A trade embargo on a country theoretically will have an impact on exports, imports, net exports, net capital flow, and economic growth. An embargo will put restrictions on what can be traded between countries or no trade at all. With less or no trade at all occurring then both exports and imports will decrease. That can affect net exports drastically. If the embargo restricts trade with a country that they export a lot to and import little from, then net exports will decrease. If the net exports are negative, exports are less than imports, then the country will have a trade deficit. If the situation is vice versa, the net exports will be positive, exports being more than imports, leaving the country in a trade surplus. Since the embargo creates the restrictions on foreign trade, the purchase of foreign assets by domestic residents will decrease drastically making the net capital flow decrease. With all that combined, there will be less transactions going on, which means there ultimately be a decrease in the development of the country. That decrease in development means that economic growth is decreasing too.
Thursday, April 21, 2016
U.S. Trade Relations With Cuba
In 1959, Fidel Castro led a group of revolutionaries to overthrow Fulgencio Batista and took control of the government in Cuba. Castro began to make economic decisions such as increasing trade with the Soviet Union, nationalizing U.S. owned properties, and hiking taxes on American imports. Those actions forced the United States to respond with economic retaliation. A ban on almost all exports to Cuba was created but John F. Kennedy escalated it to a full economic embargo that also had strict travel restrictions. After the events of the Bay of Pigs invasion of 1961 and the Cuban Missile Crisis of 1962, economic and diplomatic isolation became a goal of U.S. policy. Washington placed a 1992 Cuba Democracy Act and 1996 Helms-Burton Act that states that the embargo may not be lifted until Cuba holds free and fair elections and transitions to a democratic government that excludes the Castros. Since then, the government began to lift some restrictions of the embargo and allowed the export of U.S. medical supplies and agricultural products to Cuba. Over the past 3 years, many of the restrictions of the embargo have changed allowing more interaction with them. Travelers are allowed to use U.S. credit and debit cards; U.S. insurance companies cover health, life, and travel insurance for individuals living in or visiting Cuba; banks to facilitate authorized transactions; U.S. companies to invest in some small businesses; and shipment of building materials to private Cuban companies. The change to the embargo led to Castro making reforms that allowed decentralizing the agricultural sector; relaxing restrictions on small business; liberalizing real estate markets; making it easier for Cubans to obtain government permission to travel abroad; and expanding access to consumer goods.
A trade embargo on a country theoretically will have an impact on exports, imports, net exports, net capital flow, and economic growth. An embargo will put restrictions on what can be traded between countries or no trade at all. With less or no trade at all occurring then both exports and imports will decrease. That can affect net exports drastically. If the embargo restricts trade with a country that they export a lot to and import little from, then net exports will decrease. If the net exports are negative, exports are less than imports, then the country will have a trade deficit. If the situation is vice versa, the net exports will be positive, exports being more than imports, leaving the country in a trade surplus. Since the embargo creates the restrictions on foreign trade, the purchase of foreign assets by domestic residents will decrease drastically making the net capital flow decrease. With all that combined, there will be less transactions going on, which means there ultimately be a decrease in the development of the country. That decrease in development means that economic growth is decreasing too.
A trade embargo on a country theoretically will have an impact on exports, imports, net exports, net capital flow, and economic growth. An embargo will put restrictions on what can be traded between countries or no trade at all. With less or no trade at all occurring then both exports and imports will decrease. That can affect net exports drastically. If the embargo restricts trade with a country that they export a lot to and import little from, then net exports will decrease. If the net exports are negative, exports are less than imports, then the country will have a trade deficit. If the situation is vice versa, the net exports will be positive, exports being more than imports, leaving the country in a trade surplus. Since the embargo creates the restrictions on foreign trade, the purchase of foreign assets by domestic residents will decrease drastically making the net capital flow decrease. With all that combined, there will be less transactions going on, which means there ultimately be a decrease in the development of the country. That decrease in development means that economic growth is decreasing too.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment