Jumpstarting Puerto Rico's Economy

A joint project between The Center for the New Economy in San Juan and The Brookings Institution in Washington recently  released a study on the Island's  economy.  Under the title The Economy of Puerto Rico: Restoring Growth, the publishers claim that it is "[t]he most exhaustive study of the Puerto Rican economy done in the past 75 years. . . . " 

According to the Brookings Institution:

Restoring Growth in Puerto Rico examines the island's economy and presents policy options for sustainable growth. A number of overlapping issues are at the heart of Puerto Rico's economic difficulties: labor supply and demand, entrepreneurship, the fiscal situation, financial markets, and trade. Here, economists from Puerto Rico and the United States propose a set of policy recommendations to increase employment, encourage private sector development, improve education, upgrade infrastructure, and fix governmental finances.

The study reveals many  troubling facts about our current economic situation:

• Our current living standards have  fallen back.  They are farther away from the U.S.  than 30 years ago.
• Official statistics overstate local production of goods and services  by 20% .
• Less than 1/4 of all able workers are employed in the private industry; the rest are government workers, employed by government subsidized companies or unemployed.
  
• Government handouts undermine the incentive to work (we knew that!).
  
• U.S. tax policy has hurt Puerto Rico by providing U.S. Corporations  investment incentives without linking them to local  jobs.
• Labor productivity here is 2/3 of the U.S. level.
• Per capita income is 1/3 of the  U.S.
• Puerto Rico males have a exceptionally low involvement in the labor market.
  
• Females are taking over- in 2002-03 only 39% of college students were males.
• Minimum wage laws discourage hiring of less skilled workers
• Puerto Rico's Tax Code is filled with breaks for special interests at the expense of the rest.
• Puerto Rico's regulatory environment  and permitting process retards progress and blocks private investment and growth.