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 Front Cover
 Title Page
 Letter of transmittal
 Table of Contents
 Puerto Rico planning board structure...
 Members of the Puerto Rico planning...
 Proposed public works and assistance...
 The area - General description
 Preceding development efforts
 Prospective behavior of Puerto...
 Profile of socio economic...
 Development strategy and plan for...














Puerto Rico redevelopment area program for fiscal years...
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Permanent Link: http://ufdc.ufl.edu/UF00078131/00001
 Material Information
Title: Puerto Rico redevelopment area program for fiscal years...
Alternate Title: Overall economic development program
Physical Description: v. : ; 28 cm.
Language: English
Creator: Puerto Rico -- Planning Board
Publisher: The Board
Place of Publication: San Juan P.R
Creation Date: 1987
Publication Date: 198?-
Frequency: biennial
normalized irregular
 Subjects
Subjects / Keywords: Economic policy -- Periodicals -- Puerto Rico   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
serial   ( sobekcm )
Spatial Coverage: Puerto Rico
 Notes
Statement of Responsibility: Puerto Rico Planning Board.
General Note: Description based on: 1987-1989.
 Record Information
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 35677706
System ID: UF00078131:00001

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Title Page
    Letter of transmittal
        Unnumbered ( 3 )
    Table of Contents
        Page i
    Puerto Rico planning board structure and legal responsibility
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
    Members of the Puerto Rico planning board
        Page 6
        Page 7
        Page 8
        Page 9
    Proposed public works and assistance projects
        Page 10
        Page 11
        Page 12
        Page 13
    The area - General description
        Page 14
        Page 15
        Page 16
    Preceding development efforts
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
    Prospective behavior of Puerto Rican economy - Outlook for 1987 and 1988
        Page 32
        Page 33
    Profile of socio economic characteristics
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
    Development strategy and plan for implementation
        Page 48
        Page 49
        Page 50
        Page 51
        Page 52
        Page 53
        Page 54
        Page 55
        Page 56
        Page 57
        Page 58
        Page 59
        Page 60
        Page 61
        Page 62
Full Text












^ C=AB1 E A MOA0F















PUERTO RICO REDEVELOPMENT AREA
PROGRAM FOR FISCAL YEARS 1987-1989


PUERTO RICO PLANNING BOARD







OVERALL ECONOMIC DEVELOPMENT PROGRAM


PUERTO RICO REDEVELOPMENT AREA
PROGRAM FOR FISCAL YEARS 1987-1989


PUERTO RICO PLANNING BOARD






COMMONWEALTH OF PUERTO RICO Minllls Governmental Cnter, North Bidg.
OFFICE OF THE GOVERNOR Do Diego Ae, Stop 22
PUERTO RICO PLANNING BOARD P.O. Box 41119, San Juan, P.R. 000940. 9985





October 2, 1987




Mr. John E. Corrigan
Regional Director
Economic Development Administration
US Department of Commerce
Liberty Square Building
105 South 7th Street Ist. Floor
Philadelphia, PENN 19106

Dear Mr. Corrigan:

I am submitting herewith the 1987 Overall Economic Development
Program for Puerto Rico's economy. This document has been
prepared in conformity with revised guidelines established by the
US Department of Commerce under the provisions of the Public
Works and Economic Development Act of 1965, as amended.

This document reviews the Planning Board administrative organiza-
tion, assess our past development efforts and provides a clear
picture of current economic trends. A development strategy was
set forth along with EDA funded projects.

I will appreciate your careful review and approval of this
document. I hope, also, that this document will satisfy EDA
requirements. If you need additional information, please do not
hesitate to contact Mr. Santos Negr6n Diaz, Director of the Area
of Economic and Social Planning at 722-2070 or 723-6200 exts.
5648 or 5861.

Cordially yours,




Eng. Patria G. Custodio
President


Enclosures











TABLE OF CONTENTS




Section Page

I. Puerto Rico Planning Board Structure
and Legal Responsibility .............. 2


II. Members of the Puerto Rico Planning
Board ................................. 7


III. Proposed Public Works and Assistance
Projects .............................. 11


IV. The Area General Description ........... 15


V. Preceding Development Efforts ............ 17

VI. Prospective Behavior of Puerto Rican
Economy: Outlook for 1987 and 1988 .... 32


VII. Profile of Socio Economic Characteristics. 34


VIII. Development Strategy and Plan for
Implementation ........................ 48


































SECTION ONE

















Y








SECTION ONE


PUERTO RICO PLANNING BOARD
STRUCTURE AND LEGAL RESPONSIBILITY



The Puerto Rico Planning Board, originally created pursuant

to Act 213 of 1942, was reorganized on June 1975, through Act

75, and is presently an integral part of the Office of the
Governor. It is the responsibility of the Puerto Rico Planning

Board to. coordinate and integrate all efforts by government

agencies, public corporations and municipalities, and to

articulate a general plan to guide the economic, fiscal, physical

and social development of the Island.

