No Sugar Coating: Quantifying the Welfare Losses from US-Cuba Trade Policy

The Moynihan Institute’s program for Trade, Development and Political Economy welcomes Stefania Garetto from Boston University. 

Using newly digitized historical trade data from Foreign Commerce Yearbooks, we recover Cuba’s revealed comparative advantage at the beginning of the 20th century. Through the lens of a quantitative Ricardian model of trade, we conduct a counterfactual analysis to provide a quantitative answer to a long-standing question about the Cuban economy: the “road not taken”. What would the Cuban economy have looked like in later years if its economic integration had remained the same as in the beginning of the twentieth century? How did the US involvement in the Cuban sugar industry affect Cuban specialization and growth? The answers to these questions shed light on our understanding of the consequences of extreme specialization for developing countries in situations of political instability.

Stefania Garetto is a trade economist whose work is centered on the study of foreign direct investment and the activities of multinational corporations, both from a real and from a financial perspective. Stefania’s current research combines empirical analysis and structural dynamic modeling to understand the creation of multinational firms via mergers and acquisitions, and their expansion in space over time. She is a research associate of NBER and a research fellow of CEPR.