Puerto Rico has one of the best economies in the Caribbean, but it’s still well below U.S. standards. Approximately 44 percent of the population lives below the poverty level. In 2008 the unemployment rate was 12 percent, and annual per capita income was $12,000. The island is heavily dependent on U.S. aid, and the government is the largest employer.
From colonial times until the 1940s, the island’s largest industry was sugar production. But that industry went into decline when sugar prices plummeted as other sources became available.
In 1948 the federal and local governments came together to introduce an economic development program called Operation Bootstrap. In addition to bringing land reforms, roads, and schools to neglected parts of the island, it stimulated industrial growth by giving federal and local tax exemptions to U.S. corporations that established operations in Puerto Rico. Many major manufacturing firms set up shop, and before long the production of pharmaceuticals and electronics far eclipsed agriculture on the island. The period from the 1950s through the 1970s was a huge period of growth and development. The standard of living achieved new heights very quickly, and the tourism industry began to blossom.
But in the latter part of the 20th century, Puerto Rico’s economy suffered a series of setbacks. First the energy crisis and U.S. recession put a damper on the tourist trade in the 1980s. Then in the 1990s, Operation Bootstrap’s tax incentives were discontinued and the North American Free Trade Agreement (NAFTA) was enacted, which sent industries packing to Mexico, where labor was cheaper. Adding insult to injury, in 2004 the United States closed the Roosevelt Roads Naval Station, which contributed $250 million a year to the local economy.
But there is a new vigor fueling the economy of Puerto Rico today, and it’s apparent in the many cranes and construction projects under way throughout the island. Economic development has turned its attention aggressively toward tourism during a time, especially after 9/11, when U.S. travelers are seeking destinations closer to home. Port Authority improvements to San Juan’s 12 ship docks and seven piers have made it the largest port in the Caribbean. The brand-new 113-acre Puerto Rico Convention Center beside the Isla Grande Airport near Old San Juan was completed in late 2005, making it the largest convention center in the Caribbean. New road construction projects are under way, and seemingly every town is renovating its central plaza. An estimated five million tourists visit the island each year.
© Suzanne Van Atten from Moon Puerto Rico, 2nd Edition