3 | EMPIRICAL STRATEGY
The ideal experiment to assess the effect of the 1959 Cuban Revolution on the country’s GDP per capita would be
straightforward. We would have to design an experiment in which we would observe not one but two identical versions
of the same country, one where the revolution prevailed and another one – similar to the first in every possible way –
where no revolution occurred in 1959. Then, we would simply compare both series of GDP per capita, from 1959 until
the present, and determine the effect. The difference between the GDP of the treated Cuba and the control Cuba is
what we would call the effect of the 1959 revolution on Cuba’s GDP. The fundamental problem of causal inference is
that this difference, although simple to conceptualize, can never be observed in practice.
The changes in Cuba’s diplomatic relations, especially with respect to the United States and the Soviet Union,
further complicates our task. Regardless of the validity of our identifying assumptions, most strategies typically used in
applied work would provide us with an estimate of the combined effect of all policies implemented around the time of
the revolution. Thus, our baseline results should be interpreted as the total effect of the revolution, that is, the direct
effect of the institutional change and the effect that is mediated through changes in diplomatic relations that resulted
from the revolution. These estimates answer the following counterfactual question: Taking as given the behavior of the
other nations, namely the responses of the USSR and the U.S., what was the effect of the 1959 Cuban revolution on the
country’s GDP?
The economic impact of a US embargo on Cuba’s GDP should depend on a variety of variables: the share of exports
in GDP, the importance of the United States as a trade partner, the degree of substitutability of imports with respect to
home production, and so forth. It is relatively straightforward to identify the direct effect of the embargo on exports.
The total effect on GDP can be larger than the direct effect if the country imports “essential” goods, for which there is
little possibility of substitution. Conversely, the total effect of the embargo on GDP would be smaller than the direct
effect on exports if substitution toward home production or other trade partners is relatively cheap.
Thus, we analyze the total effect of the revolution on Cuba’s export pattern. We argue that if the effects on the
country’s exports are much smaller than the effects on GDP, then the embargo must have had a substantial indirect
effect (on consumption, government spending, and investment) for its effect to dominate that of the institutional change.
Conversely, if the effects on exports are larger than the effects on Cuba’s GDP, then even small negative spillovers in
the economy would be sufficient for the diplomatic changes to account for most of the changes we estimated for the
country’s GDP.
We consider the following identification and estimation strategies: Differences-in-Differences, Synthetic Control,
factor models, and the Hsiao et al. (2012) (henceforth HCW) panel data forecasting approach. These strategies all
share a common feature: they construct the series of counterfactual outcomes by means of a weighted average of the
11 The well-known episodes of Mariel in 1980 and the balseros in 1994 are telling examples of mass emigration from the island.
JALES ET AL . 7
outcomes of untreated units. They differ in how the weights are chosen to construct such counterfactuals.
In the following sections, we describe these methods in detail. Throughout the discussion, let Yi t (1) be the outcome
of interest, such as the country’s GDP, for country i at time t had it been subject to the treatment. Similarly, denote
Yi t (0) as the outcome of interest (GDP) for country i at time t had it not been subject to the treatment. Let i = 1 denote
Cuba. Because, at a given point in time, we can only observe each country under one of the potential treatment statuses,
we have the following:
Yi t = Yi t (1)D i t + Yi t (0)D i t ,
where D i t is equal to one if country i at time t was under the treatment regime, that is, D i t equals one for Cuba after
1959. Let D i (without the time subscript) be a dummy equal to one if the country is Cuba and zero otherwise. In the next
sections, we describe the methods used in our empirical exercise. Readers familiar with those techniques can skip to
Section 4.
3.1 | Difference-in-Differences
We are interested in estimating the effect of the 1959 Cuban revolution on Cuba’s GDP. Without loss of generality,
normalize t to zero at the beginning of the treatment, so t < 0 represents the pre-treatment period. Then, the average
treatment effect on the treated for t ≥ 0 is
δ t = E [Y1t (1) − Y1t (0) |D i = 1].
If we compare Cuba’s GDP with the countries i , 1 that were not subject to the revolution, we haveY1t − E [Yi t |D i =
0] = Y1t − E [Y1t (0)] + {E [Y1t (0)] − E [Yi t |D i = 0]} The first two terms on the right-hand side of this equation are what
we seek to compute. They are a comparison between the observed GDP of Cuba with the counterfactual GDP that
Cuba would have exhibited had it not been subject to the revolution. The term in brackets in this equation is what is
called the selection bias. It is the difference between Cuba’s GDP in the absence of the revolution and the GDP of the
countries we actually used as the control group when taking this difference. If the country were randomly selected to
experience the treatment, the selection bias would be absent. In this scenario, the average of the untreated units would
be a good estimate for the counterfactual GDP of the treated.
Since this is unlikely to be the case, the Difference-in-Differences (DiD) strategy can be used to overcome this
problem. The key idea is that if the differences in outcomes between treated and control units are stable over time,
we can use pre-treatment data to estimate the magnitude of the selection bias and use this information to correct
our estimates for the post-treatment years. This stability in the differences in outcomes is called the parallel paths
assumption. Consider the following model:
Yi t = γi + λ t + δ t D i t + i t , (1)
where γi is a country-specific time-invariant effect, λ t is a time-specific effect, δ t is the treatment effect at time t and i t
is a mean zero unobserved shock to country i ’s outcome at time t , which we assume is uncorrelated across countries
and over time. Then, we can see that for t > 0: E [Y1t ] − E [Yi t |D i = 0] = δ t + {γ1 − E [γi |D i = 0]}.
The last term of this equation can be identified using data from the pre-treatment period: E [Y1t |t < 0] − E [Yi t |D i =
0, t < 0] = γ1 − E [γi |D i = 0]. Thus, the counterfactual expected value of Cuba’s GDP in the absence of the treatment is
8 JALES ET AL .
given by E [Y1t (0)] = E [Yi t |D = 0] − {E [Yi t |D i = 1, t < 0] − E [Yi t |D i = 0, t < 0]} Note that, now, in the DiD framework,
the counterfactual is the average outcome of the control units minus a selection bias term. Then, the DiD estimator of
the treatment effect can be viewed as the sample analog of the following equation: δ t = Y1t − E [Yi t |D = 0] − {E [Yi t |D i =
1, t < 0] − E [Yj t |D i = 0, t < 0]}. The first difference is the comparison of the outcomes of the treated and control units
after the treatment. This difference includes the effect of the treatment plus selection bias. The second difference is the
comparison of the outcomes of treated and control units before the treatment was introduced. This difference only
has a selection bias term. The difference between these differences is the treatment effect. Then, the estimate of the
treatment effect is given by δbt = Y1t − Yb1t (0), where Yb1t (0) = Eb[Yi t |D = 0] + {Eb[Yi t |D i = 1, t < 0] − Eb[Yi t |D i = 0, t < 0]}.
We can write the DiD counterfactual while explicitly including the weights assigned to the control units as follows:
N
Õ 1
Yb1t (0) = βb0 + Yi t ,
C
i =2
where βb0 ≡ Eb[Yi t |D i = 1, t < 0] − Eb[Yi t |D i = 0, t < 0]. This equation shows that β 0 , the selection bias term in the DiD
framework, can be obtained by running a constrained regression of the outcome of the treated unit on the outcomes of
the controls for the pre-intervention period, where the parameters associated with the control units are constrained to
take the value 1/C for each country in the pool of controls (C = N − 1, where N is the number of countries we observe).
Then, the estimated counterfactual can be obtained from the out-of-sample – the post-intervention period – predicted
values of this regression. Thus, the DiD estimator implicitly assigns uniform (or equal) weights to each country in the
donor pool to construct the counterfactual.12
3.2 | Hsiao et al. (2012) Panel Data Approach

