ECONOMIC BENEFITS OF LIFTING U.S. SANCTIONS ON CUBA FOR THE U.S. ECONOMY - PowerPoint PPT Presentation

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ECONOMIC BENEFITS OF LIFTING U.S. SANCTIONS ON CUBA FOR THE U.S. ECONOMY

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Title: ECONOMIC BENEFITS OF LIFTING U.S. SANCTIONS ON CUBA FOR THE U.S. ECONOMY


1
ECONOMIC BENEFITS OF LIFTING U.S. SANCTIONS ON
CUBA FOR THE U.S. ECONOMY
  • Prepared by
  • Tim Lynch, Ph.D., Director
  • Necati Aydin, Research Associate
  • Center for Economic Forecasting and Analysis
    (CEFA)
  • Florida State University
  • www.cefa.fsu.edu
  • Presented at
  • Caribbean Studies Association 28th Annual
    ConferenceBelize City, Belize
  • May 2631, 2003

2
CUBAN ECONOMIC HISTORY BEFORE THE SOCIALIST
REGIME
  • Before 1959 the U.S. was Cubas main trading
    partner. Florida was Cubas largest U.S. state
    trade partner.
  • 40 percent of all cargo being routed through
    Miamis customs district was transported to Cuba.

  • 85 percent of Cubas exports were transported to
    the United States.

3
IMPACT OF FREE TRADE WITH CUBA IN THE U.S. ECONOMY
  • Cuba is the largest and most economically viable
    of the Caribbean nations.
  • Its wealth of underutilized natural and human
    resources makes it an ideal economic trading
    partner for the U.S.
  • For example the U.S.-Cuba Business Council
    estimated initial Cuban infrastructure needs of

  • 500 million investment in telecommunications.
  • 500 million in mass transit.
  • 575 million in airports.
  • 540 million in railroads.

4
IMPACT OF FREE TRADE WITH CUBA IN THE FLORIDA
ECONOMY
  • Economic reforms in Cuba since the 1990s towards
    a more open market system will generate
    considerable business opportunities for the
    Florida economy (assuming these trends
    continue).
  • Gravity theory suggests that Florida has more
    advantages than any other state to benefit from
    trade liberalization with Cuba.
  • Lifting sanctions would result in Florida (and
    the U.S.) adding approximately 11 million
    additional customers just 90 miles from Floridas
    shores.

5
RECENT ECONOMIC IMPACT STUDIES
  • Embargo costs the U.S. between 3 and 4 billion
    in lost exports per year. (Preeg, Center for
    Strategic and International Studies, 1998.)
  • Lifting sanctions on agricultural exports to Cuba
    for the 50 states and 22 commodity sectors, will
    result in increases in exports of 1.2 billion
    per year. (Rosson and Adcock, Texas AM
    University, 2001)
  • Such increase in exports would stimulate an
    additional 3.6 billion in total economic output
    and 31,262 new jobs in the U.S. labor market.
    (Ibid,Rosson, 2001)

6
TRADE SANCTIONS REFORM AND EXPORT ENHANCEMENT ACT
OF 2000
  • Allows for U.S. food and medical exports to Cuba
    under certain conditions.
  • In its first year of implementation, the U.S.
    exports to Cuba rose by a factor of 20.

Source USA Trade Online, U.S. Census Bureau, 2002
7
EXAMPLES OF NEIGHBORING NATIONAL PERCENTAGE OF
EXPORT AND IMPORT TO GDP (2002)
8
  • THE ESTIMATION OF THE IMPACT OF FREE TRADE WITH
    CUBA

9
OLD ECONOMY WITH RESTRICTED TRADE
Goods Services
Productivity
Low cost production Strong economy
Profits
10
NEW ECONOMY WITH FREE TRADE
Goods Services
Higher productivity Higher wages Higher quality
of life
More resilient economy Higher efficiency Higher
wealth
Higher profits
11
FORECAST POSSIBLE US-CUBA 10 YEAR GROWTH IN TRADE
(2003)
12
FORECAST POSSIBLE US-CUBA 35 YEAR GROWTH IN TRADE
(2003)
13
DESCRIPTION OF FSU CUBA RESEARCH USING THE REMI
MODEL
  • REMI, 2000 (REMI, 2000) is a widely accepted and
    used dynamic integrated input-output and
    econometric model.
  • REMI is the most sophisticated and widely used
    economic impact assessment tool currently
    available in the US. REMI is extensively used by
    US public and private agencies, business and
    Universities to evaluate the economic impact of
    pending complex federal, state and local policy
    actions.

14
THE 10 YEAR IMPACT OF FREE TRADE WITH CUBA ON THE
U.S. GDP (2003)
15
THE 35 YEAR IMPACT OF FREE TRADE WITH CUBA ON THE
U.S. GDP (2003)
16
THE 35 YEAR ECONOMIC BENEFITS TO FLORIDA ECONOMY
FROM LIFTING THE BAN OF TRAVEL TO CUBA (2003)
Source The Impact on the U.S. Economy of Lifting
Restrictions on Travel to Cuba,
Center for International Policy Study, July 15,
2002.
17
THE 35 YEAR JOB IMPACT OF LIFTING TOURIST TRAVEL
BAN TO CUBA ON FLORIDA EMPLOYMENT (2003)
Source The Impact on the U.S. Economy of Lifting
Restrictions on Travel to Cuba,
Center for International Policy Study, July 15,
2002.
18
SUMMARY OF FINDINGS (For The U.S. Economy)
  • Normalization of trade between Cuba and the US
    will result in
  • 5 to 15 billion imports and exports over 10
    years
  • 1.3 to 3.4 billion increase in U.S. GDP over 10
    years
  • 62 to 307 billion increase in U.S. imports and
    exports over 35 years
  • 14 to 68 billion dollars increase in U.S. GDP
    over 35 years

19
SUMMARY OF FINDINGS (For The Florida Economy)
  • The lifting restrictions on travel to Cuba will
    result in potential tourism increases alone of
  • 1.1 to 2.1 billion growth in Florida GDP over
    35 years
  • 14,000 to 27,372 new jobs in Florida over 35 years
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