Puerto Rico at a crossroads: Seizing the ‘opportunity of a generation’
The Center for a New Economy urges industrial policy that modernizes the island’s economy through collaboration and innovation.
The Center for a New Economy (CNE) believes Puerto Rico is at a pivotal moment in its economic journey, facing a unique opportunity to rebuild and redefine its economy.
The Puerto Rico-based think tank describes this as “the opportunity of a generation” in a recent policy brief outlining a vision for a modern industrial policy to drive long-term economic growth.
“In the wake of a prolonged fiscal crisis, the aftermath of multiple natural disasters and the pandemic’s economic disruptions, Puerto Rico stands at a critical crossroads. We must chart a new course that balances sustainable growth with social well-being,” said Sergio M. Marxuach, CNE’s policy director.
CNE’s proposal regarding industrial policy emphasizes collaboration across public, private and academic sectors “to redefine Puerto Rico’s economic development” strategy. While reconstruction projects and efforts to restore domestic production capacity are underway, Marxuach explained that the “convergence of strategic economic, political and social factors creates a once-in-a-generation opportunity to modernize the Puerto Rico’s economy.”
Several factors support this outlook. The successful restructuring of Puerto Rico’s public debt under a certified plan of adjustment reduced the commonwealth’s debt by about 50%, providing a foundation for renewed fiscal stability.
Additionally, the Biden administration’s commitment to expediting $20 billion in hurricane recovery funds presents opportunities to upgrade critical infrastructure, including energy resilience, transportation and digital connectivity.
However, the CNE believes achieving sustainable growth requires more than reconstruction efforts. It advocates for a resilient, self-sustaining economic model that leverages Puerto Rico’s “remarkable local talent,” “strong entrepreneurial spirit” and “commitment to excellence.”
A global shift toward recognizing the role of the state in economic development, spurred by the COVID-19 pandemic, aligns with Puerto Rico’s need for innovative policies, the CNE said. Public-private collaboration, robust industrial strategies and smart investments are now widely accepted as essential for fostering long-term economic growth, it added.
Unlike traditional industrial policies focused solely on manufacturing, CNE envisions a broader approach. This includes high-tech agriculture, advanced services and specialized manufacturing. The organization argues that industrial policy should not just correct market failures but create new markets, foster innovation and promote inclusive growth.
The CNE cites the success of Ireland and Singapore as examples of how targeted investments and strategic internationalization can transform economies.
“By engaging all the key stakeholders in the process — the public sector, private businesses, employees, labor unions, nongovernmental organizations — Puerto Rico can unlock the full potential of its human capital, infrastructure and entrepreneurial spirit,” the brief stated.
While critics point to Puerto Rico’s limited political autonomy and resources, CNE counters that the island has historically negotiated investment agreements with multinational firms and allocated significant funds for economic development. The challenge lies in improving coordination, integrating foreign and domestic sectors and establishing mechanisms for knowledge transfer, the nonprofit stated.
“Now is the time to harness [Puerto Rico’s] strengths” and build a resilient economic future, the CNE concluded.