Consider the following factor model:
Yi t (0) = b i0 ft + i t , (2)
where ft is a vector of unobserved common factors that affect all units at time t , b i is a vector of factor loadings that
measures the contribution of each element of ft to unit i , and i t is a unobserved shock to the outcome for unit i at time
t .13 Given this structure, we have that the contemporaneous covariance between units i and j is given by
C ov (Yi t (0),Yj t (0)) = b i E [ft ft0 ]b j .
This suggests that we can use the outcomes of one unit to predict the outcomes of another. Interestingly, estimating
the coefficients of the factor model is not necessary to infer the effect of the policy. The HCW approach shows that one
can instead focus only on the task of predicting the outcome of the treated unit before the treatment using the control’s
outcomes. Then, applying this idea to our problem, the estimate of the counterfactual outcome for Cuba in the absence
12 Note, also, that a similar argument holds when one adds covariates as controls in the DiD model. However, here, there is an adjustment term for differences
in the level of the covariates. This adjustment term is equal to zero when the treated unit has the same level of the covariates as the average of the controls.
One can think of the counterfactual constructed using this strategy as a simple average of the outcomes of the controls plus a time-varying intercept, which
adjusts for the time-varying differences in the level the covariates.
13 Examples of these factors include economic growth in United States and Europe, weather shocks in the Caribbean region and advances in technology. The
factor loadings would measure the effect of each of these factors on a country’s output.
JALES ET AL . 9
of the treatment will be given by, for t ≥ 0,
N
Õ
Yb1t (0) = Eb[Y1t (0) |Y2t ,Y3t , ...,YN t ] = βb0 + βbi Yi t ,
i =2
where βb0 and βbi are the OLS estimates of the regression of Cuba’s GDP on the control countries using data from before
the revolution. The HCW counterfactual can be regarded as an unrestricted version of the DiD estimator, where the
coefficients associated with the control units are not constrained to be equal to 1/C . Compared with the Synthetic
Control method, one advantage of HCW’s method is that inference can be performed using standard asymptotics,
bypassing the need for a placebo permutation test.
It is convenient to use a subset of the control units to forecast the outcome of the treated. HCW suggest using a
model selection criterion such as the BIC or R-squared to choose which countries will enter the regression. This strategy
balances within-sample fit with post-sample prediction error (Hsiao et al., 2012). This leads to the following algorithm:
• Use R 2 (or another model selection criterion) to select the best predictor of Y1t using J cross-sectional units from
the pool of controls. Denote this best predictor by M (j )∗ , for j = 1, ..., C .
• From M (1)∗ , M (2)∗ , ..., M (C )∗ , choose M (m)∗ based on the model selection criterion.14
3.3 | Synthetic Control

The Synthetic Control method also consists of attempting to construct an estimate of the latent variable (Y1t (0) for
t ≥ 0) using information from countries that were not affected by the revolution. The method exploits a set of variables
that are assumed to be correlated with the variable the outcomeY . This set of variables is used to assign weights to each
country based on a constrained optimization process that minimizes the distance between a vector of characteristics of
the country affected by the revolution (treated unit) and of the countries that were not affected (control units).
Formally, and following Abadie and Gardeazabal (2003) and Abadie et al. (2010), let C = N − 1 be the number of
0
control units that are candidates to compose the synthetic unit; define βb ≡ (β
c2 , β
c3 , . . . , βbN ) as the vector representing
the weight that each candidate control unit takes when constructing the synthetic control; let Z 1 be the (K × 1) matrix,
where K is the number of pre-treatment variables associated with the treated unit (in our case, Cuba); and let Z 0 be the
(K × C ) matrix containing the pre-treatment variables associated with all of the candidate control units. Further, let
W be a diagonal matrix. For a given weighting matrix W , the vector of weights βb is obtained by solving the following
constrained optimization problem:
0
βb = arg minβ (Z 1 − Z 0 β ) W (Z 1 − Z 0 β )
s.t.: βi ≥ 0 [ i ,
N
Õ
β i = 1.
i =2
The problem’s solution yields a vector βb of weights assigned to each control unit when constructing the Cuba’s
counterfactual outcome (Yc 15 This variable is a weighted average of the control’s outcomes, with weights given by
i t (0)).
14 Given the limited number of pre-intervention periods available, we limited our search to M (1)∗ , M (2)∗ , and M (3)∗ in our empirical application. We show that
this parsimonious specification provides a satisfactory fit to the observed outcome of the treated unit in the pre-intervention period.
15 Note that β
b is implicitly a function of the weighting matrix W . Abadie and Gardeazabal (2003) suggests to numerically search for the weighting matrix that
10 JALES ET AL .
βb. That is, Yc

1t (0) = i =2 β i Yi t .
ÍN b
3.4 | Factor Models

The Synthetic Control method and the panel data approach developed by HCW are motivated by an underlying factor
model, such as:
Õ
Yi t (0) = b i k f k t + i t ,
k
where fk t are the unobserved factors and b i k the loading associated with factor k for country i . A different approach
to the problem is to directly estimate the structural parameters of the factor model using, for example, a principal
component analysis. Pre-intervention data can be used to estimate the factor loadings for the treated unit. Estimates of
the factors can be obtained using data from the control units. Then, the counterfactual path of the treated unit had it
not been subject to the treatment is given by the product of these estimates: Ybi t (0) = k bbi k fbk t , where bbi k and fbk t are
Í
estimates of the parameters of the factor model. Note that, since the factors are by construction a linear combination of
the outcomes of the controls, the equation above is an implicit representation of the counterfactual outcome of the
treated unit as a linear combination of the outcomes of the controls.
All of these different methods share a common feature; they construct the counterfactual path of the outcome of
the treated unit based on a linear combination of the outcomes of the controls (and possibly a non-zero intercept term).
In the Synthetic Control and HCW methods, the coefficients are chosen to minimize a specified loss function. In the DiD
case (without covariates as controls), the weights of the control units are specified a priori to be equal to 1/C , where C is
the number of countries in the pool of controls. The free parameter in this method is the intercept, which is determined
to zero-out the pre-treatment difference in the average of outcomes of the treated and (average of the) controls.16
Similarly, a comparative case study, such as the comparison made in Ward and Devereux (2012), can be interpreted as a
type of matching strategy, whereby a particular element of the control set is chosen to construct the counterfactual path
of the outcome.17 In this case, the only free parameter is, once again, the intercept, which is selected to zero-out the
difference in the average of outcomes of the treated and the control units in the pre-treatment period. In our empirical
application, for the purposes of comparison, we also compute the effects using Costa Rica as the comparison case. In
this scenario, we have that Yb1t (0) = βb0 + Y2t , where βb0 = Eb[Yi t |D i = 1, t < 0] − Eb[Y2t |t < 0] and Y2t is the outcome of
Costa Rica at time t .
4 | DATA
The data used in our work come from different sources. The main source, however, is the Montevideo Oxford Latin
American Research Center (Moxlad). We also used data from the CIA World Fact Book, Polity IV Project. We observe
the following variables: per capita GDP, exports, railways (measured in kilometers relative to country size), electricity
(measured in millions of GW per hour per capita), primary school enrollment (fraction of the total population), illiteracy
minimizes the pre-treatment mean squared prediction error.