The Planning Board Organic act provides for a fulltime body

consisting of three associate members and an alternate member.

All members are appointed by the Governor of the Commonwealth of

Puerto Rico, with the consent of the Senate for a period of six

years. The Governor also appoints the Chairman from among the

three associate members, also with the Senate consent.

Since the 1975 reorganization, the Planning Board's main

functions have varied to incorporate a more integral conception

of planning. As a result, the Board is no longer required to ,

prepare a Master Plan, which had a decidedly physical connotation.








The main Board's responsibility is now directed to the formula-

tion of a Comprehensive Development Plan (CDP). The CDP incorpo-

rates, in an articulate fashion, the policies and strategies to

be implemented through a Land-Use Plan, a Land Budget and a Four
Year Investment Program.

The Land-Use Plan will designate the distribution and

allocation of land resources toward their multiple and competi-

tive uses. Every project to be performed by any persons must be

consistent with the official Land-Use Plan.

In order to guarantee the best utilization of land

resources, the Board will prepare a Land-Budget. Such Land

Budget consist of estimates of the quality and location of land

demanded, as well as of a priority system to determine the spe-

cific land uses during a period of time.

The Four Year Investment Plan consists in a general outline

of social and economic goals which are expected to be achieved at

the end of every four years period. It is also conceptualized as

a tool to coordinate the public expenditures with capital

improvements necessary to achieve sectorial macroeconomic goals.

The Island of Puerto Rico qualifies as a Redevelopment Area

under the provisions of the Public Work and Economic Development

Act of 1965 due to persistent high unemployment and low family

income. As a result, the 78 municipalities and it's agencies,

are fully ellegible to receive assistance from the Economic

Development Administration (EDA) of the US Department of

Commerce.








Given the prevailing need to integrate all social and

economic development initiatives in Puerto Rico, the Governor as-

signed to the Puerto Rico Planning Board the responsibility of

coordinating all EDA programs in the Island. This responsibility

is to organize and to accomplish the Overall Economic Development

Program (OEDP) Committee which, in turn, serve as an advisory

body to the Puerto Rico Planning Board.

The preparation of the Overall Economic Development Program

is conducted by the Area of Economic and Social Planning of the

Puerto Rico Planning Board. The advisory and full involvement of

many executives from government agencies and municipalities are

seeked in order to ascertain their particular problems and

priorities to the planning process.

The Puerto Rico Planning Board's organization as it stands

today can be seen in the enclosed diagram.







ORGANIZATIONAL DBrAMM


























SECTION TWO










SECTION TWO


MEMBERS OF THE PUERTO RICO PLANNING BOARD



The current members of the-Puerto Rico Planning Board and

their affiliations are as follows:


