An American in Puerto Rico

The economy of Puerto Rico is classified as a high-income economy by the World Bank and as the most competitive economy in Latin America by the World Economic Forum. The main drivers of Puerto Rico's economy are manufacturing, which primarily includes pharmaceuticals, textiles, petrochemicals, and electronics; followed by the service industry, notably finance, insurance, real estate, and tourism. Unlike other developing economies in the Caribbean region, Puerto Rico is classified as a high-income, mature economy. Consequently, economists note that its lower recent percentage growth rates do not reflect structural stagnation or a lack of competitiveness, but rather the market saturation and economic convergence typical of territories that have already achieved high levels of industrialization and per capita development. The geography of Puerto Rico and its political status are both determining factors of its economic prosperity, primarily due to its relatively small size as an island, its lack of natural resources used to produce raw materials, and, consequently, its dependence on imports; as well as its relationship with the United States federal government, which controls its foreign policies while exerting trading restrictions, particularly in its shipping industry. At the macroeconomic level, Puerto Rico has been experiencing an economic depression for 20 consecutive years, starting in 2006 after a series of negative cash flows and the expiration of section 936 that applied to Puerto Rico of the U.S. Internal Revenue Code. This section was critical for the economy of the island as it established tax exemptions for U.S. corporations that settled in Puerto Rico and allowed its subsidiaries operating in the island to send their earnings to the parent corporation at any time, without needing to pay federal tax on corporate income. Puerto Rico has, however, been able to maintain a relatively low inflation rate in the past decade. Economists argue that most of Puerto Rico's economic woes stem from federal regulations that expired, have been repealed, or no longer apply to Puerto Rico; from its inability to become self-sufficient and self-sustainable throughout history; from its highly politicized public policy which tends to change whenever a political party gains power; as well as from its highly inefficient local government which has accrued a public debt equal to 66% of its gross domestic product over time. Despite these issues, the economy continues to gradually grow. In comparison to the different states of the United States, Puerto Rico is poorer than Mississippi, the poorest state of the United States, with 45% of its population living below the poverty line. However, when compared to Latin America, Puerto Rico has the highest GDP per capita in the region. Proponents argue it is necessary for Puerto Rico to reach restructuring deals with creditors to avoid a bankruptcy-like process under PROMESA. In 2022 the PROMESA law cut Puerto Rico’s pu