16 In terms of the identifying assumptions, the DiD method assumes a parallel path between the outcomes of the treated and a simple average of the controls.
The HCW method, in contrast, assumes a parallel path between the outcome and some (a priori unknown) linear combination of the outcomes of the controls,
whereas the Synthetic Control assumes an identical path of outcomes between the treated and an (a priori unknown) weighted average of the controls.
17 A natural question to ask is how to choose this control unit. A fully statistical approach to the problem is to use the nearest neighbor in terms of pre-treatment
characteristics or outcomes.
JALES ET AL . 11
TA B L E 1 Descriptive statistics
Variable Obs Mean Std. Dev. Min Max
Per capita (log) GDP 1,134 7.946 0.591 6.791 9.317
(log) Exports 1,134 6.105 2.065 1.609 12.022
Railways 1.098 0.012 0.012 0.000 0.049
Electricity (GwH per capita) 895 0.001 0.001 0.000 0.003
EAP in agriculture 166 0.386 0.162 0.048 0.747
EAP in industry 155 0.164 0.068 0.074 0.565
Primary school enrollment 1,058 0.119 0.041 0.025 0.210
Illiteracy 774 14.605 17.533 0.000 85.000
Polity Index 1,131 0.385 6.362 -9.000 10.000
Source: Authors’ elaboration
rate, the economically active population (EAP) in agriculture and industry as a proportion of the total EAP, and the Polity
IV index of political institutions (ranging between -10 and +10).18 Our primary variable of interest is the level of Cuba’s
GDP per capita.
There is a vast literature on GDP measurement in Cuba (Alienes, 1950; Oshima et al., 1961; Brundenius, 1984;
Pérez-López, 1991; Santamaría, 2000; Ward and Devereux, 2012). Among the many challenges, comparative studies
involving Cuba are difficult to undertake due to the absence of official estimates of Cuba’s GDP and price indexes. The
missing data is particularly vital in the revolutionary period since Cuban official statistics used to publish the Global
Social Product (GSP), based on the Soviet “material product system", which differed from the UN system of national
accounts (Mesa-Lago et al., 2000).
The focus of our paper is to build a valid counterfactual of Cuba’s GDP per capita. To accomplish this, we do not
construct new estimates of GDP but rely on estimations that already exist in the literature. In particular, we use in
our paper a series that satisfies three criteria: (1) the series relies on well-known estimates, (2) it is internationally
comparable, and (3) the data is available for a sufficiently large period.
We used the PPP per capita GDP (1990 US$) available at the Montevideo-Oxford Latin American Economic History
Data Base (MOxLAD). Cuba’s GDP per capita is constructed using the growth rate of GDP constructed by Bértola and
Ocampo (2010). The authors use three sources: from 1950 to 2010, they use estimations of ECLAC; from 1929 to 1949,
they use Angus Maddison (2009)’s database; and they use Santamaría (2009) from 1830 to 1928. The base-year is 1990
and Cuba’s GDP per capita at this year is measured using Bolt and Zanden (2014) methodology. 19 In addition to the
MOxLAd series, we also use GDP per capita estimations of the Maddison-Project (2013) database. Since both series
generate similar results, we’ve decided to show only the results from MOxLAD.
The countries used are those from Latin America for which data were available. They are the following: Argentina,
18 As pointed out by a referee, an unfortunate limitation of our railroad variable is that it does not include the extension of the network of sugar railroads.
19 "(...)I started from Brundenius and Zimbalist’s (1989) estimate of Cuba’s GDP per head relative to six major Latin American countries (Argentina, Brazil, Chile,
Colombia, Mexico, and Venezuela, LA6) in 1980 (provided in Astorga and Fitzgerald 1998) and applied this ratio to the average per capita income of LA6 in
1980 Geary-Khamis dollars to derive Cuba’s level in 1980. Then, following Maddison (1995: 166), I derived the level for 1990 with the growth rate of real per
capita GDP at national prices over 1980-1990 and reflated the result with the US implicit GDP deflator to arrive at an estimate of per capita GDP in 1990 at
1990 Geary-Khamis dollars. Interestingly the position of Cuba relative to the US in 1929 and 1955 is very close to the one Ward and Devereux (2009) derived
with a different approach" (Bolt and Zanden, 2014).
12 JALES ET AL .
TA B L E 2 1959 Revolution Effect on Cuba’s GDP per capita
Years Costa Rica Factor Model HCW DiD Synthetic Control
1959 -0.188*** -0.120*** -0.099* -0.174 -0.045
(0.029) (0.040) (0.053) (0.141)
1960 -0.244*** -0.178*** -0.252*** -0.209 -0.067
(0.029) (0.045) (0.056) (0.143)
1961 -0.229*** -0.201*** -0.381*** -0.232 -0.074
(0.029) (0.049) (0.063) (0.144)
1962 -0.249*** -0.170*** -0.309*** -0.257* -0.123
(0.029) (0.069) (0.066) (0.141)
1963 -0.288*** -0.178*** -0.229*** -0.282** -0.146
(0.029) (0.072) (0.069) (0.140)
1964 -0.301*** -0.238*** -0.348*** -0.278** -0.188
(0.029) (0.087) (0.058) (0.141)
Pre-treatment R 2 0.403 0.509 0.796 0.368 0.543
Pre-treatment RMSPE 0.178 0.161 0.104 0.191 0.156
Post-pre RMSPE ratio 2.185 3.533 3.763 2.045 1.975
Note: Standard errors in parenthesis.

Source: Authors’ elaboration.
Brazil, Chile, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Peru, Uruguay, and Venezuela.
Our investigation period runs from 1959 to 2010. Table 1 describes the main features of the data. Note that for
some observable characteristics, such as EAP employed in agriculture, we have a considerable amount of missing
data. This feature prevents us from using observables in our DiD regression.20 It, however, does not present greater
difficulties for the Synthetic Control method since this approach uses only the pre-treatment averages of the observable
characteristics.
5 | RESULTS
5.1 | 1959 Revolution

Table 2 displays the effects of the 1959 revolution on Cuba’s GDP. Figure 1 displays the evolution of the observed GDP
per capita and the counterfactual GDP per capita for each method. The counterfactual estimates of Cuba’s per capita
GDP follow closely the path of observed outcomes during the pre-treatment period. This finding suggests that Cuba’s
outcome can be appropriately predicted by a linear combination of the outcomes of the control countries. Cuba’s actual
outcome falls below the counterfactual outcome during most of the post-treatment period, which suggests a combined
negative effect of the policies. Interestingly, we do not observe a particularly large effect in 1962, the year when the
20 We implement the DiD including the observables as controls. The results, available on request, are qualitatively similar to our baseline results.
JALES ET AL . 13
F I G U R E 1 Observed and Counterfactual Outcome Paths.

