Why Is Hong Kong Rich, Cuba Impoverished, and Puerto Rico Broke?

In 1955, the islands of Puerto Rico, Cuba and Hong Kong had roughly the same real per capita income. They each took very different economic paths.

by Richard Rahn
April 1, 2016

Back in 1955, the islands of Puerto Rico, Cuba and Hong Kong had roughly the same real per capita income. They each took very different economic paths.

Now, some 60 years later, Hong Kong is even richer than the United States on a per capita income basis. Cuba is an economic disaster, having gone from the richest Caribbean nation to the poorest, next to Haiti. And Puerto Rico finds itself flirting with bankruptcy, with a per capita income much higher than Cuba’s but only roughly half that of Hong Kong.

Incomes have increased approximately 22-fold in Hong Kong, 11-fold in Puerto Rico, and only fourfold at best in Cuba, in a little over a half-century.

Cuba became a communist nation, with the Soviet Union-Russia as its economic big brother, from which it received considerable subsidies. Puerto Rico has had the United States as its big brother — it is a largely self-governing territory of the U.S. — from which it has received considerable economic assistance.

Hong…