Economy

Puerto Rico's economy has improved greatly since the early 20th century, when the island was impoverished and dependent mainly on farming. In 1942 an economicdevelopment plan, called Operation Bootstrap, was begun. To encourage industry, the government began training workers, building transportation and power facilities, and offering tax exemptions and other benefits to companies opening plants there. Since the introduction of the plan, hundreds of United States corporations have opened facilities in Puerto Rico, substantially raising the island's standard of living.

Manufacturing is the most important industry in Puerto Rico. It contributes to a large portion of the gross domestic product. The service industries, together, account for more than half of the gross domestic product of Puerto Rico.

Tourism, based primarily on the warm winter weather, attractive scenery, and historic sites, is also a major economic activity. Most of the tourists come from the U.S. mainland. Associated with it is a large and growing service industry, especially in San Juan, the capital and main tourist center. Tourism benefits such services as the operation of hotels and restaurants. Sizable, too, is the construction industry, spurred by the need for more factories, roads, homes, and schools. Money sent home by Puerto Ricans living in the United States is also significant in the economy. Trade is mostly with the United States.

Despite its overall progress, Puerto Rico's economy lags considerably behind that of the 50 states in virtually all respects. High unemployment is one of the island's most persistent economic problems.

It is Puerto Rico's leading source of income and employment. In terms of employment, the principal industrial activities are the manufacturing of clothing and textiles, computer and electronic products, petroleum and coal products, transportation equipment, electrical and electronic equipment, processed foods, precision instruments, pharmaceuticals, and chemicals. Other products manufactured are leather products, machinery, medical and scientific instruments, and rubber and plastic products. By value, pharmaceuticals and electrical and electronic equipment are the leaders. Rum and refined sugar are among the island's best-known products. Centrales (sugar mills) in Puerto Rico produce raw sugar from the sugar cane grown on the island. San Juan and the nearby cities form the main manufacturing area. Also significant is the Ponce area, on the south coast. There is a value added by manufacture of about $45 billion a year on products manufactured and processed in the commonwealth.

Prior to Operation Bootstrap, agriculture was the island's economic mainstay, engaging almost half of the workforce. Only about 5 per cent presently work in farming. Of the total land area in Puerto Rico about 30 per cent is used for farming. As the land has been worked hard for many years, a lot of fertilizer has to be used to enrich the fields. Water for farms in the drier southern parts of the island is provided by irrigation, which is also used on farms along the northwest coast of Puerto Rico. Meat, milk, eggs and poultry products account for about half of all farm income. Sugarcane, once the predominant crop, has declined drastically in production, but remains a major product. It is grown in the coastal lowlands Puerto Rico. Coffee and tobacco have long been significant commercial crops. Coffee beans are grown in the western region of the central mountains. Coffee is produced in more than half of Puerto Rico’s farms. A great variety of vegetables and fruits is produced for local consumption. The most important commercial fruits of this island are bananas and plantains. Pineapples are grown in the coastal lowlands, mostly in the north. Other fruits are avocados, coconuts, and oranges and other citrus fruits.

Rice, a staple food in the diet of Puerto Ricans, is increasingly being grown. Large amounts of food are imported. Beef cattle are also raised by the farmers. The production of livestock has rapidly increased in Puerto Rico to help feed its growing city populations.

Fishing is not a major industry in Puerto Rico’s economy. The waters around Puerto Rico are too deep for good commercial fishing. Close to 6 million pounds (2.7 million kilograms) of fish and shellfish are caught annually. Much tuna, however, is brought in from distant waters for processing and export to the eastern United States. Sport fishing is a tourist attraction.

Puerto Rico has few mineral resources of commercial value. The most valuable mined products are Portland cement and stone. Foremost among those produced are construction materials such as stone, sand, lime and gravel.

The same laws and regulations apply to trade between Puerto Rico and the United States as to trade between the states of the United States. No customs duties are paid by Puerto Ricans on goods imported from the United States, as is done on imports from other countries.

Earlier, the most important exports in Puerto Rico were molasses, rum, and sugar. Among them, only rum is still exported in large quantities. Now, exports from Puerto Rico include clothing, computer and electronic products, food products, machinery, medical and scientific equipment, petroleum products, pharmaceuticals, and tobacco products. The island mainly imports chemicals, computers and electrical products, food products, petroleum products, and transportation equipment. There are ‘foreign trade zones’ in San Juan, Ponce, and Mayagüez, where owners can process, store, and reship their goods without paying customs duties.

Puerto Rico’s utilities provide electric, gas, and water service. Electric power is generated and sold by a public corporation and government agency created in 1941, the Puerto Rico Electric Power Authority. Power plants that burn petroleum produce almost all electric power.

Service industries account for the largest portion of the gross domestic product of Puerto Rico. There is a concentration of service industries in the metropolitan areas.

In terms of contribution to the GDP, finance, insurance, and real estate are the leading service industry group in Puerto Rico. The chief financial center is San Juan, which is home to hundreds of banks and other financial organizations.

Second in rank in terms of the gross domestic product are wholesale and retail trade. Of special importance is the wholesale trade of groceries, medicine, and motor vehicles and motor vehicle parts. The leading centers of wholesale trade are San Juan, Bayamon, and Ponce. The retail trade of this island is aided by tourist spending at hotels, restaurants, and shops.

Community, business, personal services (which include private health care and tourism) and government services provide employment for about half of all Puerto Ricans. Military activities and the operation of public schools and hospitals are included in the government services.

Paved roads link most parts of the island and constitute the primary transportation network. There are around 24,000 miles (38,600 kilometers) of surfaced roads in Puerto Rico, which provide good transportation by automobile, bus, and truck throughout the island. Buses provide service between the larger cities. Goods are transported by trucks. The only railways are narrow-gauge lines used to haul sugarcane to mills during the harvest season. There is, however, commuter railway known as the Tren Urbano (Urban Train) that connects San Juan to a number of suburbs. There are no navigable rivers. San Juan is the chief seaport and air terminal. The other main seaports are Ponce in the south and Mayagüez in the west. The largest airport is Luis Muñoz Marin International Airport in San Juan.