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Enough With The RhetoricPuerto Rico Needs Action
By ELISABETH ROMAN
December 30, 2004
Once more, Puerto Ricos economy reported a disappointing year. In 2004, real growth was about 2.5% in Puerto Rico, much lower than the economic performance in the mainland U.S., which reported a growth rate of 4%, and the 5.5% growth registered in Latin American & Caribbean countries.
You dont have to be an economist to grasp the implications of this situation. The economic gap between the U.S. mainland and the island just keeps getting wider. Puerto Rico continues to steadily fall behind. The islands per capita income compared to Mississippis, the poorest state in the nation, continues to widen.
Making Puerto Ricos situation more precarious is the fact that our neighbors from Latin America , although still behind, are closing the gap that exists with the island; growing twice as fast as Puerto Rico, which only grew between 2.2% and 2.5%, while our neighbors to the south and in the Caribbean grew by more than 5%. The oil-price hikes that surpassed $55 per barrel of crude affected most of the economies of the world, not just Puerto Rico, but they still managed to perform better economically than Puerto Rico. If you take into consideration the fact that 30% of our energy now comes from natural gas and coal, Puerto Rico has an advantage over some of our neighbors.
The islands economy continues to be highly dependent on the public sector. The participation rate in the labor force was under 50% and the average unemployment during 2004 remained high at over 10% throughout most of the year. This, in spite of the fact that employment in the commonwealth government increased, now employing 30% of the salaried employees in Puerto Rico.
The islands economy continued to be driven by public investment and government expenditures, as is always the case during election years. Yet, despite this, the quality of life in Puerto Rico didnt improve, with our streets becoming increasingly more violent every day and nearly 800 people murdered in 2004 alone, the highest number since 1996. No wonder Puerto Rico residents are moving in large numbers to the U.S. mainland, especially to Florida. To make matters worse, there is no confidence a highly politicized commonwealth government can adequately address Puerto Ricos economic and social ills.
The islands new government will have to revamp its economic model if our economy is going to catch up, even with the poorest states in the nation. This means Puerto Rico not only needs a tax reform, but a complete overhaul of its fiscal system, to alleviate the existing burden on taxpayers and local businesses, and maintain Puerto Ricos bond ratings. But tax reform wont be sufficient unless it is accompanied by a complete overhaul of the fiscal sidemeaning government spending and improvement in how public corporations are managed. And without a doubt, the level of Puerto Ricos government spending must come under control, as must the crime problem.
Four years into the 21st century, Puerto Rico remains at an economic crossroads, with the need to revamp its economic, social, and infrastructure model. Most economists agree that in order for Puerto Rico to achieve adequate growth levels, proactive and aggressive measures are necessary or the economy will continue to experience sluggish growth. Puerto Rico must become more competitive by improving its economic performance and the efficiency of government.
Puerto Rico doesnt need more political rhetoric from government officials and legislators or partisan battles. What we need is a complete revamping of the public sector, and if the commonwealth government isnt willing to do so, it is up to us, the taxpayers and the private sector, to demand they do so. Enough is enough!
This Caribbean Business article appears courtesy of Casiano Communications.