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Puerto Rico has one of the most dynamic economies in the Caribbean region. Plantation sugar production dominated Puerto Rico's economy until the 1940s. Industry has surpassed agriculture as the primary sector of economic activity and income. Encouraged by duty free access to the U.S. and by tax incentives, U.S. firms have invested heavily in Puerto Rico since the 1950s (U.S. minimum wage laws apply). As a result, Puerto Rico's export and import has prospered, nearly doubled between fiscal years 1987 and 1997. Recently the economy has suffered budget cuts from U.S. The Puerto
Rican economy has depended heavily on the tax incentives given to
U.S. mainland companies and on federal transfers. In 1993, President
Clinton aimed to cut the Section 936
On the other hand, the agreement between the U.S., Canada and Mexico for the North American Free Trade Agreement (NAFTA) also has implications for Puerto Rico because of competition for jobs and investment. Although wage levels are lower in Mexico, Section 30A gives companies in Puerto Rico an advantage in pharmaceuticals and hi-tech industries. In low-skill labor-intensive manufacturing, such as clothing and footwear, Mexico has the advantage. Puerto Rico currently employs 30,000 in the clothing industry. By some economists Puerto Rico's economy is considered somewhat fictitious. Puerto Rico has very few natural resources of economic value and its economy relies mainly on Federal Aid from the United States Government, which depends on the industrialization programs and the tax incentives that U.S. offers. Economists believe that reinstating IRS Section 936 or making IRS Section 30A permanent for U.S. firms operating in Puerto Rico is not the best way to stimulate sustainable development on the island. Important industries include pharmaceuticals, electronics, textiles, petrochemicals, processed foods, clothing and textiles. Sugar production has lost out to dairy production and other livestock products as the main source of income in the agricultural sector. The principal livestock are cattle, pigs and poultry. Tourism has traditionally been an important source of income for the island, with estimated arrivals of nearly 3.9 million tourists in 1993, and a 7% of the Island's GNP, the tourism industry employees over 60,000 people. The main government expenditures are on health, education and welfare. Duties on imports from countries outside the U.S. tariff wall are collected at Puerto Rico's borders but sent to the Puerto Rico Treasury, not the U.S. Treasury. Currency: United States dollar (US$) Coins: 1, 5, 10, 25 (cents) 1 (dollar) Bills: $1, $2, $5, $10, $20, $50, $100, $500, $1,000, $5,000, and $10,000. On July 14, 1969, the Treasury Department and the Federal Reserve Board announced that they would immediately stop distributing currency in denominations of $500, $1,000, $5,000 and $10,000. Production of these denominations stopped during World War II. Their main purpose was for bank transfer payments. Note that the US dollar is often referred by locals as "peso". Trade Partners: U.S. Gross National Income (GNI per capita) (formerly GNP per capita):
$53.4 billion; per capita: $13,675.1 (2006)
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![[Glos.]](images/glos.gif)
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Gross Domestic Product (GDP) - purchasing power parity - $75.82 billion (2006 est.) GDP per capita: purchasing power parity - $19,300 (2006 est.) Puerto Rican workers are covered by the U.S. Federal Fair Labor Standards Act (FLSA) are subject only to the Federal minimum wage ($5.15) and all applicable regulations. Workers not covered by the FLSA will be subject to a minimum wage that is at least 70 percent of the Federal minimum wage or the applicable mandatory decree rate, whichever is higher. Labor costs are below the mainland average, but are higher than in other areas of the Caribbean Basin. Basic Minimum Rate (per hour): $3.61 to $5.15. Gross Domestic Product: real growth rate - 2.0% (2006)
Average Hourly Wage: $8.08/hour, well below the U.S. average. Population Below Poverty Level: 44.6% (2000)
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Taxes: All inbound shipments to Puerto Rico are subject to a local excise tax. Merchandise and/or articles arriving from the U.S. that will be sold, consumed, given away, and/or remain in Puerto Rico are subject to a 6.6% Puerto Rico excise tax that is calculated from the commercial invoice value. This is payable upon entry to Puerto Rico. Puerto Rico has it own tax system. Although it is modeled after the U.S. system, there are differences in law and tax rates. The Puerto Rico tax system is based on self-assessment. Taxes are paid to the state. In addition, a premium is paid to the Social Security. Individual taxpayers are required to file an annual income tax return when minimum-income thresholds are met. They report taxable income and deductions, compare their final tax liability to any income tax withheld or estimated tax paid, and determine any balance due or overpayment of tax due from the Treasury. For information about the filing taxes in Puerto Rico contact the Bureau of Income Tax at the following address:
To obtain tax forms, contact the Forms and Publications Division Office at the above address or call (787) 721-2020, extensions 2643, 2645, or 2646 or visit the Internal Revenue Service web site. These forms are also available online along with the other tax forms, instruction booklets, etc. To obtain these forms visit the Departmento de Hacienda web site. Finance: Stock Market: Labor Force: 1.4 million (2005) |
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Construction Growth: 15% (1997 est.) Organized Labor: Unemployment Rate: 11.8% (2005) |
Exports: $59,218 billion (2006) Merchandise Imports and Exports: 1980 to 2006 Export Commodities: chemicals, electronics, apparel, canned tuna, rum, beverage concentrates, medical equipment |
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Export Partners: US 90.3%, UK 1.6%, Netherlands 1.4%, Dominican Republic 1.4% (2002 est.) Export Destinations: (1999)
Values expressed in thousands of dollars. Imports: $42,462 (2006) Merchandise Imports and Exports: 1980 to 2006 Imports Commodities: chemicals, machinery and equipment, clothing, food, fish, petroleum products Imports Partners: US 55.0%, Ireland 23.7%, Japan 5.4% (2002 est.) External Debt: $NA Public Debt: U.S.$15,993,600,000. (outstanding; 1995) Industries: |
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Manufacturing: Manufacturing Average Hourly Earning: $7.85 Manufacturing Average Weekly Earning: $310.86 Percentage of Manufacturing Employment by Industry Group:
Electricity Costs:
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Industrial Production Growth Rate: 5% (1994) Tourism: Agriculture: Today, agriculture accounts for only 3% of labor force and less than 1% of GDP, concentrating primarily to crops which can be sold in the United States. Coffee is the most valuable crop, followed by vegetables, sugar cane, fruits (pineapples, plantains, bananas), milk, eggs, and livestock (cattle, chickens, pork). Economic Aid: none Economic Development:
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Until 1955, agriculture constituted Puerto Rico's main economic sector.
Sugar cane, mostly for export to the American market, was the main crop,
followed by coffee and tobacco. Sugar cane production declined as prices
remained low, agricultural labor migrated to the United States, and urban
expansion took over much sugar cane land. Coffee production, taking place
mostly in the mountainous areas away from the pressures of urban expansion
and supported by guaranteed minimum prices, has remained stable. Tobacco
production has virtually disappeared. Considerable expansion has occurred
in the production of dairy products, beef, pork, eggs, and poultry,
although significant amounts of these products are still imported,
primarily from the United States. There is also production of fruits and
garden vegetables as well as of starchy vegetables, such as bananas and
plantains.
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