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How The US's New Relationship With Cuba Will Affect The Economy

The United States' newfound relations with Cuba will not only affect the nation politically, but economically as well. One trade and travel resume to normal, many industries will being to benefit including banks, airlines, farmers, construction suppliers, and internet service providers. It has been 50 years since the US has had full diplomatic relations with Cuba, and although we have done alright since, this new friendship will bring some significant changes to a number of industries.

 

Progress will be slow, but far-reaching

Since travel restrictions are also limited to citizens with family, performers, journalists, etc, the travel industry will have to wait until they see the monetary benefits as well. This means that Cruise companies, hotel operators, and more will have to be ready and waiting on standby until travel between the two countries is fully, officially open. Last year with the restrictions in place, 170,000 Americans traveled to Cuba, so the future numbers will be staggering. Right now if you wanted to travel 90 miles to Cuba you would need one of 12 licenses that said you were going for a charity or education group.

But other practicalities need to be considered before Cuba opens up, and that’s where even more industries will become involved. Construction will go up when it comes time to build the US embassy, and ports for cruise ships full of vacationing Americans to dock. Since only a reported 5% of Cuba’s population has access to the full internet, telecommunications companies see the company as ripe financial fruit, too. Not only will American companies be caught up in the whirlwind, but so will the people of Cuba who have lost an estimated $1 trillion since the start of the US embargo.

 

How the economy will be affected

For now the trade embargo is still limited by federal law, but once Congress has debated the topic we may begin to see improvement. So for the past five decades until it is overturned, the embargo has meant that American companies cannot do business in Cuba, or visit as tourists. Originally Americans were prohibited from spending money in Cuba as well. For now, citizens can bring a limited amount of goods home from Cuba with them back to the US, but $100 worth of cigars won’t be enough to stimulate the economy alone. Cuba is not an enormous country and its economy is likewise not the size of say, China’s, but their impact would not be insignificant. After normalizing US-Cuba tensions, the Us could eventually make $4.3 billion exporting merchandise to Cuba.

After it got onto the USA’s bad side, Cuba continued to become more isolated from the world. Now, Americans will be able to come back with $400 worth of Cuban goods with them (including the cigars), and can send more money to people on the island if they have relatives there. Right now Cuba and America really aren’t impacting each other’ economy, but that will all change. The economic book will not only help Americans, but also private Cuban businesses and small farmers. This will be a great help, as Cuba’s gross domestic product in 2011 was what the US made in a day and a half: $68 billion.

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