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Vacation Over: Implications for the Caribbean of Opening U.S.-Cuba Tourism

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  • Rafael Romeu

Abstract

An opening of Cuba to U.S. tourism would represent a seismic shift in the Caribbean's tourism industry. This study models the impact of such a potential opening by estimating a counterfactual that captures the current bilateral restriction on tourism between the two countries. After controlling for natural disasters, trade agreements, and other factors, the results show that a hypothetical liberalization of Cuba-U.S. tourism would increase long-term regional arrivals. Neighboring destinations would lose the implicit protection the current restriction affords them, and Cuba would gain market share, but this would be partially offset in the short-run by the redistribution of non-U.S. tourists currently in Cuba. The results also suggest that Caribbean countries have in general not lowered their dependency on U.S. tourists, leaving them vulnerable to this potential change.

Suggested Citation

  • Rafael Romeu, 2008. "Vacation Over: Implications for the Caribbean of Opening U.S.-Cuba Tourism," IMF Working Papers 2008/162, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2008/162
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    Cited by:

    1. Nahrstedt, Jan, 2021. "US economic sanctions on Cuba: An analysis of the reasons for their maintenance," IPE Working Papers 162/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    2. Philip Liu & Rafael Romeu, 2011. "A Dynamic Factor Model of Quarterly Real Gross Domestic Product Growth in the Caribbean: The Case of Cuba and the Bahamas," Money Affairs, CEMLA, vol. 0(1), pages 77-95, January-J.
    3. Mr. Manuk Ghazanchyan & Li Zhao & Steve Brito & Vivian Parlak, 2019. "New Insights into ECCU's Tourism Sector Competitiveness," IMF Working Papers 2019/154, International Monetary Fund.
    4. Ms. Evridiki Tsounta, 2008. "What Attracts Tourists to Paradise?," IMF Working Papers 2008/277, International Monetary Fund.
    5. Bolaky, Bineswaree, 2011. "Tourism competitiveness in the Caribbean," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    6. Paolo Spadoni, 2017. "U.S.-Cuba Business Relations Under The Obama Administration And Prospects Under The Trump Administration," Annual Proceedings, The Association for the Study of the Cuban Economy, vol. 27.
    7. Mr. Andy M. Wolfe & Rafael Romeu, 2011. "Recession and Policy Transmission to Latin American Tourism: Does Expanded Travel to Cuba Offset Crisis Spillovers?," IMF Working Papers 2011/032, International Monetary Fund.

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    More about this item

    Keywords

    WP; U.S. tourist; tourism restriction; market concentration; OECD country; U.S. tourism;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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