The Economy

To oversimplify the 500-year development of the Puerto Rican economy, it has gone from sugar to rum, from rum to women's underwear and from women's underwear to Valium. Sounds like fun! But although Puerto Rico has become one of the best economies in the Caribbean, and things are still improving, it remains economically worse off than the poorest US state, Mississippi. Agriculture dominated the local livelihood from the time Spanish settlers failed to find gold until the Depression this century. A bright spot centered around the rum industry, which helped build the southern city of Ponce. During the 1930s, the Puerto Rican government invested heavily in further promoting rum trade, and the island quickly became the world's largest producer of the spirit. Today, 77% of rum sold in the United States comes from Puerto Rico.

In the 1940s, the government developed an economic plan called Operation Bootstrap - an attempt to join the industrial revolution by luring manufacturing capital with tax incentives and duty-free access to the US market. Off-island (mostly US) companies built plants to manufacture clothing, tobacco, processed food and leather, shifting jobs away from sugar plantations and coffee fincas (plantations). Today, Puerto Rico imports more than two-thirds of its food. Agriculture has shrunk to 1% of the Gross Domestic Product and - although the focus has shifted - manufacturing of items such as canned tuna and lingerie still plays a large part in the economy. More recently, as wages have begun to catch up to industrialized standards, the government has sought to bring to Puerto Rico more capital-intensive industries, such as high-tech and pharmaceuticals (again with tax incentives approved by the US Congress). Hewlett-Packard, for example, now operates a massive facility in Aguadilla. The Roche Products plant in Manatí produces the entire US supply of Valium, as well as Librium and other tranquilizers. In fact, local manufacturing is so strongly linked to the US market that about 90% of Puerto Rican exports are sent north to the States.

DID YOU KNOW! Although Puerto Rico's minimum wage is tied to that of the United States, average incomes are well below US averages. The average hourly wage in 1999 was $8.08, with a Gross Domestic Product per capita of $9,800. Unemployment dipped to about 10% in 1999 - the lowest level in years. However, to stay above the poverty line, roughly half of Puerto Ricans receive food stamps, according to recent figures.

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