US strengthened its embargo against Cuba. This suggests that the contemporaneous effect of the embargo on Cuba’s
GDP is small. The effects are significantly different from zero at conventional significance levels.21 In the appendix, we
perform placebo permutation tests to evaluate the significance of our results from the Synthetic Control method.
Regarding the pattern of the effects over time, we initially observe a negative effect. The effect stabilizes in the
1970s and then begins to move toward zero in the 1980s before falling again after 1991. Note that although we cannot
clearly distinguish the effect of the 1959 revolution from the effects of the embargo at this point, our estimates of the
effect after 1991 are purged from the effects of the trade agreement with the USSR. Thus, the interpretation of our
results should be as follows: the combined effect of the revolution, the embargo, and the trade agreement with the
Soviet Union was negative during the majority of the analyzed period. The combined effect of the revolution and the
embargo, net of the effects of the trade agreement with the Soviet Union, was negative and sizable, which can be seen
by the estimated effects after 1991.
A substantial share of the changes in the treatment effect over the period between 1970 and 1980 comes from the
small or negative growth in the control countries (when compared with Cuba’s GDP growth). This suggests that the
revolution seems to have shielded Cuba from the slowdown in economic growth faced by the control countries during
the 1970s, as a result of internal political conflicts, inflation, and the Oil Crisis faced by the control countries.
Table 3 displays the weights assigned to each control unit in the construction of the counterfactual outcomes. Note
that the intercept in both the DiD and the Costa Rica methods are negative, as Cuba’s average outcome prior to the
treatment is below that observed for the control units. Note also that the idea of using Costa Rica as the comparison
case has statistical support. Costa Rica is one of the four counties that receive positive weights in the Synthetic Control
method, which suggests that the contemporaneous covariance in GDP movements between the countries prior to the
21 Heteroskedasticity-robust standard errors are in parenthesis. Similar results are obtained when one cluster the standard errors at the country level for the
Difference-in-Difference models. We ignore first-stage uncertainty in the construction of the standard errors for the factor models.
14 JALES ET AL .
F I G U R E 2 1959 Revolution Effect on Cuba’s GDP per capita. Gap between observed and Counterfactual outcome.
treatment is positive. Finally, using the terminology of Abadie et al. (2010), we note that the factor model and the HCW
method allow for extrapolation outside the convex hull of the control’s outcomes since the estimated weights are not
constrained in the interval [0,1].
Table 4 displays the point estimates of the impact of the revolution on Cuba’s exports. We document negative
combined effects for most of the analyzed period. As expected, the magnitude of the point estimates increases (in
absolute value) precisely when the embargo was tightened by the Kennedy administration in 1962. Although the short
temporal distance between the revolution and the embargo does not allow us to precisely separate one effect from the
other, we seem to have evidence that tightening the embargo led to an immediate decrease in Cuba’s exports.
Regarding the pattern of effects over time, we again observe that the negative effects seemed to slow down
and then reverse in the late 1970s. Furthermore, the effect becomes markedly larger following the end of the trade
agreement with the Soviet Union. Our results suggest that the trade agreement partially, but not completely, mitigated
the combined effects of the embargo and the revolution on Cuba’s export performance.
JALES ET AL . 15
F I G U R E 3 Observed and Counterfactual Outcome Paths.

F I G U R E 4 1959 revolution Effect on Cuba’s Exports. Gap between observed and Counterfactual outcome.
16 JALES ET AL .
TA B L E 3 Coefficients assigned to control countries by method
Countries Comparative Case Differences in Differences HCW Synthetic Control Factor Model
Costa Rica 1.000 0.077 0.000 0.130 0.137
Chile 0.000 0.077 0.000 0.259 0.151
Colombia 0.000 0.077 -1.473 0.000 0.115
Brazil 0.000 0.077 0.959 0.000 0.091
Argentina 0.000 0.077 1.731 0.000 0.130
El Salvador 0.000 0.077 0.000 0.385 0.002
Guatemala 0.000 0.077 0.000 0.000 0.093
Honduras 0.000 0.077 0.000 0.225 0.661
Mexico 0.000 0.077 0.000 0.000 0.122
Nicaragua 0.000 0.077 0.000 0.000 -0.195
Peru 0.000 0.077 0.000 0.000 -0.002
Uruguay 0.000 0.077 0.000 0.000 0.185
Venezuela 0.000 0.077 0.000 0.000 -0.024
Intercept -0.031 -0.163 -2.928 0.000 -3.650

JALES ET AL . 17
TA B L E 4 1959 Revolution Effect on Cuba’s exports
1959 -0.835*** -0.305*** -0.221*** -0.345 0.079
(0.076) (0.101) (0.075) (0.360)
1960 -0.871*** -0.518*** -0.627*** -0.465 -0.030
(0.076) (0.108) (0.097) (0.360)
1961 -1.045*** -0.615*** -0.617*** -0.544 -0.059
(0.076) (0.126) (0.115) (0.346)
1962 -1.352*** -0.998*** -1.029*** -0.811** -0.283
(0.076) (0.165) (0.107) (0.335)
1963 -1.034*** -0.834*** -0.882*** -0.690* -0.291
(0.076) (0.092) (0.122) (0.359)
1964 -1.181*** -0.845*** -0.938*** -0.532 -0.108
(0.076) (0.156) (0.119) (0.337)
1965 -1.281*** -0.944*** -0.931*** -0.753** -0.224
(0.076) (0.158) (0.118) (0.321)
Pre-treatment R 2 0.604 0.846 0.924 0.663 0.796

18 JALES ET AL .
TA B L E 5 1991 End of Trade Agreement Effects on Cuba’s GDP
1991 -0.149*** -0.146*** -0.071** -0.023 -0.108
(0.044) (0.012) (0.024) (0.174)
1992 -0.342*** -0.235*** -0.162*** -0.186 -0.272
(0.044) (0.023) (0.031) (0.167)
1993 -0.556*** -0.388*** -0.366*** -0.377** -0.464
(0.044) (0.029) (0.032) (0.168)
1994 -0.576*** -0.386*** -0.360*** -0.402*** -0.454
(0.044) (0.032) (0.038) (0.167)
Pre-treatment R 2 0.788 0.965 0.980 0.708 0.872

5.2 | The End of the Trade Agreement

This section reports the estimated effects of the end of the trade agreement with the USSR. Our goal is to infer the
contribution of this agreement to Cuba’s economic performance. Formally, we construct estimates of the counterfactual
paths of outcomes (per capita GDP and exports) that would prevail in the scenario in which the trade agreement was
maintained after 1991.22
Regarding Table 5, we see that the end of the trade agreement had a large negative effect on Cuba’s GDP. Our
estimates suggest that the country’s per capita GDP would be substantially larger had the trade conditions that prevailed
in the pre-treatment period been maintained during the 1990s.
Comparing the different methods, we note that the DiD and the Costa Rica comparison strategy perform poorly
in terms of matching the pre-treatment trend of GDP. It seems that the parallel path assumption and the similarities
between Cuba’s and Costa Rica’s economy break down after the revolution. The factor model and HCW strategies seem
to perform better in terms of pre-intervention fit. Typically, this would suggest exercising greater caution in interpreting
the results. However, the magnitude of the effect of the policy seems large enough that we can still note a clear break in
the trend of the outcome. The path of the observed outcome falls outside the envelope of estimated effects even in this
case when such an envelope is considerably wide.
Regarding Table 6, we again observe a substantive decrease in Cuba’s exports, caused by the end of the trade
agreement. All point estimates using different identification strategies suggest that Cuba’s export level would have
been larger had the agreement lasted longer. Note that, when considering exports as the outcome variable, all of the
strategies we employ seem to perform well in terms of matching the trends of the outcome prior to the treatment, even
the simple strategy of using Costa Rica as the single control unit.
22 Note that such an agreement is virtually impossible since the Soviet Union ceased to exist in the 1990s.
Thus, it is perhaps more appropriate to say that we
construct estimates of the counterfactual paths of the outcomes that would prevail if an agreement with the same terms as those in the agreement with the
USSR were available to Cuba after 1991.
JALES ET AL . 19
F I G U R E 5 Observed and Counterfactual Outcome Paths

