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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 08/162, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:08/162
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=21887
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    References listed on IDEAS

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    1. Yang Dean, 2008. "Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-45, June.
    2. Subramanian, Arvind & Wei, Shang-Jin, 2007. "The WTO promotes trade, strongly but unevenly," Journal of International Economics, Elsevier, vol. 72(1), pages 151-175, May.
    3. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    4. Rafael Romeu, 2005. "Why Are Asset Markets Modeled Successfully, But Not Their Dealers?," IMF Staff Papers, Palgrave Macmillan, vol. 52(3), pages 1-1.
    5. Cukierman, Alex, 1980. "The Effects of Uncertainty on Investment under Risk Neutrality with Endogenous Information," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 462-475, June.
    6. José PINEDA & Lenin BALZA & María CABALLERO & Leonardo ORTEGA, "undated". "Market Diversification and Exports Growth in Latin America," EcoMod2008 23800109, EcoMod.
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    Cited by:

    1. Evridiki Tsounta, 2008. "What Attracts Tourists to Paradise?," IMF Working Papers 08/277, International Monetary Fund.
    2. Bolaky, Bineswaree, 2011. "Tourism competitiveness in the Caribbean," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.

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