Professional Activity prior
Name and Position Background to Appointment


Patria Custodio Engineer University
Chairman Professor


Lina Dueno Architect Public Service
Vicepresident


Luis E. Rivera Engineer Public Service
Alternate Member







SHCTS C


IlMIIMiP IBI O.LD.P. OaMOaT


weA/Isrnc AD RESS AWIIIATIcI


1. Mr. Lorenzo Iuft Franco
President

2. Mr. Hector Jirfine Juarbe
Executive Director

3. Mr. Juan AMCr
President

4. Mr. Manul A. Garrido
Partner in charge

5. Me. Angela Aja Ortiz
Ohairparaon

6. Mr. Hector rrsumanin


7. Mr. Artuzo Dtas
President

8. Angel 0. Berr ls
President

9. Mr. Angel M. Perez Perez


Cagua Federal Savings Bank
San Juan, Puerto Rioo 00936

Manufacturers Association
Santurce, Puerto Rico 00909

Hbm Builders Association
Santurce, Perto Rico 00909

Touch Rose & cpany
Hato Pby, Puerto Rico 00904

Carifbean Girls Soout Qouncil
Santurce, Puerto Rioo 00907

Puerto Rico Banks Association
Hato Iay, Puerto Rico 00918

Diaz Enterpriaes
Rio Piedras, Puerto Rico 00929

Mayor's Association
Caguas, Puerto Rico 00625

Interamerican University
Rio Piedras, Puerto Rico 00924


Badking


Industry


Construction
Industry

Camneroe


Citizenry


Banking


Industry


Municipal
Governments

Education







IBI P XWWR O.B.D.P. xaMgrrnc


NmE/P0s6IN cu ADDRESS AWEILFATIO


10. F g. Rafael Ignacio Torree
President

11. Mr. LAta A. Mejia Nattel
Deputy secretary

12. Mr. Lionel Hotta Garcia
Engineer

13. Hon. Jorge L. Aquino
Secretary

14. Hon. Ral6n PR=mn Hernndez
Mayor

15. Mr. oberto Gotay Guadalupe
Ci3ef, Bureau of Enforcement

16. Hon. Alfomno 4ez ChQaar
Mayor

17. on. Benjamn Cole
Mayor

18. Ms. Mona Gordon
President


P. R. Industrial Ccnpany
San Juan, Puerto Rico 00936

Department of Agriculture
Santurce, Puerto Rico 00908

Regulations and Permits Administration
Santurce, Puerto Rico 00940

Department of Cannerce
San Juan, Puerto Rico 00905

Municipality of San SebastiAn
San Sebasti Puerto Rico 00755

Iartmjnt of Ccmnuer Affairs
Santurce, Puerto Rico 00940


Dorado, Puerto Rioo 00646

Municipality of Mayaguez
Mayage, Puerto Rioo 00708

Legislative Scrutiny
Box 5803
San Juan, PR 00906


Industry


Agriculture


Government


Ccmnerce


Municipal
Government

Conasuners


Mincipal
CGovernment

Municipal
Government

Citizenry

































SECTION THREE
















I,







SECTION THREE
PROPOSED PUBLIC WORKS PROJECTS
As of September 30, 1987


Applicant Project Description EDA Local Total
I Requested Share Cost


Municipality of San Lorenzo

Puerto Rico Ports Authority





Municipality of Ponce





Puerto Rico Industrial
Development Company

Municipality of Mayaguez

Municipality of Adjuntas

Las Flores Metalarte

Rural Development Corpo-
ration


Industrial building

Tourist Pier in Old San
Juan

Expansion to Mayaguez
Airport Terminal

Ponce Port Reconstruction
Wharves No. 6 and No. 5

Ponce Port Expansion of
Wharf No.8


Juana Diaz Industrial Park

Industrial building

Rural access roads

Industrial building


Infrastructure for broiler
park-Coamo


$1,000,000


1,000,000


1,000,000


1,000,000


1,000,000


1,000,000

1,000,000

1,000,000

1,000,000



1,000,000


250,000


250,000


250,000


250,000


250,000


250,000

250,000

250,000

250,000



250,000


$1,250,000


1,250,000


1,250,000


1,250,000


1,250,000


1,250,000

1,250,000

1,250,000

1,250,000



1,250,000






EDA Local Total
Applicant Project Description Requested Share Cost
Requested Share Cost


Agricultural Services
Administration





Municipality of Caguas

Municipality of Comerlo


Rural roads for various
municipalities

Egg processing facilities

Two (2) agricultural
supplies centers in
Culebra and Vieques

Industrial building

Infrastructure for
industrial, commercial
and residential deve-
lopment


1,000,000

500,000



500,000

1,000,000




1,000,000


250,000

125,000



125,000

250,000




500,000


I Ia_ _


1,250,000

625,000



625,000

1,250,000



1,500,000









PROPOSED ASSISTANCE PROJECTS
As of September 30, 1987


Applicant Project Description EDA Local Total
I jRequested Share Cost


Puerto Rico Commercial
Development Co.

