Puerto Rico has to ‘resize economy’ on a small scale, plan for reduced population
Faced with the reality of an economy that has been reduced by 25% since 2006 and a population in continuous decline, Economist José Joaquín Villamil, from the Estudios Técnicos, Inc. firm, warned that the island’s risk profile “is very pronounced,” and urged planning for markets for the elderly, as well as taking advantage of new consumption patterns with technologies whose use has ramped-up in the wake of the COVID-19 pandemic.
“The future is not what it was. Puerto Rico’s economy has been ‘oversized’ and will have to ‘resize’ as a smaller economy and population,” said the economist during a virtual conference entitled “Planning for sustainable reconstruction,” before the Puerto Rican Planning Society.
Villamil stressed that, for decades, the Puerto Rican economy has been losing its ability to generate growth, which has been reflected in the Gross National Product that is now 25% smaller than in 2006.
To this is added a population that, as a result of emigration and fewer births, has decreased from 3.8 million in 2000 to 3.1 million this year. It is estimated that by 2025, the population in Puerto Rico will be reduced to 3 million, with fewer young people and an aging population that will impact all markets and services, particularly those of health, education, housing and the labor market, he said.
“It’s very likely that Puerto Rico will face a future in which a high proportion of the workforce will be permanently unemployed, if measures aren’t implemented to address this situation,” Villamil said.
“The problems of inequality, poverty and lack of social mobility will have to be recognized not only as social problems, but as obstacles to development,” the economist warned.
Faced with this harsh reality, planning to facilitate a new vision of Puerto Rico becomes urgent, he said.
“Today, landing federal funds has become the plan for the island,” said Villamil, to emphasize that other planning strategies are needed that include analysis and management of the global, economic, political, social and technological risks they face.
He noted that minimizing risks is vital as a development strategy.
“This suggests, economically, strengthening internal linkages and local capital,” he stressed.
“Planning should be located as the axis of a network of decisions in which the other actors are municipalities, government agencies, public corporations, nonprofit and community-based organizations and, of course, the private sector. Seeing it this way suggests that the role of planning is one of ‘connector,’ or integrator of that network that characterizes the decision-making process in a complex society,” said Villamil.
The economist told the planners during the virtual presentation that it is necessary to understand in depth the system being planned, which in Puerto Rico involves the aforementioned aspects of understanding the environment and incorporating the element of risk.
“The way things are planned depends on that knowledge,” Villamil said.
As for re-dimensioning Puerto Rico toward a smaller economy, he said it is necessary but that “smaller is not necessarily worse. Many small economies are successful examples of development.”