The economy of Puerto Rico, much like its history of the past 100 years, is closely tied to the economy of the United States. Duty-free access to the continental United States and a number of tax incentives has created an atmosphere that encourages investment in manufacturing and industry.
Although agriculture historically played an important part in the economy of Puerto Rico, it now accounts for only 1 percent of the gross domestic product and employs only 3 percent of the labor force. Ginger was historically harvested on the island, but sugar has been the most important agricultural crop. The spread of urban areas and the migration of labor to the United States, where wages and conditions are better, have hurt the sugarcane industry. Both coffee and tobacco are also important agricultural products produced in Puerto Rico. Additional resources produced in limited quantities in Puerto Rico are dairy products, vegetables, fruits, beef, and poultry.
Around the same time that Puerto Rico was granted the rights of internal self government in 1952, American companies began to take advantage of the tax incentives and duty-free access to the United States that were available by investing in the manufacturing and industry sectors on the island. This close link with the United States has generally favored the economy of Puerto Rico, as the strength of the U.S. economy has bolstered that of Puerto Rico's. Frequent injections of federal funding from the United States government helps to sustain the country's economy, despite cuts in budget assistance in the 1990s. Puerto Rico is still more attractive to U.S. companies for investment in pharmaceuticals and technology, though Mexico is now being used for light manufacturing. Textiles, pharmaceuticals, technologies, and petrochemicals are among the primary industries in the country.
The status of any Caribbean economy, even one as diversified as Puerto Rico's, cannot be discussed without mentioning tourism. While dips in the United States' economy affect both Puerto Rico's economy and tourism, international vacationers are an important resource for Puerto Rico. The tourism industry employs more than 60,000 workers, and an average of 4 million people visit the island each year, spending approximately $2 billion a year.
Even though Puerto Rico's economy is strong compared to many other Caribbean nations, there is still a significant problem with poverty and unemployment, and many residents attempt to find jobs in the United States that offer better working conditions.
Despite the problems, the diversification of the economy of Puerto Rico, coupled with investment and funding from the United States, has created an economically secure Caribbean nation that does not rely solely on tourism for financial prosperity.
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