Regarding the pattern of the effects over time, it seems that the end of the trade agreement led to a permanent
decrease in Cuba’s exports, whereas the decline in output seems to revert toward zero by the end of the decade. Our
data, however, do not cover a long enough period to allow us to observe whether the effects on output would ultimately
become statistically insignificant.
Note the impressive magnitude of the coefficients on Cuba’s exports and GDP for the post-1991 period. It seems
clear that the end of the trade agreement with the USSR led Cuba to experience a serious crisis. Tracing the effects back
in time, this suggests that, had Cuba been unable to rely on favorable terms of trade with the Soviet Union, the declines
in the country’s GDP and exports on the post-1959 period would have been even larger than those we documented in
the previous section. Moreover, the magnitude of the impact of the end of the trade agreement is substantially larger
than the effects observed both at the beginning of the revolution and following the introduction of the embargo.
In summary, our estimates suggest that the trade agreement with the Soviet Union had a substantial positive effect
on Cuba’s economy, which is shown in the data by a substantial decrease in both GDP and exports following the end
of the treaty. We also document a negative combined effect of the three historic events following the fall of Batista’s
regime: the revolution, the embargo, and the trade agreement. The evidence suggests that, as a bundle of policies, the
embargo and the revolution had a negative effect on the country’s economic performance. However, the immediate
effect of the end of the trade agreement seems much larger than those of the embargo or the revolution.
5.3 | A Decomposition Exercise
Whenever policies are contemporaneous, there are considerable obstacles to disentangling their effects. During most
of the period when Cuba has faced the effects of Castro’s revolution, the country also faced the effects of an economic
embargo imposed by the US. We recognize that disentangling these effects may only be possible if in the future either
20 JALES ET AL .
F I G U R E 6 End of Trade Agreement Effects on Cuba’s GDP per capita. Gap between observed and Counterfactual
outcome
one of these policies is abandoned before the other.

However, given our results for the pair of outcomes, namely exports and GDP, we can attempt to perform a similar
exercise: to uncover the direct effects of the combined policy (defined as Castro’s revolution and the embargo) on Cuba’s
GDP and the indirect effect of the policy, which occurs through changes in the the level of exports. In this section,
we employ tools from mediation analysis to disentangle the total effects on Cuba’s GDP estimated before into two
components: the direct effects on GDP and the indirect, or mechanism, effects operating through exports.
To perform the decomposition, we add the level of observed exports (X ) as a control in the GDP equation. The
predicted values of GDP (Y ) using the observed levels of exports (Yb(0) |X ) are the counterfactual associated with the
outcome Cuba would have experienced had the policy only affected exports but not GDP directly. The predicted values
using the counterfactual levels of exports are the counterfactual GDP Cuba would have obtained had the policy not been
implemented (Yb(0)). The difference between the observed GDP and that obtained using actual values of exports is the
direct effect of the policy (Yi t − Yc
i t (0) |X ). The difference between outcome obtained using the actual values of exports
and those obtained using the counterfactual values of exports is the indirect, or mechanism, effect (Yc i t (0) |X − Y
ci t (0)).
Figure 9 displays the results of the decomposition exercise. For simplicity, we focus on our preferred method, the
HCW estimator. Our results show that during the first years of the revolution, the direct effect and the mechanism
effect were of similar magnitude. Interestingly, the mediated effect is larger than the direct effect in 1962, exactly when
the embargo was tightened. Over time, the indirect effects begin to revert circa 1970 and start increasing towards zero.
A similar, but much less pronounced, pattern occurs for the direct effect. This result shows that, conditional on the
observed levels of exports, the observed GDP of Cuba in the 1970s and 1980s was smaller than what we would expect.
However, given the observed growth of exports Cuba exhibited in the 1970s and 1980s, the indirect effect of the policy
was positive.
JALES ET AL . 21
TA B L E 6 1991 End of USSR Trade Agreement Effect on Cuba’s Exports
1991 -0.885*** -0.734*** -0.701*** -0.869* -0.717
(0.071) (0.103) (0.052) (0.499)
1992 -1.545*** -1.303*** -1.311*** -1.331*** -1.276
(0.071) (0.114) (0.054) (0.478)
1993 -2.050*** -1.755*** -1.818*** -1.845*** -1.923
(0.071) (0.108) (0.057) (0.462)
1994 -2.039*** -1.790*** -1.759*** -1.874*** -1.948
(0.071) (0.107) (0.059) (0.457)
Pre-treatment R 2 0.966 0.980 0.982 0.976 0.977
Pre-treatment RMSPE 0.264 0.186 0.177 0 .204 0.203
Note: Standard errors in parenthesis

Under certain conditions, it is possible to relate the results from the mediation analysis to the effects of the embargo,
the trade agreement, and the revolution. However, these assumptions are quite strong. Nevertheless, we will discuss
these conditions and what we obtain when we impose them, with the forewarning that these results are, by their nature,
speculative.
If (i) the embargo and the trade agreement are correctly excluded from the GDP structural equation, that is, they
only affect GDP per capita through their effects on export levels; (ii) GDP is correctly excluded from the structural
equation for exports; and (iii) the revolution only affects GDP but not exports; then, the direct effect obtained in the
decomposition in Figure 9 represents an estimate of the effect of the revolution net of embargo and trade agreement
effects, and the mechanism effect in Figure 9 is a reasonable estimate of the combined effect of the embargo and the
trade agreement on Cuba’s GDP (through their effects on exports).23
The decomposition exercise remains valid as long as condition (ii) holds. However, to interpret the decomposition in
terms of the different economic events in Cuba’s recent history, we need to impose all of them.24 These results show
that if the embargo had a substantial effect on Cuba’s GDP, it must have been through its directs effects on Cuba’s GDP.
23 The
decline in the direct effect after the end of the trade agreement suggests that the exclusion restriction for this policy in the GDP equation is invalid.
However, it does not change the qualitative nature of our results. Note that our decomposition is valid for the period 1991-2000 regardless of any exclusion
restriction with respect to the trade agreement, as the policy was not in effect during this period. The fact that our qualitative results regarding the relative
magnitude of the direct versus the mediated effect are similar before and after 1991 suggests that our results are robust to this assumption throughout the
analyzed period.
24 The direction of the bias when conditions (i) and (ii) are violated is difficult to determine. However, if condition (iii) is violated, then the qualitative implications
of our results would remain the same. Regarding the magnitude, the effects of the revolution would be larger, and the effect of the embargo would be smaller.
22 JALES ET AL .
F I G U R E 7 Observed and Counterfactual Outcome Paths

