Friday, June 01, 2007

Puerto Rico, Part II of III

In my previous comment about Puerto Rico I forgot to mention the business side of things (I was so mesmerised by the natural and architectural beauty of the island that I forgot about everything else).

It's another example of a small territory in a region (Caribbean) that managed to recreate itself and achieve great results (compare with similar stories I already posted about Dubai (Middle East) and Mauritius (Africa)) Puerto Rico was poor, devastated by hunger, unemployment and hurricanes in late 1930s. In the forties the government of PR realised that they could not any more rely on agriculture for the growth of the economy and in 1942 established Puerto Rican Industrial Development Corporation. They placed their bet on 3 main areas: rum, industry and tourism - and won.

To cut a long story short, though since 1940s Puerto Rico had some ups and downs, eventually great results were achieved. It was a smart move to finally realise that fight with poverty was more important than fight for independence from the U.S. and Puerto Ricans managed to capitalize on all the benefits the tie with the U.S. offered, especially the Section 936 of Internal Revenue code that for some time exempted manufactures from having to pay federal income tax on profits earned by their subsidiaries located in Puerto Rico. And though this clause was later abolished thanks to it more than 2000 factories operate now on the island. Pharmaceutical industry accounts for 1/4 of gross domestic product and I already mentioned the famous Bacardi factory in my previous post. Tourism industry is booming too: more than 700 cruise ships come to the port of San Juan every year.

Though Puerto Rican per capita income is less than anywhere in USA it tops most of the Caribbean islands and it is higher than anywhere in Latin America. Actually, Puerto Rico has one of the highest standards of living in the Caribbean.

Once again I cannot fail to mention how fascinated I am with such stories of success, the stories of how small countries can make big changes.

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