Volume IX – Number 2
Diane L. Chesnutis
Abstract: This article traces Puerto Rico’s economic development from 1950-1974, with a focus on the various factors which contributed to its success. A critical factor to Puerto Rico’s economic success is its Commonwealth status with the US. Because it is exempt from federal taxes, it has an advantage in attracting industry. Investors are eager to tap into the Caribbean market, tax-free, and gain access to the unemployed and unskilled Puerto Rican workforce. The US federal government also handles all of Puerto Rico’s foreign affairs, including defense, which frees up government funding for education and entitlement programs, further bolstering the Commonwealth’s workforce. Puerto Rico’s economic success can also be attributed to the election of the Munoz-Marin government in the 1940’s, which stressed a mixed economic system encompassing elements of both capitalism and socialism. Furthermore, in the 1950s the mass emigration of Puerto Ricans to the mainland US benefited the Commonwealth’s economy, as it reduced competition for employment among those who stayed and reduced the state’s economic burden caused by funding social programs. In 1955, the government’s decision to emphasize industry rather than agriculture, due to lack of arable land and a large population, proved to be a turning point in Puerto Rico’s economic history. It was initially positive as it motivated further foreign investment, especially in the tourism and rum industry. However, by the 1960s and 1970s, the government felt the negative consequences of neglecting agriculture, notably in the sugar, coffee, and tobacco industries. Nevertheless, aside from the decline of the agricultural sector, Puerto Rico has made notable economic gains since 1950. If Puerto Rico maintains its Commonwealth status and its creative approach to development, continued economic progress is expected.
Key Words: Puerto Rico, Economic Development, Caribbean, Commonwealth, Industry, Agriculture
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