6 | FINAL REMARKS
We argue that Cuba’s GDP level began to diverge from its historical trend and from those of other Latin American
countries in 1959. To identify when Cuba began to lag behind, we employ a number of different identification strategies.
Using these different identification strategies, we show that Cuba’s trajectory suffers a structural break after the Cuban
revolution in 1959.
We also document evidence of the magnitude of the effects of Cuba’s trade agreement with the Soviet Union. We
show that the favorable terms of trade implied by the agreement had to a positive effect on Cuba’s GDP and level of
exports. The elimination of such favorable terms of trade led to a sharp decrease in Cuba’s GDP per capita and level of
exports.
A decomposition exercise shows that a substantial share of the combined effect of these three policies on Cuba’s
GDP occurs through a direct effect on the country’s output rather than changes in its levels of international trade. This
evidence, although far from conclusive, suggests that changes in the local economy play a larger role than changes in
export levels in explaining the changes in Cuba’s GDP trend in the second half of the 20th century.
In December 2014, diplomatic relations between the U.S. and Cuba began to change once again. In March 2016, U.S.
President Barack Obama became the first American president to visit Cuba in more than 50 years. The “Cuban Thaw”,
the name given to the warming of diplomatic relations between the two countries, may be the beginning of another
round of substantial changes in Cuba’s domestic and trade policies. If the US decides to unilaterally remove the embargo
before economic reforms are made to Cuba’s local economy, then it may be possible in the future to finally settle the
controversial debate over which of these policies were to blame for Cuba’s economic performance.
JALES ET AL . 23
F I G U R E 8 End of Trade Agreement Effects on Cuba’s Exports. Gap between observed and Counterfactual outcome
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7 | APPENDIX
7.1 | Synthetic Control

Tables 7 and 8 display the pretreatment characteristics of Cuba and compare them with the characteristics of the Latin
American countries and the characteristics of the weighted average of Latin American countries using the Synthetic
Control weights for the 1959 and 1991 treatments. Synthetic Cuba I is constructed to approximate Cuba’s GDP per
capita, and Synthetic Cuba II is constructed to approximate Cuba’s exports. Both tables show that our Synthetic Cuba
seems to be more similar to the actual Cuba than Latin America and Costa Rica with respect to our outcomes of interest.
Synthetic Cuba I reproduces accurately Cuba’s GDP per capita, and Synthetic Cuba II reproduces closely Cuba’s exports.
We performed the Placebo Permutation Test designed by (Abadie et al., 2010). The test consists in applying the
Synthetic Control method to all countries in the candidate controls set as if they had been treated with the Cuban
JALES ET AL . 27
TA B L E 7 Pre-treatment (1959) characteristics
Variables Cuba Latin America Synthetic Cuba I Synthetic Cuba II Costa Rica
Per capita (log)GDP 7.455 7.606 7.464 7.792 7.486
(log) Exports 5.784 4.682 3.570 5.764 3.021
Railways 0.045 0.013 0.020 0.010 0.013
Electricity (GwH per capita) 0.000 0.000 0.000 0.000 0.000
EAP in agriculture 0.413 0.558 0.571 0.475 0.573
EAP in industry 0.129 0.150 0.120 0.159 0.109
Primary school enrolment 0.107 0.085 0.079 0.104 0.094
Illiteracy 27.750 48.625 48.465 40.201 31.000
Polity index 1.051 -1.247 -0.340 -1.343 10.000
Note: Standard errors in parenthesis

Revolution in 1959. Then, we compute the difference between the observed GDP per capita trajectory of each control
unit, as well as Cuba’s GDP per capita trajectory and its synthetic version. Plotting all the gaps from the placebos and
Cuba gives us an empirical distribution of the estimated effect of the placebo interventions under the null hypothesis.
Unfortunately, this test has limited precision in our context given the small number of control units.
Figure 10 shows the empirical distribution.25 Cuba’s GDP per capita gap is the second smallest in all series from
1964 until 1970. Thereafter, Cuba’s gap begins to increase, culminating in a positive gap in 1982. That trajectory then
reverses and declines abruptly at the end of the 1980s. By the end of the century, the gap is again at the bottom of the
distribution.
Regarding the effects of the revolution on Cuba’s GDP per capita, we do not have sufficient precision to rule out a
zero effect based on the pattern observed in Figure 10.26 Our interpretation of these results is that the effects of an
institutional change, such as the revolution, need not be sizable immediately after policy introduction. The small, but
negative, effects we find in the first decade after the revolution seem to point in this direction. The fact that Cuba’s gap
is still the second smallest in the distribution of placebos at the end of our analyzed period suggests that the long-run
effects of this policy may be substantial. We interpret the positive gap observed in the 1980s and the upward trend in
the gap in the 1970s as an interesting effect of the revolution. This period was characterized by slow growth in Cuba’s
GDP. However, the growth observed in the rest of Latin America was even lower. Thus, when compared with the control
countries, Cuba’s performance was better. This suggests that the revolution insulated Cuba from the crisis faced by
similar Latin American countries during the 1980s.
Figure 11 plots the gap in Cuba’s exports and the distribution of placebos. We observe that Cuba’s gap is negative.
In the first decade after the revolution, it is the second lowest in the distribution. Similar to what we observed for GDP,
the gap exhibits a brief upward trend that subsequently reverses after 1991. At the end of the analyzed period, the gap
is the smallest among the distribution of placebos.
25 Thedistribution includes all countries in the set of controls with the exception of Venezuela. Venezuela was excluded from the distribution because the
country exhibits a Root Mean Squared Error twice the size of Cuba’s. (Abadie et al., 2010) suggest the exclusion of controls with Root Mean Squared Errors
that are too high relative to the treated unit’s.
26 We can, however, rule out sizable positive effects.
28 JALES ET AL .
TA B L E 8 Pre-treatment (1991) characteristics
Variables Cuba Latin America Synthetic Cuba I Synthetic Cuba II Costa Rica
Per capita (log)GDP 7.817 8.233 7.825 8.418 8.272
(log) Exports 7.508 7.105 6.098 7.491 5.987
Railways 0.047 0.012 0.009 0.017 0.013
Electricity (GwH per capita) 0.001 0.001 0.000 0.001 0.001
EAP in agriculture 0.269 0.374 0.459 0.323 0.387
EAP in industry 0.177 0.167 0.177 0.172 0.140
Primary school enrolment 0.155 0.147 0.137 0.152 0.162
Illiteracy 8.182 21.438 30.384 17.345 9.000
Polity index -6.688 0.574 -0.262 -1.557 10.000
Note: Synthetic Cuba I refers to the weights used when per capita GDP is the outcome of interest. Synthetic Cuba II
refers to the weights used when export is the outcome of interest.
This result suggests that the contemporaneous impact of the embargo on Cuba’s exports was smaller than that of
the end of the trade agreement. In 1962, we observe a negative effect; however, the change is substantially larger in
1991.
Figure 12 displays the gap in Cuba’s GDP and the distribution of placebos. We observe that Cuba is again the second
lowest series in the distribution of gaps throughout the post-treatment period. We also observe that, now, Cuba’s gap is
substantially far from the gaps in the placebos, which suggests a sizable effect. An even stronger pattern appears in
Figure 13, where Cuba’s gap is the lowest in the series and significantly larger compared to the placebos. This result
implies a strong dependence of Cuba’s economy on the USSR.
The second test examines the distribution of the ratio between the RMSPE of the post-treatment period and the
RMSPE of the pre-treatment period (1929-1959) for every placebo and Cuba. The higher the ratio is, the larger the
difference between the pre- and post-treatment periods. Again, if Cuba’s ratio is relatively large compared to the
placebos, the probability of finding such effect by random chance is low. Tables 9 and 10 show the ratio for Cuba for
five post-treatment periods (1960-1970, 1960-1980, 1960-1990, 1991-1995 and 1991-2000) for GDP per capita and
exports, respectively. They also show the p-value, indicating the percentage of control units that presented a higher
ratio than Cuba for the same periods. Again, due to the small number of controls, this test has limited precision, but the
results imply that we are unable to reject the null hypothesis, namely, that the 1959 Revolution had no impact on Cuba’s
economic performance. However, we can reject, at the 10% level, the null hypothesis that the end of the USSR had no
impact on Cuba’s economic performance.
The third and final test concerns the timing of the treatment and is called the Temporal Placebo test. It consists of
changing the period when we believe the treatment occurred. The Cuban revolution was a guerrilla-type war and began
in the early 1950s. It is, therefore, plausible to speculate that Cuba’s economic performance was affected by the war
rather than the institutional changes implemented by Fidel Castro.
We apply the temporal placebo in 1952 and present it for Cuba’s per capita GDP in Table 11 and Figure 14. The
results suggest that there is an effect in 1953, likely resulting from the beginning of the guerrilla conflict. However, the
gap between the actual per capita GDP’s trajectory and the estimated trajectories seems to decline to nearly zero over
JALES ET AL . 29
TA B L E 9 Ratio of Post-Treatment RMSPE and Pre-Treatment RMSPE (GDP per capita)
1960-1970 1960-1980 1960-1990 1991-1995 1991-2000
RMSPE Ratio 1.498 1.665 1.406 4.637 4.570
p-value 0.50 0.64 0.86 0.07 0.15
Note: P-value refers to the percentage of controls with a higher post/pre ratio than Cuba’s
post/pre RMSPE ratio.
TA B L E 1 0 Ratio of Post-Treatment RMSPE and Pre-Treatment RMSPE (Exports)
1960-1970 1960-1980 1960-1990 1991-1995 1991-2000
RMSPE Ratio 1.315 1.440 1.658 7.404 8.473
p-value 0.43 0.43 0.57 0.07 0.07
Note: P-value refers to the percentage of controls with a higher post/pre ratio than Cuba’s
post/pre RMSPE ratio.
TA B L E 1 1 Placebo’s Effect on Cuba’s GDP per capita
1952 0.106*** 0.136** 0.341*** 0.046 0.002
(0.034) (0.058) (0.041) (0.098)
1953 -0.154*** -0.115 0.140*** -0.126 -0.185
(0.034) (0.068) (0.043) (0.098)
1954 -0.101*** -0.056 0.155*** -0.115 -0.147
(0.034) (0.080) (0.047) (0.105)
1955 -0.154*** -0.023 0.058 -0.170** -0.146
(0.034) (0.111) (0.050) (0.071)
1956 -0.025 0.071 0.112** -0.113 -0.072
(0.034) (0.098) (0.052) (0.073)
1957 0.042 0.215* 0.132** -0.033 -0.000
(0.034) (0.119) (0.056) (0.074)
1958 -0.060* 0.244 -0.004 -0.057 -0.035
(0.034) (0.154) (0.065) (0.070)
1959 -0.197*** 0.194 0.127** -0.188** -0.170
(0.034) (0.150) (0.053) (0.073)

