Economy of Puerto Rico

Economy of Puerto Rico
Fixed exchange rates	Uses USD
Fiscal year	1 July - 30 June
Trade organisations	CARICOM (observer)
Statistics
GDP	$96.3 billion (2010 est.)
GDP growth	1.01% (2010 est.)
GDP per capita	$24,229 (2010 est.)
GDP by sector	1% agriculture 45% industry 54% services (2002 est.)
Inflation (CPI)	6.5% (2003 est.)
Population below poverty line	45.4% (2006 U.S. Census)
Labour force	1.3 million (2009 est.)
Labour force by occupation	agriculture 3% industry 20% services 77% (2000 est.)
Unemployment	16.1% (2010)
Main industries	pharmaceuticals, electronics, apparel, food products, tourism
Ease of Doing Business Rank	43rd
External
Exports	$46.9 billion FOB (2001)
Main export partners	US 90.3%, UK 1.6%, Netherlands 1.4%, Dominican Republic 1.4% (2006)
Imports	$29.1 billion CIF (2001)
Main import partners	US 55.0%, Ireland 23.7%, Japan 5.4% (2006)
Public finances
Public debt	$63.8 billion (FY 2010)
Revenues	$8.5 billion (FY 2010)
Expenses	$29.1 billion (FY 2010)
Economic aid	$6.8 billion (FY 2010)
Credit rating	BBB (Standard & Poor's) Baa1 (Moody's)
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars

The Economy of Puerto Rico is one of the most diverse in the Caribbean region. Services and industrial production have surpassed agriculture as the primary focus of economic activity and income. Encouraged by duty-free access to the US and by tax incentives, United States firms have invested heavily in Puerto Rico since the 1950s. US minimum wage laws apply. Sugar production has lost out to dairy production and other livestock products as the main source of income in the agricultural sector. Tourism has traditionally been an important source of income for the island, with estimated arrivals of nearly 3.4 million tourists in 2007.

History

Spanish Colonialism

In 1935, United States President Franklin D. Roosevelt launched the Puerto Rican Reconstruction Administration, which provided agricultural development, public works, and electrification of the island.

In the late 1940s a series of projects called Operation Bootstrap encouraged, using tax exemptions, the establishment of factories. Thus manufacturing replaced agriculture as the main industry.

Since the Great Depression there has been external investment in capital-intensive industry such as petrochemicals, pharmaceuticals, and technology.

Operation Bootstrap was based on an "industrialization-first" campaign and modernization, focusing the Puerto Rican economy on exports, especially to the United States. Though initially there were large gains in employment and per capita income, recessions in the United States were magnified in the country and have repeatedly hampered Puerto Rican development.

With the signing of the North American Free Trade Agreement and the Dominican Republic–Central America Free Trade Agreement, Puerto Rico lost a trade advantage over some Latin American countries as the right to duty-free imports to the U.S. market were expanded. Puerto Rico is also subject to the minimum wage laws of the United States, which gives lower-wage countries such as Mexico and the Dominican Republic an economic advantage in the Caribbean.

Current economic overview

Puerto Ricans had a per capita GDP estimate of $17,100 for 2009 and $16,300 for 2010. Federal transfer payments to Puerto Rico make up more than 20% of the island's personal income. By comparison, the poorest state, Mississippi, had a median level of $21,587, according to the U.S. Census Bureau's Current Population Survey, 2002 to 2004 Annual Social and Economic Supplements. Since 1952, the gap between Puerto Rico's per capita income and the national level has changed substantially — From one third the U.S. national average and roughly half that of the poorest state in 1952, to 10% less than poorest state in 2007. As of 2006, the unemployment rate was 11.7%.Currently the unemployment rate is at 15.9%</ref> The ledger.com [http.//www.ledgerdata.com/unemployment/puerto-rico//2011/january/] The U.S. state with the highest unemployment in October 2007 was Michigan, at 7.7%, and the U.S. average was 4.4%. On November 15, 2006 the Government of Puerto Rico implemented a 5.5% sales tax. An optional 1-1.5% municipal tax had been in effect since May 2006.

Puerto Rico’s public debt has grown at a faster pace than the growth of its economy, reaching $46.7 billion in 2008. In January 2009, Governor Luis Fortuño enacted several measures aimed at eliminating the government's $3.3 billion deficit. The island unemployment rate is 12% as of November 2009. The rate further dropped to 15.7% in October 2010.

Tourism

Tourism is an important component of the Puerto Rican economy supplying an approximate $1.8 billion. In 1999, an estimated five million tourists visited the island, most from the United States. Nearly a third of these are cruise ship passengers. An increase in hotel registrations, which has been observed since 1998, and the construction of new hotels and the Puerto Rico Convention Center are indicators of the current strength of the tourism industry.

The following are significant public and private projects (finished, planned or under construction) which are aimed at increasing the tourism industry in Puerto Rico:

• The Puerto Rico Convention Center (finished)
• The Puerto Rico Convention Center District (under construction)
• The Pan American Port Terminal in Isla Grande for cruise ships and liners (finished)
• Coliseo de Puerto Rico, José Miguel Agrelot (finished)
• The Condado Trio Renovation Project (Condado Vanderbilt and La Concha hotels) (under construction)
• Luis Muñoz Marín International Airport expansion and renovation project (under construction)
• Fairmont Coco Beach Resort
• JW Marriot Resort at Río Grande (planned)
• Numerous other hotel projects underway (including new hotels and expansions) adding hundreds of rooms to the industry

Trade with the United States

As an unincorporated territory of the United States, travel and trade between Puerto Rico and the U.S. mainland or other U.S. territory is not subject to international border controls. All goods moving from Puerto Rico to the U.S. mainland are subject to agriculture inspection controls by USDA [3]. Travelers and goods move without restriction between Puerto Rico and other U.S. territories such as U.S. Virgin Islands. Travel and trade between Puerto Rico and territory outside U.S. jurisdiction is subject to international border controls.

Mail bound for the mainland from Puerto Rico and Hawaii is subject to USDA inspection for quarantined plant matter.

Puerto Rico may collect import duties only to the same degree it taxes the same goods produced domestically.

Puerto Rico receives cross-over subsidies, which generated approximately $371 million in 2008.

Other statistics

• Industrial production growth rate: NA%

• Household income or consumption by percentage share:

• lowest 10%: NA%
• highest 10%: NA%

• Budget:

• revenues: $8.1 billion Central Government, $25 Billion with Public Corporations
• expenditures: $9.6 billion Central Government

• Electricity

• production: 23,720 GWh
• consumption: 22,060 GWh
• exports: 0 kWh
• imports: 0 kWh (2007 est.)

• Electricity - production by source:

• fossil fuel: 98.06%
• hydro: 1.96%
• nuclear: 0%
• other: 0% (1998)

• Agriculture - products: sugarcane, corn, coffee, pineapples, plantains, bananas; livestock products, chickens
• Exports - commodities: pharmaceuticals, electronics, apparel, canned tuna, rum, beverage concentrates, medical equipment
• Imports - commodities: chemicals, machinery and equipment, clothing, food, fish, petroleum products

• Tax: 7.0%

See also

• Cross-Over Subsidies
• Economy of the United States

External links

• The Bankrupt Economy
• History of Puerto Rico
• Changing of the Guard: Puerto Rico
• UW Press: Sugar and Slavery in Puerto Rico