We have plenty of reasons to believe that statehood will be good for Puerto Rico’s economy. Once the chaotic territorial relationship has ended and Puerto Rico is able to get into the game with the other 50 states, Puerto Rico can expect to see the same kind of jump in tourism, investment, and trade that other territories saw when they became states.
But what does Puerto Rico bring to the table for the United States?
In 2016, Puerto Rico paid $3.6 billion in taxes to the federal government. This is more than some current states. In 2010, Puerto Rico was 19th among states and territories in net federal expenditures in 2010. Net federal expenditures means that the amount the federal government spent on the territory was subtracted from the amount the territory paid in to the federal government. Puerto Rico was in the top half of states and territories — the federal government made a profit. We don’t have more current figures, and it is certainly possible that Puerto Rico has been less profitable for the U.S. government in tough recent years, but Puerto Rico is on the road to recovery. Statehood will be an important part of that recovery.
A more prosperous Puerto Rico will pay more to the United States Treasury than an impoverished territory of Puerto Rico. Statehood will be directly beneficial to the United States as a whole, as well as to Puerto Rico.
Puerto Rico has potential for alternative energy sources. Walmart stores in Puerto Rico are powered almost entirely by solar arrays, and Puerto Rico’s plentiful sunshine is a real resource. Solar power use could reduce costs in Puerto Rico and improve the reliability of electricity on the Island. Not only would this help the people directly by lowering the current high prices for energy, but it would make Puerto Rico a more desirable place for business investment.
Hydroelectric power is also a realistic option for Puerto Rico.
Puerto Rico’s natural beauty is itself a resource. Tourism had increased to 7% of the total economy before the outbreak of the coronavirus, and that positive trend will probably resume when travel restrictions end. Hawaii saw an enormous increase in tourism following statehood, as fellow U.S. citizens learned about the amazing natural beauty of its islands. Puerto Rico, home of the only tropical rain forest in the U.S., can expect to see the same.
Puerto Rico is already a popular place to make movies. With reliable electricity, federal investments in roads and other infrastructure on a level with the investment made in states, and the security of a permanent political status, Puerto Rico should be in a strong position to appeal to film makers.
Puerto Rico also has mineral, plant, and animal resources, including products like high-quality honey which — unlike the honey produced in the United States — could be certified organic. Bees have limited flight on an island, so it is possible to control the flowers they use. This can’t be done in the states on the mainland.
Agriculture is already beginning to make a comeback. Full participation in federal benefits for agriculture after statehood will benefit Puerto Rico’s agricultural industry and increase the flow of products from Puerto Rico to the U.S. — right now, Puerto Rico relies heavily on food products sent from the states to the Island. Full participation in trade among the states will benefit the state of Puerto Rico, but will also increase access to Puerto Rican products in the other states.
While Puerto Rico is still seeing a decrease in population, statehood and the resulting improvement in quality of life could change that. Puerto Rico has an educated, bilingual population which may be the most important resource the Island can offer.
U.S. companies that currently rely on overseas remote information workers — and that describes an ever-increasing number of companies — can turn to Puerto Rico for information technology workers, translators, developers, and designers without the problems of offshoring. Once Puerto Rico is a state, concerns about legal differences and the Island’s political stability will no longer inhibit this kind of hiring. Steady electricity and strong internet connections will allow the growth of the IT industry in Puerto Rico.
Right now, businesses in the states benefit from medical professionals leaving Puerto Rico and relocating to a state. Once Puerto Rico is a state, the entire U.S. can benefit from medical tourism in Puerto Rico — combining a tropical vacation with quality medical care for less than the cost of the care alone in a costlier state.
Manufacturers will also look to Puerto Rico for opportunities to build plants in the U.S. In recent years, U.S. companies have been bringing their production facilities back to the United States, building small footprint plants with shorter supply chains. By locating in Puerto Rico, those companies will be able to have “Made in the USA” products with cost-effective production. The things businesses look for: strong infrastructure, access to an educated workforce, and good logistics options. Many of the Southern states have been able to attract businesses by providing these sustainable, ongoing benefits that last after the tax perks expire. Puerto Rico will be able to do the same.
A long view of the economy
Statehood won’t correct all of Puerto Rico’s economic problems overnight. But we have seen with other territories that became states that statehood improves a territorial economy impressively and quickly. New strategic business partnerships spring up, benefiting both sides. The new state, once it is incorporated fully into the national economy, enriches the nation as well as its own people.
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