30 JALES ET AL .
TA B L E 1 2 Placebo’s Effect on Cuba’s Export
1952 -0.654*** -0.239 -0.085 -0.174 0.542
(0.084) (0.209) (0.171) (0.226)
1953 -0.765*** -0.250** -0.252** -0.247 0.139
(0.084) (0.118) (0.114) (0.229)
1954 -1.007*** -0.599*** -0.770*** -0.502* 0.044
(0.084) (0.193) (0.147) (0.240)
1955 -0.877*** -0.553** -0.618*** -0.515** 0.318
(0.084) (0.233) (0.148) (0.178)
1956 -0.573*** -0.341 -0.439** -0.390** 0.365
(0.084) (0.219) (0.162) (0.162)
1957 -0.577*** -0.228 -0.417** -0.222 0.753
(0.084) (0.331) (0.164) (0.199)
1958 -0.782*** -0.238 -0.404** -0.285 0.581
(0.084) (0.328) (0.155) (0.190)
1959 -0.727*** -0.379 -0.577*** -0.405* 0.615
(0.084) (0.329) (0.156) (0.191)

JALES ET AL . 31
F I G U R E 1 0 Placebo Permutation Test - Per capita GDP

time, until 1959. This suggests that the effect of the guerrilla war on Cuba’s GDP may have been transitory. Regarding
Figure 14 , one of the methods actually implies a positive effect when applying the treatment at 1952. This result is quite
distinct to what we find when we apply the treatment in 1959.
Table 12 and Figure 15 show the results for Cuba’s exports. As with per capita GDP, every method shows that there
is an effect prior to 1959; however, the effects seem to be clearer than with GDP per capita. Furthermore, the gap
between actual and predicted trajectories does not close - with the exception of the Synthetic Control method, which
seems to follow closely the actual trajectory of exports.
7.2 | Cuba-Venezuela trade relations
Since agreements in the early 2000s, Venezuela has been a major trade partner of Cuba. In recent years, Venezuela’s oil
has met about 60 per cent of Cuban demand. Venezuela assumed the role the Soviet Union had on the Cuban economy
before 1991. Oil is heavily subsidized: only half of the total payment is made in the first 90 days, while the remaining
becomes a debt to be paid in 25 years at an interest rate of 1 per cent per year. In addition, trade with Venezuela
has represented around 40 per cent of total commercial relations. In exchange, approximately 40,000 Cubans live in
Venezuela providing services such as health facilities (Vidal, 2014). The partnership also includes credits, investment,
and economic assistance from Venezuela. Economic relations with China also increased, but that has not been as
important as Venezuela (Mesa-Lago and Pérez-López, 2013).
32 JALES ET AL .
F I G U R E 1 1 Placebo Permutation Test - Exports

In this section, we look at the effects of the economic ties with Venezuela on Cuba’s GDP per capita. To do so,
we apply our empirical strategy to the Venezuela treatment, starting on 2001. We carefully choose a pre-treatment
period that is long enough so we can precisely estimate the model parameters, but not too long so that it misses the
fundamental changes on Cuba’s economy in the second half of the last century. Our main results use the years of 1980 to
2000 as the pre-treatment period and the treatment period from 2001 to 2010. To improve the model’s pre-treatment
fit, we allow for a structural break in the year of 1991 due to the effects of the fall of the Soviet Union.
Table 13 and Figure 16 displays the estimates of the effects of the trade agreement with Venezuela on Cuba’s per
capita GDP. We see a small effect immediately after the signature of the agreement. Interestingly, the effect seems to
grow in magnitude right around 2005 when Venezuela and Cuba sign another agreement. These effects are statistically
significant at conventional levels. We conclude that the approximation with Venezuela and the favorable terms of trade
implied by the agreement had positive effects on Cuba’s per capita GDP.
JALES ET AL . 33
F I G U R E 1 2 Placebo Permutation Test - Per capita GDP

