Performance of 2006

Puerto Rico is noted for its diverse output performances between their industrial and service sectors. Manufacturing ranks as the country’s highest contributor to GDP earnings (estimated around 44% in 2006).However, the economy’s GDP growth performance of 2006 stood at a negligible 0.6%. Puerto Rico’s sugar industry output has diverged to trivial levels, and as of recent, production of livestock replaced this industry as being the main revenue earner for the country’s agricultural sector. Moreso, the unpredictable nature of tourism has become a main source of income (with fluctuating tourists’ arrivals, as they increased in 2004 to 5 million and then decreased to an estimated 3.9 million in 2006). [Sources:Puerto Rico Economy,:Encyclopedia-Puerto Rico]

Understanding the Post World War II trend in Puerto Rico

Upon further investigation, fiscal operations seemed to be the most integral part of the economy’s demise. A summary on the article, “The Economy of Puerto Rico” (second chapter), Bosworth and Collins examined the level and growth of production and income in Puerto Rico. A U.S. Tax code introduced in 1976 provided strong incentives for U.S. corporations to exploit profits from Puerto Rico (U.S. companies benefited by being exempted from U.S. taxation). This created a distortion of estimating Gross Domestic Product of the country, and ‘adjusted’ GDP estimates from the authors suggests a 20% cut in the level of Puerto Rican GDP by 2003. The tax policy as quoted “has done a disservice to Puerto Rico by providing U.S. corporations incentives for investment with few or no employment or local linkages.”

Between the periods 1950-75, Puerto Rico’s economy growth rate was comparable to that of East Asia, Ireland, and Latin America; output rates per person averaged around 5% a year. The economy was then characterized by its efficiency of factor usage. But after 1975, productivity growth rates per person fell to 1%, and there was a deficiency between capital accumulation and employment.

Public Debt

On May 1, 2006, the Puerto Rican government faced significant shortages in cash flows, which forced the closure of the local Department of Education and 42 other government agencies. All 1,536 public schools closed, and 95,762 people were furloughed in the first-ever partial shutdown of the government in the island's history.[29] On May 10, 2006, the budget crisis was resolved with a new tax reform agreement, with plans to apply a temporary 1% tax input so that all government employees could return to work. On November 15, 2006 a 5.5% sales tax was implemented. Municipalities have the option of applying a municipal sales tax of 1.5% bringing the total sales tax to 7%.[Source:Puerto Rico Profile

Interestingly enough, Puerto Rico spends a smaller share on education, and a higher share on health and welfare. James Alm’s view on Puerto Rico’s fiscal situation highlights the weak tax administration and the overuse of tax incentives which undermined the government’s attempt of promoting development. Tax revenue in Puerto Rico comes exclusively from three sources: personal income taxes, corporate taxes and to a less extent excise duties. A major problem with having a narrow tax base system means that those left in the tax net face potentially greater distortions of their decision making. Alm’s recommends lowering the corporate taxes and eliminating most of the tax incentives, he further states that incorporation of value added tax would expand the tax base and target consumption.

Solutions to providing more employment

A common theory for low employment and low labour participation rates are the transfer programs involved in Puerto Rico. Authors such as, Maria Enchautegui and Richard Freeman express their views on how, Social Security Disability and Nutritional Assistance programs impedes the economy’s progress by giving large disincentives to Puerto Rican men. Burtless and Sotomayor also further this suggestion, and states that government should link program benefits with incentives to seek employment or to increase the hours of work. [source: The introduction and summary of "The Economy of Puerto Rico"]

Economic Analysis - DR-CAFTA Creates New Trade Opportunities

23 Jun 2006
The Dominican Republic-Central America free trade agreement (DR-CAFTA) will bring new benefits and opportunities to Puerto Rico's struggling economy. As a US commonwealth territory, Puerto Rico will enjoy many of the trade benefits that the DR-CAFTA treaty will bring. The agreement, which was approved in 2005, not only includes Puerto Rico's most important trade partners in the region, but also presents an opportunity for the expansion of its activities in the Caribbean. While the treaty will bring numerous benefits, its is perhaps the liberalisation of services and investment that presents the greatest opportunities to Puerto Rico.
Source:Business Monitor International

Una Economía Nueva

Este plan se enfoca en nuestro recurso más valioso: nuestra gente.
Esta visión reconoce que nuestra generación tiene la capacidad de lograr que nuestros empresarios y trabajadores sean los protagonistas de nuestro desarrollo económico. Propone que el capital nativo que se genere, se reinvierta en la Isla, logrando un efecto multiplicador en nuestra economía. Esto generará, a largo plazo, una economía menos dependiente y menos susceptible de los vaivenes de la economía global porque se basa en las propias ventajas competitivas de Puerto Rico.

Bajo este plan se crearán 1,000 nuevas empresas puertorriqueñas, con una inversión de $30 millones a través del programa La Llave Para Tu Negocio. Con este programa, el empresario local tendrá los fondos y financiamiento para iniciar su nueva empresa gracias a Apoyo al de Aquí.

Por otro lado, también, se busca agilizar y descentralizar los permisos que necesita el empresario para hacer negocios, crear empleos y promover que el Gobierno compre el 15% de todas las licitaciones a la empresa local. Al mismo tiempo, vamos a garantizarles a los proveedores de bienes y servicios, que el gobierno pague a tiempo. De igual forma, la nueva economía busca incentivar la exportación de productos y servicios y la creación de Zonas Libres de Impuestos en los centros urbanos del país.
Source: Government of Puerto Rico

2005 Latin America and the Caribbean Selected Economic and Social Data

The 2005 edition of Latin America and the Caribbean: Selected Economic and Social Data (the LAC Databook), includes the most recent data at the time of publication from a multitude of international and national sources. The Bureau for Latin America and the Caribbean of the US Agency for International Development presents this Databook with the goal of gathering and presenting the most up-to-date information possible from official country sources and leading international institutions."
Source:USAID

Educación De Primera Y Sin Deserción

La educación es el pilar más fundamental del Triángulo del Éxito a largo plazo, porque todo –la economía, la paz social y la buena convivencia- depende de una educación de excelencia para los niños y niñas puertorriqueñas. La buena educación, no solo les brinda las herramientas del éxito individual a los estudiantes, sino que propicia menos criminalidad y mejora la calidad competitiva del país. Una buena educación es la base de una sociedad más productiva y feliz.

La meta del plan con respecto a la Educación es darle a los estudiantes las herramientas para el éxito individual y colectivo. Para ello vamos a adelantar 5 metas importantes:

• Aumentaremos el nivel de aprovechamiento total en un 20% en las asignaturas de inglés, español y matemáticas. • Reduciremos la deserción escolar. • Fortaleceremos los estudios especializados, incluyendo educación vocacional y educación especial. • Mejoraremos la planta física y la seguridad en las escuelas. • Conectaremos el 100% de las escuelas a la Internet asd.

Con mi plan de una Educación de Primera y Sin Deserción, les estamos enviando un mensaje claro a nuestros niños y jóvenes, no con palabras sino con acción. Para ello, necesitamos de la cooperación de todos en el País: maestros, padres, funcionarios y de los propios estudiantes. Porque lograr una educación pública de calidad es la primera prioridad de nuestro Gobierno.
Source: Government of Puerto Rico

Solid Waste Management

Selected statistics indicators for PUERTO RICO
UN Statistics Division for PUERTO RICO
Caribbean Social Statistics Database
Caribbean Trade Statistical Database