Puerto Rico Compass ©

2Q-2017 Will Manufacturing Save Puerto Rico?

An analysis of 2nd Quarter 2017 economic indices

Historically, manufacturing was a growth engine in Puerto Rico. Manufacturing’s relevance started with operation Bootstrap and the implementation of Section 931 of the US Internal Revenue Code in the 50s and continued with the implementation of Section 936 in the 70s. Thus, the contribution of manufacturing to the nominal GDP growth grew from 25% in the 50s to 61% in the ‘00s. However, due to the end of Section 936 in 2006, international competition, the end of several drug patents, and the PR fiscal and debt crises, the contribution of manufacturing to the Island’s economic growth fell from 61% in the ‘00s to 46% this decade (2010-2016). Is this sustainable? Worldwide, manufacturing paints a gloomy picture. Although responsible for 8% of total jobs, manufacturing was responsible for 47% of PR’s GDP in 2016. This issue examines the performance of 2Q-2017 indices with emphasis on manufacturing.