3/13/2008

A Signal of Change for Cuba?

Cuba's new president, Raul Castro, has lifted previous restrictions against the sale of a handful of consumer electronic products, including computers. Is this a signal of what to expect in the future from this new leader? How will this new reform in policy affect the market of consumer electronic goods?

After years of increasing demand and limited supply due to the ban, prices for these items should be expected to be high until these two factors correct themselves. Initially, the wealthy will be the beneficiaries of the new policy until competition between retailers brings the equilibrium of supply and demand down to prices levels where more of the population can afford them.

Perhaps Raul is a little more level-headed and less stubborn than his elder brother Fidel.

4 comments:

William said...

I think if anything this is great for Cuba. With more trade being allowed it increases its market. With the market expanding it helps to better its economy.
I think that Cuban leaders are starting to look at countries that were once communist and see the improvements that they are now having (ex. being China). As Cuba starts to increase what it allows to be traded I think this is going to have a huge impact with the US. Currently the negative aspects of having an embargo with Cuba are not that great, but if Cuba starts to open up its trading and what it allows to come in it is going to have a much greater effect on the US.
I believe that as Cuba starts to increase its trade we (the US) are going to have to bring the embargo issue up and re-evaluate whether or not it should stay in place.
I for one believe that we should get rid of the embargo, in a free capitalistic world there should never be an embargo. We could be better off if we did trade with them. Trade is good, in the basic economics class we studied how trading, for the most part, creates advantages for each party.

Avery said...

I agree, Rearden. The prices of these goods will continue to be inflated until supply and demand come to an equilibrium. To William's comment - I am not sure about lifting the embargo yet until we know more about what kind of a leader Raul will be. I think it is more about politics than economics where Cuba is involved.

Dr. Tufte said...

I wonder how big a deal this actually is.

Most people in Cuba can't afford this stuff. Those that can are probably connected to the government in a way that allows them to collect economic rents.

We are also making a big thing out of cellphone sales. But here, the benefits to the regime may outweigh the costs, since setting up a cellphone network is so much cheaper than hanging and maintaining wires around the country.

Anonymous said...

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