34 JALES ET AL .
F I G U R E 1 3 Placebo Permutation Test - Exports

JALES ET AL . 35
F I G U R E 1 4 Temporal Placebo - Per capita GDP

36 JALES ET AL .
F I G U R E 1 5 Temporal Placebo - Exports

JALES ET AL . 37
TA B L E 1 3 Effect of Cuba-Venezuela trade agreement on Cuba’s GDP
2001 0.028 0.061 0.118*** 0.068*** -0.062
(0.023) (0.041) (0.018) (0.019)
2002 0.031 -0.028 0.084* 0.098*** -0.052
(0.023) (0.070) (0.041) (0.032)
2003 0.023 0.022 0.079 0.119*** -0.022
(0.023) (0.072) (0.064) (0.037)
2004 0.054** 0.179*** 0.195*** 0.123*** -0.008
(0.023) (0.059) (0.029) (0.027)
2005 0.120*** 0.349*** 0.333*** 0.186*** 0.073
(0.023) (0.063) (0.016) (0.024)
2006 0.166*** 0.516*** 0.478*** 0.251*** 0.161
(0.023) (0.076) (0.022) (0.023)
2007 0.179*** 0.642*** 0.576*** 0.273*** 0.203
(0.023) (0.091) (0.036) (0.022)
2008 0.206*** 0.751*** 0.627*** 0.282*** 0.219
(0.023) (0.104) (0.042) (0.025)
2009 0.246*** 0.780*** 0.621*** 0.320*** 0.256
(0.023) (0.100) (0.030) (0.028)
2010 0.239*** 0.826*** 0.629*** 0.305*** 0.232
(0.023) (0.113) (0.024) (0.035)
Pre-treatment R 2 0.639 0.897 0.856 0.701 0.396

38 JALES ET AL .
F I G U R E 1 6 The Effect of Cuba-Venezuela trade agreement

JALES ET AL . 39
F I G U R E 1 7 The Effect of Cuba-Venezuela trade agreement

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ORIGINAL ARTICLE

Measuring the Role of the 1959 Revolution on

Hugo Jales1∗ | Thomas H. Kang2 | Guilherme Stein3 |

Funding information KEYWORDS

and Romer, 1999; Heilmann, 2016).

1980 (Mesa-Lago et al., 2000).

δ t = E [Y1t (1) − Y1t (0) |D i = 1].

3.2 | Hsiao et al. (2012) Panel Data Approach

C ov (Yi t (0),Yj t (0)) = b i E [ft ft0 ]b j .

of the treatment will be given by, for t ≥ 0,

3.3 | Synthetic Control

βb. That is, Yc

3.4 | Factor Models

minimizes the pre-treatment mean squared prediction error.

Variable Obs Mean Std. Dev. Min Max

Per capita (log) GDP 1,134 7.946 0.591 6.791 9.317

(log) Exports 1,134 6.105 2.065 1.609 12.022

Railways 1.098 0.012 0.012 0.000 0.049

Electricity (GwH per capita) 895 0.001 0.001 0.000 0.003

EAP in agriculture 166 0.386 0.162 0.048 0.747

EAP in industry 155 0.164 0.068 0.074 0.565

Primary school enrollment 1,058 0.119 0.041 0.025 0.210

Illiteracy 774 14.605 17.533 0.000 85.000

Polity Index 1,131 0.385 6.362 -9.000 10.000

Source: Authors’ elaboration

TA B L E 2 1959 Revolution Effect on Cuba’s GDP per capita

Years Costa Rica Factor Model HCW DiD Synthetic Control

1959 -0.188*** -0.120*** -0.099* -0.174 -0.045

(0.029) (0.040) (0.053) (0.141)

1960 -0.244*** -0.178*** -0.252*** -0.209 -0.067

(0.029) (0.045) (0.056) (0.143)

1961 -0.229*** -0.201*** -0.381*** -0.232 -0.074

(0.029) (0.049) (0.063) (0.144)

1962 -0.249*** -0.170*** -0.309*** -0.257* -0.123

(0.029) (0.069) (0.066) (0.141)

1963 -0.288*** -0.178*** -0.229*** -0.282** -0.146

(0.029) (0.072) (0.069) (0.140)

1964 -0.301*** -0.238*** -0.348*** -0.278** -0.188

(0.029) (0.087) (0.058) (0.141)

Pre-treatment R 2 0.403 0.509 0.796 0.368 0.543

Pre-treatment RMSPE 0.178 0.161 0.104 0.191 0.156

Post-pre RMSPE ratio 2.185 3.533 3.763 2.045 1.975

Note: Standard errors in parenthesis.

5.1 | 1959 Revolution

F I G U R E 1 Observed and Counterfactual Outcome Paths.

F I G U R E 3 Observed and Counterfactual Outcome Paths.

TA B L E 3 Coefficients assigned to control countries by method

Costa Rica 1.000 0.077 0.000 0.130 0.137

Chile 0.000 0.077 0.000 0.259 0.151

Colombia 0.000 0.077 -1.473 0.000 0.115

Brazil 0.000 0.077 0.959 0.000 0.091

Argentina 0.000 0.077 1.731 0.000 0.130

El Salvador 0.000 0.077 0.000 0.385 0.002

Guatemala 0.000 0.077 0.000 0.000 0.093

Honduras 0.000 0.077 0.000 0.225 0.661

Mexico 0.000 0.077 0.000 0.000 0.122

Nicaragua 0.000 0.077 0.000 0.000 -0.195

Peru 0.000 0.077 0.000 0.000 -0.002

Uruguay 0.000 0.077 0.000 0.000 0.185

Venezuela 0.000 0.077 0.000 0.000 -0.024

Intercept -0.031 -0.163 -2.928 0.000 -3.650

Source: Authors’ elaboration.

1959 -0.188* -0.120* -0.099* -0.174 -0.045

1960 -0.244* -0.178* -0.252*** -0.209 -0.067

1961 -0.229* -0.201* -0.381*** -0.232 -0.074

1962 -0.249* -0.170* -0.309*** -0.257* -0.123

1963 -0.288* -0.178* -0.229* -0.282 -0.146

1964 -0.301* -0.238* -0.348* -0.278 -0.188

1959 -0.835* -0.305* -0.221*** -0.345 0.079

1960 -0.871* -0.518* -0.627*** -0.465 -0.030

1961 -1.045* -0.615* -0.617*** -0.544 -0.059

1962 -1.352* -0.998* -1.029* -0.811 -0.283

1963 -1.034* -0.834* -0.882*** -0.690* -0.291

1964 -1.181* -0.845* -0.938*** -0.532 -0.108

1965 -1.281* -0.944* -0.931* -0.753 -0.224

1991 -0.149* -0.146* -0.071** -0.023 -0.108

1992 -0.342* -0.235* -0.162*** -0.186 -0.272

1993 -0.556* -0.388* -0.366* -0.377 -0.464

1994 -0.576* -0.386* -0.360* -0.402* -0.454

1991 -0.885* -0.734* -0.701*** -0.869* -0.717

1992 -1.545* -1.303* -1.311* -1.331* -1.276

1993 -2.050* -1.755* -1.818* -1.845* -1.923

1994 -2.039* -1.790* -1.759* -1.874* -1.948