Puerto Rico Agricultural
SCredit Corporation
UJ


Bread Industry Study


Revolving Loan Fund


25,000


500,000


10,000


500,000


35,000


1,000,000


























SECTION FOUR










SECTION POUR


THE AREA GENERAL DESCRIPTION


The Redevelopment Area of Puerto Rico comprises a group of
islands in the West Indies, approximately, 1,000 miles Southeast
of Miami, Florida and 1,500 miles Southeast of New York, located
between 17 55' and 18 31' North Latitude and 65 17' and 65 37'

West Longitude. The islands are surrounded by the Atlantic Ocean

on the North, the Caribbean Sea on the South, Mona Passage on the

West and Vieques on the East.
The Island of Puerto Rico, the smallest of the Greater

Antilles, is approximately 100 miles long and 35 miles wide,

bordered on the North by the Atlantic Ocean and on the South by

the Caribbean Sea. Puerto Rico has a land area of 3,423 square

miles. The distance from Puerto Rico to New York is 1,612 miles

(3 1/4 hours by air), and the distance from Miami is 1,050 miles
(2 1/2 hours by air).

The topography of Puerto Rico consists of coast plains and a

central mountainous region. Puerto Rico enjoys a very attractive

tropical climate with mild temperatures and cooling breezes.

As of July 1986, the population of Puerto Rico was estimated

at nearly 3,286,000. The 1985 estimated population in the San








Juan Metropolitan Area was 1,119,070 inhabitants. Other princi-

pal cities are: Ponce with 190,612, Caguas with 123,395, Mayagiez

with 102,261 and Arecibo with 89,101.

During the 1950's the population of Puerto Rico grew by some

14,000 persons every year. From 1960 to 1974, however, the popu-
lation increased at a rate of 48,000 persons per year, or more

than 3 times as fast as the previous decade. During the last

decade (1975-86) it rose at an average rate of almost 34,363

persons per year. Determing factors in Puerto Rico's population

growth have been the combinations of its natural increase and

decreasing migration trends to the United States as job opportu-

nities open up in Puerto Rico.

The mayor highway network also includes a circumferential

system around the coast and a North South highway across the

mountains between Ponce and Arecibo. The major air carriers and

international airport, and the primary seaport are in San Juan.

Other seaport facilities for general cargo are located in

Arecibo, Mayaguez and Ponce. Industrial seaport for bulk

shipment of petroleum and its derivates are located at Guayama,

Guayanilla, and Yabucoa. Direct air passenger and cargo service

is provided by major domestic airlines to Toronto, Chicago, Bos-

ton, New York, Philadelphia, Baltimore, Washington, Atlanta,

Miami, New Orleans and Los Angeles. San Juan is also served by

foreign flag airlines operating between Europe and South America.

Although the port of San Juan is a major center of activity for








cruise ship operation, surface passenger service is not available

between Puerto Rico and the mainland. General cargo and

containerized are provided on a regular basis between San Juan

and ports on the East coast, the Gulf of Mexico and Europe.

SECTION FIVE

PRECEDING DEVELOPMENT EFFORTS

A. Goal Assessment

A comprehensive development planning process requires

for a clear understanding of the goals, the objectives, and

the strategies to be achieved by the planning authority. Two

different types of goals can be recognized in this planning

process: the ultimate (superior) goal and the intermediate

goals. The ultimate goal is concerned about the improvement

of the quality of life. No other aims beyond such ultimate

goal are conceivable. On the other hand, the intermediate

goals are positioning at a previous level of the ultimate

goal and they are concerned about specific development aims.

Meanwhile, objectives are also specific development aims but

they can be allowed to translate into quantitative targets.

In Puerto Rico current administration has recognized

the following goals about the economic development.


ULTIMATE GOAL

THE IMPROVEMENT OF THE QUALITY OF LIFE
INTERMEDIATE GOALS

1) Retaining Existing Industries and Foster New

Industries (including service industries)








2) Raising Indigenous Sources of Capital for Local

Entrepreneur and Development New Local Entrepreneur

Capacities

3) Improving Infraestructure
4) Promoting Tourism & Recreational Facilities
5) Promoting Agriculture and Agri-business
6) Developing Indigenous Research and Development
capacity
To provide an assessment of the island's success in

past development efforts (emphasizing 1986 FY), a brief

summary of the island's progress in meeting each of above

goals is provided below.
1) Retaining Existing Industries and Foster New
Industries
After the long battle to preserve Section 936

(finally won in the US Congres)s and a new industrial

incentives law about to be passed by the Commonwealth

Legislature, the Puerto Rico Economic Development
Administration (henceafter "Fomento"), feels has

cleared the final obstacles to a period of sustained

manufacturing and services employment growth.

According to Fomento, 16,030 jobs were promoted during

1986 FY, near 4,250 more than the number promoted in

1985 FY, and near 1,660 than 1984. Local investors

accounted for 8,328 of the jobs promoted, more than

half the total.








