Puerto Rico’s economy has been in continuous decline for over a decade. The government’s bankruptcy and lack of market access, coupled with the increasing absence of credibility and trust in our rule of law and democratic institutions, have caused an economic free fall that has only been offset by federal assistance for disaster relief and COVID-19.
While delaying a total economic breakdown, the federal funds have inadvertently created a safety net that allows politicians to promote an agenda lacking in necessary action to jumpstart growth and free enterprise.
So, how can we bounce back? How can we propel individual entrepreneurship and prosperity in Puerto Rico?
At the Center for Economic Renewal, Excellence and Growth (CRECE, for its Spanish acronym) we believe one answer to these questions is to unleash economic freedom. This “fundamental right of every human to control his or her own labor and property” (The Heritage Foundation) can determine an entrepreneur’s capacity to open a business, make it profitable, create jobs, and expand it through open markets.
People in societies with greater economic freedom enjoy higher per capita income, cleaner environments, higher levels of education and added food security.
CRECE recently published its third edition of the Puerto Rico Economic Freedom Index (PREFI), an independent analysis that uses methodology of The Heritage Foundation’s Economic Freedom Index annual report.
The PREFI focuses on key areas of the economy, including rule of law, government size, regulatory efficiency, and open markets.
In the latest PREFI, Puerto Rico scored 64.4, ranking 69 out of 180 countries. Although Puerto Rico has a moderately free economy, which is comparable to Mexico (64.7) and Turkey (64.6), within the Latin American and Caribbean region, it lags behind Colombia, Panama, Costa Rica, and Barbados. Compared to other U.S. cities, Puerto Rico ranks 57 of 66, with an index of 70.1. Cities like Orlando, Bridgeport, Atlanta, and Oklahoma City perform better than Puerto Rico.
As we face a 10-year economic downturn and a bankrupt government, we must strive for free enterprise and an economic climate that leads to sustainable economic growth. The PREFI provides a roadmap that identifies specific areas that require attention.
It can be used to design economic policy aimed at spurring growth by (1) enforcing the rule of law, (2) implementing transparent and efficient processes, (3) restoring the government’s fiscal health, and (4) eliminating barriers to growth.
Government administrators should aim to build a vibrant and agile economy where it does not take six months to register a new property, complete 22 procedures and wait 165 days to get a construction permit, or be burdened with a regressive inventory tax that directly limits consumer access and choices.
Download a free copy of the PREFI study at HERE. To support CRECE’s mission to cultivate pro-market solutions that foster self-reliance and growth, and learn about our initiatives, send an email. CRECE is a 501c3, non-profit organization. At the state level, donations made to CRECE may qualify for tax incentives, per Law 302 of 2012.
[EDITOR’S NOTE: This opinion piece is sponsored by the Center for Economic Renewal, Excellence and Growth (CRECE, for its Spanish acronym).]