Puerto Rico is Latin American in some respects. Spanish is the Island’s official language, Puerto Ricans are a very influential Hispanic group in New York and Florida. What share of Puerto Ricans now live in the U.S.? Many born in Puerto Rico consider themselves immigrants, though technically they are not. However, Puerto Rico remains a territory of the Unites States. It is not a country as defined by the UN or Bretton Woods organization (any more than New York is county). Recently Puerto Ricans voted to become the 51st state, 93% voted in favor of this idea, but only 23% of the population voted (perhaps because it was an unofficial referendum). During the 1960s and 1970s there was an active political movement for Puerto Rican Independence (President Obama pardoned one of its leaders leading to controversy at the most recent Puerto Rican day parade). This may be the reason several agencies publish data on Puerto Rico (see the WB Doing Business indicators for example). More recently however it seems but breakaway sentiment has ebbed. Like Greece however, Puerto Rico has a large debt and like Ecuador, El Salvador and Panama it does not have its own currency. Some tax and labor market policies are local, PR has its own minimum wage for example (what is it? under $7/hour if I recall). The major difference between Puerto Rico and most LatAm countries are that workers are free to migrate to the United States. At 29% of mainland income per person, in 1960 Puerto Rico’s income per person was about the same as Mexico (31% of U.S. levels) and Chile (27%), see Figure Pr-5 below
Puerto Rico News: Puerto Rico Opens Arms to Refugees From Irma’s Caribbean Chaos
Puerto Rico data
Abel, J., J. Bram, R. Deitz, T. Klitgaard, and J. Orr (2012) “Report on the competitiveness of Puerto Rico’s economy.” New York City, NY: US Federal Reserve Bank of New York.
US Multinationals in Puerto Rico and the Repeal of Section 936 Tax Exemption for U.S. Corporations http://www.nber.org/papers/w23681?sy=681
Zadia M. Feliciano, Andrew Green NBER Working Paper No. 23681 Issued in August 2017 NBER Program(s): ITI
Puerto Rico, the Commonwealth Island and unincorporated territory of the United States, was placed under a fiscal Oversight Board by the U.S. Congress in 2016. Unable to pay $72 billion it owes to bond holders, Puerto Rico’s Government and the Oversight Board filed for court proceedings under Title III of the Puerto Rico Oversight, Management and Economic Stability Act, similar to Chapter 9 of the US Bankruptcy code. The origins of the crisis in Puerto Rico have been attributed in part to the phase out of the IRS Section 936 tax exemption program for U.S. corporations from 1995 to 2005 and its elimination in January 2006. Using industry panel data, compiled from the IRS Statistics of Income for U.S. Possessions Corporations, the U.S. Economic Census for Outlying Areas, and the mainland U.S. Economic Census, we analyze the effects of the phase out and elimination of Section 936 on the number of establishments, value added, employment, and wages in Puerto Rico’s manufacturing. Our results show the elimination of Section 936 had the effect of decreasing average manufacturing wages by 16.7%, and decreasing the number of manufacturing establishments by 18.7% to 28.0%
Despacito has 3.7 billion views, compared to just 2.9B for Gangnam Style, this is very symbolic as Korea and other Asian countries have left overtaken LatAm countries (and Puerto Rico) economically (Figure PR-6). Recall the argument of A&L, 2017 regarding why Latin America “unilaterally” liberalized in the 1980s (fortunately PR is prevented from blocking trade by the constitution, unfortunately it got stuck with the Jones Act, which raises the price of almost everything on the Island).