In term of start-ups, 177 new plants and expansions

began operations during 1986, employing more than 6,900

persons.

At the same time, factory closings dropped to 69,

the lowest yearly total of 1980's. This 69 factories

accounted for 1,890 jobs of the time of closing, which

also represented the lowest number of jobs lost due to
factory closing.

Evaluating the two previous fiscal years, 1985 and

1986, 4,854 new jobs were generated by new starting

plants while 4,102 jobs were lost due to factory clos-

ing (see table). Net employment generated during

these two years were 752 jobs.

There were several industries highly successful in

generating employment for instance, Services,

Chemical, Food, Plastics and Furnitures. Those less

successful were, Machine, except electrical,

Machinery, and Equipment Apparel, and Textiles.

For the next two or there years Fomento expects

that many of the new jobs created will come from the

Puerto Rican phase of complementary plants promoted in

Puerto Rico and nearby countries as part of the





TABLE

EMPLOYMENT GENERATED AND EMPLOYMENT LOST
DUE TO FACTORY CLOSING PLANTS DURING FISCAL
YEARS 1985 and 1986


Industries

Food

Tobacco

Textiles

Appatel

Wood

Furnitures

Paper

Printing

Chemical

Refinery

Plastics

Leather

Stone and Clay

Primary Metals

Metal Fabricate

Maquinery, Exc-]

Machinery & Equ:

Transportation

Instrument

Miscellaneous

Services


TOTAL


1 2
Employment at Employment lost
the beginning of due to factory
operation closing

352 86



114 251

811 1,113

8 11

249 66

20 30

10 125

933 115

0 4

217 23

80 34

117 17

5 2

S156 157

Elect. 197 857

ipment 535 680

20 35

287 234

24 146

719 116


4,854 4,102


Sources: Commonwealth Economic Development Administra-
tion, SanJuan, Puerto Rico, june 1987.

20


Ne
(1-


26(



-13

-30;

-r

187

-1C

-115

818

-4

194

46

100

3

-1

-660

-145

-15

"53

-122

603


752








Caribbean Basin Initiative (CBI). There are several

complementary plant projects under considerations that

potentially will generate more than 6,400 jobs in the

CBI region and 4,000 jobs in Puerto Rico.

The Caribbean Economic Development Program Office

at Puerto Rico's Economic Development Administration
(Fomento) announced that the following corporations

have either begun or are about to begin investments in
the Caribbean.

Brystol Myers announced the establishment of a

twinplant facility at the San Cristobal free zone in

the Dominican Republic that will initially employ 40

workers. The plan will manufacture syringes for use in

veterinary medicine and perform quality assurance

inspection of glass vials. These components will then

be filled with pharmaceutical products at Bristol Myers

facilities in Puerto Rico. The new plant is scheduled

to begin operations in January 1988. Bristol Myers is

ranked 27th in US corporations in terms of market value

and 50th in net profits, according to Forbes. Its

three Puerto Rico plants employ about 385 people.

Abbott Laboratories will soon manufacture components

for inter-oral sets in Granada. The new plant, sched-

uled to begin operations at the end of this year,

expects to employ 25 to 30 workers. Though this opera-

tions will not be linked to Abbott's facilities in








Puerto Rico, the company is planning a twin-plant

venture with the Dominican Republic.

American Cyanamid has begun a sub-contracting

arrangement between the Dominican Republic and its

Puerto Rico operation for the winding and packaging of

sutures. The project will create 18 jobs in Puerto
Rico and 45 in the Dominican Republic by the fourth

quarter of 1987. The firm is studying second phase of

this project.

Hanes Knitwear will soon open an assembly operation

in the Dominican Republic for the production of women's

undergarments. Located in the Itabo Industrial Park

near Santo Domingo, the facility is expected to employ

250 workers within a year. Although the Dominican

venture will initially source its cloth elsewhere, the

company is strongly considering the possibility of

linking the operation with Hanes' textile facilities in

Ponce, Puerto Rico.

Warner Lambert has begun a $500,000 expansion of its

facilities in the Dominican Republic, where the company

produces toothbrushes and mouthwash. The Dominican

operation will add 50 workers to its present employment

level of 200. The company is also exploring alterna-

tives for a production-sharing venture with Puerto

Rico.







