Puerto Rico, Puerto Pobre: The Island’s Economic Decline

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By: Luis Gallardo Rivera

Puerto Rico is at a standstill. Está estanca’o. And it seems to have been that way since the 1970s, when the impressive growth and social mobility of an Industrial Revolution reached its maximum capacity and ground to a halt. Abundant welfare dollars, food stamps and federal aid have been able to keep the island afloat for a while, but these are either waning or cannot keep up with the growth of Puerto Rico’s rampant poverty.

It was not but a decade ago that one would commonly hear people speak negatively of las repúblicas, where things were supposed to be much worse than in Puerto Rico. Las repúblicas were almost mysterious places where barbarian Latin Americans killed each other in civil wars and fell to the dictatorial prowess of military coupsters. Millions of immigrants from all over the Caribbean and Latin America risked their lives to make it up north and live in prosperity, even if said wars and coups were integral parts of U.S. foreign policy.

Ironically, Puerto Rico is now trailing Latin America in many areas. While Puerto Rico has been struggling with a recession that pre-dates that of the U.S., countries that were recently considered poor houses are now experiencing exponential growth and social advancements. In recent years las repúblicas have bound together to create the Community of Latin American and Caribbean States (CELAC) and have begun laying the foundations for a common currency and free movement within CELAC borders. Even the smaller Caribbean nations – with their higher debt and fewer resources – have obtained discounted oil prices and preferential trade agreements with their continental counterparts.

puertorico-puertopobreThe end of the Cold War has stripped Puerto Rico of its poster boy status as a successful example of U.S. efforts in the region. And while Fidel Castro was the boogieman for the previous generation, the evil manifestation of repúblicas until recently was Hugo Chávez, who just seemed to keep winning internationally accredited democratic elections and whose country also experienced ridiculously rapid growth. Scruffy guerrillas and starving campesinos are no longer the image of Latin America. It is the Mexican businessmen that just purchased Puerto Rico’s International Airport.

The Latin American economy is poised to grow 4.5 percent in 2013. Meanwhile in Puerto Rico, official statistics report that the local economy grew only 0.4 percent during the 2011-2012 fiscal year with projections of a measly 0.6 percent for 2012-2013. Puerto Rican exports fell 13.7 percent in 2012, while Latin America exports are scheduled to grow by 4.6 percent in 2013. Puerto Rico has also been surpassed by many of it neighbors in the areas of tourism, education and health. Latin America and the Caribbean have left Puerto Rico in the dust as the region continues to consolidate its economic and political power.

Interestingly enough, Puerto Rico resembles Latin America during much of the 1980s and 1990s when repúblicas accumulated debt faster than they could pay it off. Presidents enacted neoliberal austerity measures designed by international lenders like the IMF and World Bank and social conflict and inequalities reached their tipping point. Puerto Rico, for example, now has a near-insolvent public debt of $68.4 billion, an increase of $10.9 billion in four years despite the neoliberal policies of the previous administration. The Puerto Rican government in recent years has also swiftly eliminated utility subsidies, slashed the public workforce by 30,000 employees and privatized billions of dollars of public assets and responsibilities. Inequality in Puerto Rico has increased and even returned to its pre-Commonwealth numbers. Sadly, Puerto Rico’s 2011 drug trade-fueled murder rate was comparable to that of Tijuana and civil war-torn Colombia, dwarfing that of traditionally notorious república cities such as São Paulo and Mexico City.

Latin America’s response to such a situation was not pretty and was characterized by protests, riots and the collapse of various governments. Ultimately, the region overcame two straight decades of economic and social conflict. Puerto Rico is not that far from reaching a similar crossroad, though there is one particular variable that could obstruct the island from taking what seems to be its natural path: Puerto Rico’s status as a U.S. colony.


Luis Gallardo Rivera holds a M.A in public administration and is a legislator for the Municipality of Aguas Buenas in Puerto Rico. He is also a member of the Board of Directors for the Association of Municipal Legislators of Puerto Rico and teaches courses in public administration for the University of Phoenix.

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