Title: ECONOMIC BENEFITS OF LIFTING U.S. SANCTIONS ON CUBA FOR THE U.S. ECONOMY
1ECONOMIC 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
2CUBAN 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.
3IMPACT 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.
5RECENT 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)
6TRADE 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
7EXAMPLES OF NEIGHBORING NATIONAL PERCENTAGE OF
EXPORT AND IMPORT TO GDP (2002)
8- THE ESTIMATION OF THE IMPACT OF FREE TRADE WITH
CUBA
9OLD ECONOMY WITH RESTRICTED TRADE
Goods Services
Productivity
Low cost production Strong economy
Profits
10NEW ECONOMY WITH FREE TRADE
Goods Services
Higher productivity Higher wages Higher quality
of life
More resilient economy Higher efficiency Higher
wealth
Higher profits
11FORECAST POSSIBLE US-CUBA 10 YEAR GROWTH IN TRADE
(2003)
12FORECAST POSSIBLE US-CUBA 35 YEAR GROWTH IN TRADE
(2003)
13DESCRIPTION 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.
14THE 10 YEAR IMPACT OF FREE TRADE WITH CUBA ON THE
U.S. GDP (2003)
15THE 35 YEAR IMPACT OF FREE TRADE WITH CUBA ON THE
U.S. GDP (2003)
16THE 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.
17THE 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.
18SUMMARY 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
19SUMMARY 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