The Social and Economic Effects of Ending U.S. Travel and Remittance Restrictions for Cuban-Americans

This paper explores the economic and social effects of remittances sent from the United States to Cuba. The quantity of remittances sent to Cuba has steadily increased to above $3.5 billion since remittances from the U.S. began with the legalization of the dollar in 1993. The arrival of Western Union in 1999 and remittance policy changes implemented by the Obama administration beginning in 2009 had a noticeable effect on remittance flows. An analysis of the data available on remittance flows suggests a positive association between these policy changes and the amount of remittances sent from the United States to Cuba. Nineteen interviews with Cuban citizens conducted in June 2016 in and around central Havana provide insights into the narratives behind the increasing remittance flows. We found that Cubans spend remittances primarily on food and other basic necessities. Economic need coupled with distrust of banks, lack of banking infrastructure, restrictions on private ownership and the type and scale of private enterprise, and limited access to capital prevent widespread savings or investment are driving factors for this trend. Whereas Cubans perceive that remittances are good for individuals and families, they disagree as to the long-term social and economic effects. Some interviewees observed that remittances further incentivized unemployment among the Cuban youth. Others saw remittances as a much-needed source of capital for entrepreneurs. Several of the interviewees pointed out that US and Cuban policies will have to change before economic development can be realized.