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America's embargo against Cuba has obviously had a broad and serious impact on the island's economy, but nobody has said exactly why it is obvious.
We hear that food is rationed and that medicines are scarce, and yet Cuba's life expectancy is just as good as America's. Newspapers report that cars in Cuba are over 50 years old, and yet new hotels welcome thousands of wealthy foreigners each week. The supposedly obvious economic harm of the embargo has never been independently quantified, and nobody knows the overall effect.
Useful data on Cuba remain scarce, but some fragments are available from government and international agencies. These are standard economic indicators, but they are subject to manipulation so they can only tell part of the story. Because consistent data across the decades do not exist, the usual approach of tracking GDP will not work. To unearth the real impact on Cuba a new method is introduced here. It reveals the embargo's macroeconomic impact by looking at 3 somewhat obscure elements of Cuba's economy before and during the embargo:
1) Industrial Structure
2) Trade under the Gravity Theory
3) The UN Human Development Index
Cuba has never been as thoroughly compared with its international peers, and the results are surprising.
Did Cuba actually fare worse than non-embargoed countries as is commonly assumed? The data show that Cuba was able to grow under many different conditions including the interwar years, the Soviet period, the post-Soviet period, embargo or no embargo. There were setbacks due to the embargo, but there were also compensating factors. How do these add up?
There may be plenty of reasons to endorse or denounce the embargo, but until now there has been too little information about its macroeconomic impact. Find out what the data reveal under this new analysis.
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About the Author
Joe Atikian is the author of 3 books on economics and personal finance.
Joe's latest book is published by Palgrave-Macmillan (May 2013) and is suitable both for the general reader and for economists.
"Industrial Shift: The Structure of the New World Economy" shows that in the rapidly changing global economy, the popular impression of declining manufacturing and agriculture is largely unfounded. Several charts from the UN and World Bank databases support the analysis, showing that factory output is growing virtually everywhere, but remains hidden by even faster service sector growth. Several surprises are revealed in employment, wages, and regional progress.
"Saving Money, The Missing Link", outlines the mindset of a saver as well as the three basic ideas behind your financial power. No tips or tricks here, but a solid foundation based on how to think about this tricky aspect of personal affairs.
"Cuba Under Embargo" examines the macroeconomic impact of the US embargo on Cuba. Since the usual types of macro data do not exist in Cuba's case, Joe has compiled a series of alternative indicators to assess the damage. And since there has never been such a study, the results may be surprising.
Joe has a background in engineering, an honors degree in economics, and an early retirement.