ABSTRACT
This chapter explores the potential economic benefits and costs of normalizing relations between the United States and Cuba. In the first scenario, normalization occurs, but within the current public policy framework in Cuba. Cuba’s exports of goods and services to the United States would also increase with normalization under the current public policy status quo, but again, by less than could occur with key economic reforms. Major potential exists for US direct foreign investment in Cuba following normalization. Normalization with the United States will also generate a variety of new types of financial flows. With normalization, trade between the two countries would expand considerably, with beneficial consequences for economic performance and well-being for the citizens of both countries but most importantly for Cuban citizens. One indication of how quickly US exports to Cuba would increase is provided by the US liberalization of agricultural exports in 2002.
