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

July 1, 2008

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Rafael Romeu. Vacation Over: Implications for the Caribbean of Opening U.S.-Cuba Tourism, (USA: International Monetary Fund, 2008) accessed November 8, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Gravity models, Natural disasters, Tourism, Trade agreements, Trade liberalization

Keywords: Market concentration, OECD country, Tourism restriction, U.S. tourism, U.S. tourist, WP

Publication Details

Pages:

62
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/162
Stock No:

WPIEA2008162
ISBN:

9781451870206
ISSN:

1018-5941

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