Puerto Rico Economic Pulse ©

October 1999: The Contribution of International Banking to PR

Results since the law was amended in 1989

As time goes by, the international or offshore banking plays an important role in a country`s financial development. Puerto Rico is no exception and has hitched on to this bandwagon. But, how effective have IBEs been since the law was amended in 1989? The emergence of financial institutions that establish their operations outside their home country is supposed to help the host country attain more economic development. Has the opening of subsidiaries in Puerto Rico by offshore institutions generated more jobs? Are the jobs created more sophisticated, highly skilled, and technologically oriented? Find out what has been the contribution of these entities to PR.

Puerto Rico Economic Pulse ©

September 1999: Can Rising Interest Rates Put the Brakes on the Economic Expansion?

How Sensitive is the Puerto Rico Economy to Interest Rates?

A gyrating US stock market has made investors fearful of interest rate hikes. Is that panic justified in Puerto Rico? Financial market deregulation and innovation, along with the rising importance of globalization have changed the structure of Puerto Rico`s economy. Our empirical evidence suggests a reduction in the economy`s overall interest sensitivity. This reduction is not spread equally across all sectors of the economy, however compsumption and residential investment have become less interest sensitive, while net exports now fall rather than rise in response to an interest rate hike.

Puerto Rico Economic Pulse ©

August 1999: The Puerto Rican Miracle: How to Spend Beyond Your Means

An X-Ray of our consumption Patterns, causes and effects

By international standards, our share of consumption in GNP exceeds 93% of all countries in the world yet our income is barely a third of Mississippi`s per capita income. The consumer sector in Puerto Rico does not appear severely strained by low savings. Dramatic use and availability of credit is partly the explanation. Find out how the average consumer spends its income; why, despite a revolutionary health care reform, we are spending more on health and less on food. And, are we really spending less on education? In assessing whether the household sector has become overextended, debt balances provide some answers and worries as interest rates start to rise again.

Puerto Rico Economic Pulse ©

July 1999: Where will the new jobs come from?

Can Rising Interest Rates Put the Brakes on the Economic Expansion?

A low unemployment rate in Puerto Rico does not necessarily mean more jobs are being created. Discourage workers leave the labor force and this artificially reduces unemployment. By international comparisons, the island`s 78% share of services in employment surpasses Europe, Latin America (64%), and most country (29%). During the past twenty year, services have grown uninterruptedly. Services is the big winner and manufacturing is the big loser in jobs but not in wages. Brainpower is wanted with Professional and Managers experiencing the highest demand. Learn about the risks of Puerto Rico`s secret weapon to achieve economic development.

Puerto Rico Economic Pulse ©

June 1999: Is Puerto Rico Ready for Regional Competition?

The new economic model arises out of this need

It has become second nature to assume that Puerto Rico is essentially an integrated economic region of the United States. There are, however, some key sectors of the Puerto Rican economy that can be affected by other Caribbean economies in the region. Specifically, tourism and services represent two areas that must fight for a share of the regional markets. Furthermore, these are two of the strategic areas in the new model for PR. It is, then important to find out how Puerto Rico fares in the region. Newly integrated world and regional markets and the possibility of further Cuban competition only stress the need for Puerto Rican businesses to be prepared. Learn how PR is doing and what it can do to maintain its position in the region.

Puerto Rico Economic Pulse ©

May 1999: Venezuela: Lessons to be Learned

Short Course Of Dos and Don`ts For Puerto Rico

To understand Venezuela`s crisis, it is useful to examine the economic programs that preceded it. With oil prices riding high in the mid-seventies and eighties, both government and consumers spent more than their income. Find out how inefficient subsidies interfered with the free market; how prices soared; and why the people took to the streets and rioted. During 1998, economic growth was negative and income inequality worsened. For many retailers on the island, the collapse of oil rich Venezuela has not been good. What are the lessons of Venezuela`s crisis for Puerto Rico. Can the PR economy say that on average it is OK? Find out the answers in this issue.

Puerto Rico Economic Pulse ©

April 1999: The Economic Model of Puerto Rico after 50 Years

And ways to keep it running for another 50

Is the Puerto Rico economic model of the past fifty years dead? We used three measures to evaluate the performance of the model: growth in output, productivity, and job creation. The record in terms of growth and productivity is impressive but the fruits of economic growth have not been shared by those persistently unemployed. Times have changed and we are challenged with a new economic model based on tourism and services. Find out if these sectors can replace manufacturing as the engine of growth and high wages. Learn how PR can overcome the handicap of high wages on competitiveness in this fourth industrial revolution.

Puerto Rico Economic Pulse ©

March 1999: Why Puerto Rico’s economy surprised all of us in 1998

An overview of 1998 and forecasts for 1999 and 2000

The growth of the Puerto Rico economy in 1998 was higher than expected. Why? Partially, the impulse of the US economy echoed in PR, mainly through exports and record low interest rates that zapped construction. Find out how Viagra helped PR. Government contributed with a massive program of public works. Productivity posted significant gains, particularly in manufacturing. Tourism also thrived under the umbrella of government incentives. Our economy grows apart from the US. Is this a trend? With this landscape, our model forecasted a continuation of positive but lower growth for most sectors, coexisting with still high unemployment and inflation during 1999 and 2000. Y2K remains a risk factor.

Puerto Rico Economic Pulse ©

February 1999: Understanding the PR Budget for 2000

An easy-reading guide to a hard to read document

Great social reforms, mega projects for infrastructure, and a widening gap between recurrent revenues and expenses, but how will all this be paid for? An analysis of the complex $20b PR Budget for year 2000 provides some answers and raises many more questions. By focusing on the economic consequences of trends in revenues and expenses we provide the reader insights into the size of the budget; how we compare with other countries, how are we financing it; and how much is paid for by taxpayers, federal government, public debt. Find out whether in fact there is a balanced budget, not only in terms of revenues and expenses but indeed, in terms of economic priorities.

Puerto Rico Economic Pulse ©

January 1999: The Euro Challenge

What the new European currency means to the US dollar – and you

The power of Europe’s new single currency, the Euro, to transform global political and financial markets is not to be underestimated. Participating countries of the Economic and Monetary Union (EMU) account for 18.6% of world trade and produce 19.4% of world GDP. The Euro is expected to generate growth primarily within Europe but also spilling over to the rest of the world.  The Euro will challenge the US dollar supremacy as international reserve currency.  Will competition between Euro and dollar push interest rates and inflation in PR?  Find out how the Euro will impact Puerto Rico’s exports, prices, and interest rates.