Puerto Rico - FEDERAL RESERVE BANK of NEW YORK

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Highlights

At the Federal Reserve Bank of New York (popularly known as the New York Fed), we are proud that Puerto Rico is part of the Second District, which we represent in the Federal Reserve System. We are deeply committed to the people of the Island and to its growth and prosperity. Our commitment is reflected in the ongoing work of our Outreach and Education teams with partners on the Island and in the research by our economists, who monitor and analyze local economic conditions. This analysis—along with similar analysis from other regions across our nation—feeds into the decisions the Federal Reserve makes on monetary policy and regulation of the financial system. READ MORE »

EXECUTIVE SUMMARY

The term competitiveness refers to productive efficiency, or getting the most output from available resources. Puerto Rico has a number of features that make it a strong and potentially highly competitive economy: Literacy rates and educational attainment continue to improve, the labor force is largely bilingual, the economy is open with a favorable location, and close ties to the U.S. mainland economy provide many advantages. However, Puerto Rico’s economic progress has stalled: the Island has been operating below its potential for some time and the competitiveness of the economy continues to deteriorate. The underutilization of labor resources, evidenced by persistently high unemployment and strikingly low labor force participation rates, provides the clearest evidence of a lack of competitiveness. READ MORE »

CHALLENGES AND RECOMMENDATIONS

The challenge to policymakers is to marshal the Island’s considerable strengths to raise living standards and restore growth. In this report, we identify five factors that in our view pose significant competitive challenges to the Island: READ MORE »
CHALLENGES		Improving Labor Market Opportunities Developing Human Capital Reducing the Costs of Doing Business Mobilizing Finance for Business Development and Growth Lowering Dependence on a Shrinking Industry

Puerto Rico has made noteworthy efforts in recent years to address different aspects of these complex and interrelated challenges. But more can be done. We present five policy recommendations. Several reflect themes that have been actively discussed and debated—and in a few cases, already addressed—on the Island. READ MORE »
RECOMMENDATIONS		Reduce Barriers to Job Creation and Labor Force Participation Reform the Energy Industry Lower the Costs of Doing Business Foster Partnerships between Industry and Higher Education Promote Independent Policy Evaluation

Speeches

Dudley: The Competitiveness of Puerto Rico's Economy: Reducing the Cost of Doing Business and Improving Labor Market Opportunities

McAndrews: Summary of the Report on the Competitiveness of Puerto Rico's Economy

KEY DATA POINTS

AUTHORS

This report was prepared by the project team of Jaison Abel, Jason Bram, Richard Deitz, Thomas Klitgaard, and James Orr of the Research and Statistics Group of the Federal Reserve Bank of New York; Katherine Bradley and Tricia Kissinger of the Bank’s Emerging Markets and International Affairs Group; and Rae Rosen and Javier Silva of the Bank’s Communications Group; Christian Jauregui provided excellent research assistance, and Jeanette Donato provided excellent administrative assistance.

Address correspondence to Jason Bram or Andy Haughwout.

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