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In the early 1900's the greatest contributor to Puerto Rico's economy was agriculture, its main crop being sugar. In the late 1940's a series of projects code named Operation Bootstrap encouraged, using tax exemptions, the establishment of factories. Thus manufacturing replaced agriculture as the main industry. The economic conditions in Puerto Rico have improved dramatically since the Great Depression due to external investment in capital-intensive industry such as petrochemicals, pharmaceuticals, and technology. Once the beneficiary of special tax treatment from the U.S. government, today local industries must compete with those in more economically depressed parts of the world where wages are not subject to U.S. minimum wage legislation. In recent years, some U.S. and foreign owned factories have moved to lower wage countries in Latin America and Asia. Puerto Rico is subject to U.S. trade laws and restrictions. Tourism is an important component of the Puerto Rican economy supplying an approximate $1.8 billion. In 1999, an estimated 5 million tourists visited the island, most from the United States. Nearly a third of these are cruise ship passengers. A steady increase in hotel registrations, which has been observed since 1998, and the construction of new hotels and new tourism projects, such as the Puerto Rico Convention Center, are indicators of the current strength of the tourism industry. Puerto Ricans had a per capita Gross Domestic Product (GDP) estimate of $17,700 for 2004, which demonstrates a growth over the $14,412 level measured in the 2002 Current Population Survey by the Puerto Rican Legal Defense and Education Fund. In that survey, Puerto Ricans have a 48.2% poverty rate. By comparison, the poorest State of the Union, Mississippi, had a median level of $21,587, according to the U.S. Census Bureau’s Current Population Survey, 2002 to 2004 Annual Social and Economic Supplements. Since 1952, the gap between Puerto Rico's per capita income and U.S. national levels has essentially remained unchanged — one third the U.S. national average and roughly half that of the poorest state. On May 1, 2006, the Puerto Rican government faced significant shortages in cash flows, which forced the closure of the local Department of Education and 42 other government agencies. All 1,536 public schools closed, and 95,762 people were furloughed in the first-ever partial shutdown of the government in the island's history. On May 10, 2006, the budget crisis was resolved with a new tax reform agreement by the Presidents of both legislative bodies and the Governor, with plans to apply a temporary 1% tax input so that all government employees could return to work. |
Puerto Rico Information: Inside
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