|Puerto Rico Economy|
The island of Puerto Rico in the Caribbean Sea is an unincorporated territory of the United States of America. Puerto Rico is situated between the Dominican Republic and the British Virgin Islands, with the US Virgin Islands to the south-east. The country is quite large, covering an area of around 3,500 square miles and has a population of approximately 3.8 million people. Unlike many other Caribbean territories, Puerto Rico uses the US Dollar as its currency, as opposed to the East Caribbean Dollar. The Puerto Rico economy is said to be one of the most diverse to be found in the Caribbean area of the world.
Early History of Puerto Rico Economy
Like so many other Caribbean territories and nations, Puerto Rico's economic history pertains heavily to the production and manufacture of sugar cane. Whereas many other islands suffered a decline in sugar cane production as early as the 19th century, the success of this industry carried on in Puerto Rico right up until the 1940s. From this time onwards, Puerto Rico has enjoyed the benefits of other areas of industry through agreements put in place due to being a Commonwealth of the United States.
One of the biggest contributors to the Puerto Rico economy is trade and commerce. The island's location and many port cities make it an ideal point for trade to pass through from routes including the Americas, Europe and on to the Panama Canal.
Trade Gives Puerto Rico Economy a Boost
Since the 1950s, finance, trade and manufacturing industries have taken off on the island and in particular the commonwealth has a substantive import and export partnership with the United States (as much as 90% of the exports from Puerto Rico are destined for the U.S.A.). The North American Free Trade Agreement (NAFTA) which came into effect in 1994, also means that the island enjoys great trade links with Canada and Mexico. Trade is such a large part of the Puerto Rico economy and is kept steady thanks to the fact that most of the island's dealings are with the United States itself.
Many U.S. based companies have also chosen to base their business on the island. This is to primarily take advantage of the tax incentives and the duty-free importation status that the island provides. As a result, the services sector is the largest employment provider on the island with as much as 77% of the 1.6 million workforce having jobs in this niche.
Tourism & Hotels
As well as a strong foothold on trade and commerce, the Puerto Rico economy also benefits from the tourism sector. It is estimated that around 3.5 million people visit the island per year with the majority of travellers coming from America. With so many port cities on the island, this figure also includes those coming for day trips and those on cruise ships. The stability of this sector has meant that the construction industry in particular has benefited with many new hotels and the development of the impressive Puerto Rico Convention Center which opened in 2005.
As you can see, the days of relying heavily on the economic rewards of sugar cane are well behind the commonwealth of Puerto Rico. The island, it is fair to say, does have a diverse economy but is actually also quite dependent on aid from the United States of America. Yet, the future looks bright for the Puerto Rico economy, with the government taking an interest in trying to find ways of reducing the island's debt and to increase its strong industry sectors in the years to come.