Tru-citrus recently incorporated in Puerto Rico by a

group of Florida investors, this company will import

bulk fresh citrus production from the Dominican

Republic and Jamaica for processing and packaging as

fresh citrus juice and fruit. Its products will be

marketed primarily in Puerto Rico, where close to 90
percent of citrus consumption is currently imported in

ready-to-use form.

This agro-industrial project will create 75 jobs at

two processing plants in Ponce, Puerto Rico, and will

entail an investment of approximately $2,800,000. The

Government Development Bank recently approved a loan of

$2.2 million to Tru-Citrus for this project using

low-cost 936 funds. The number of agricultural jobs to

be created by this project in Jamaica and the Dominican

Republic has not yet been determinated.

2) Raising Indigeneous Sources of Capital for Local
Entrepreneur and Development New Local Entrepreneur
Capacities

Entrepreneur has been, so far, considered as one of

the primary economic development elements in many coun-

tries. However, lack of capital as well as mechanisms

to foster entrepreneur capacities are major obstacles

in many under-development economies.








A successful economic development strategy most

create an environment that is conducive to entrepre-

neurical activities. Meanwhile, entrepreneurial

initiative has to be translated into development
through investment.

Last year, Puerto Rico's legislature created the

Economic Development Bank (EDB) which aimed in pro-

moting the private sector by emphazing manufacture,

agriculture, tourism and services through direct loans,
guarantees and investment funds. In general terms, the

EDB function is to supply and/or make feasible financ-

ing through investment or loan to private enterprises,

to act as a promoter for the development of new firms,

to identify new business opportunities and to promote

the formation of local capital.

By the same token, the EDB jointly with the Univer-

sity of Puerto Rico (UPR) created a Center of the

Development of Entrepreneurs (CDE). Such CED has five

basic elements:

a. Incorporates the concept of entrepreneur devel-

opment to the education system.

b. Enables owners of small enterprises to insure

their permanence in the market.

c. Facilitates the conversion of manager into

entrepreneurs, avoiding the exportation of

professional technology and knowledge.








d. Transfers the product and process generated by

scientific research activities to project on

manufacture and services.

e. Uses resources from UPR and the EDB to generate
projects.

Up to July 1987, sixty-one (61) guarantee loans

which represented an amount of more than $10 millions,
were made by the EDB. From those sixty-one loans,

seven (7) went to agriculture forty-five (45) to manu-
facture and nine (9) to tourists projects. The EDB

started with a direct loan program this current fiscal

year 1987-88.

3) Improving the Infrastructure
The sorrowful state of local infrastructure,

particularly dragged on our economic development

efforts. Its improvement is an essencial component of
both short and long term economic development plans.

Under this public administration expenditures on

infrastructure has increased dramatically, reaching

$1,110.00 million in fiscal year 1986. Although most

public attention has been focused on the Aqueducts and

Sewers Authority, improvements in other areas are pro-

ceeding at a rapid rate. For instance, the Puerto Rico

Telephone Company expects to invest $790 million over









the next five years in an ambitious long-term improve-

ment and expansion plan. Meanwhile, the Public

Building Authority plans to invest $642 millions over

four years.

According to the Honorable Governor of Puerto Rico,

$180 millions were invested in 116 water projects

during the last two fiscal years. Currently, sixty-

three (63) infrastructure water projects are under

construction for an amount of $175.8 millions in

investment.

4) Developing Tourism and Recreational Facilities

Current administration has made tourism one of it's

top economic priorities with the aim of restoring the

Island's position as the most popular destination in

the Caribbean. Meanwhile, internal tourism has been.

also a main concern of the current administration.

According to the Tourism Company, hotel occupancy

experienced an increase of 23 percent for the first six

days of 1987, compared with the same period last year.

The occupancy rate at hotels with casinos was 82.2

percent, while in 1986 was 65.9 percent.

Figures for the first ten months of calendar year

1986, compared with the same period in 1985, show that

the number of hotel visitors went up by 13.5 percent

and tourists arriving on cruise ships increased by 7.3

percent, meanwhile a total of 2,227,217 airline








visitors arrived in Puerto Rico, an increase of 14.4

percent over the same period the previous calendar

year.

A striking fact is also that internal tourism has

also picked-up. Fiscal year 1986 was a record year for
local tourism and the prospects for 1987 are better,

according to Tourism Company officials. From fiscal

1984 to 1986, the number of local residents registering

in hotels, guest houses and the small inns called
"paradores" outside metropolitan San Juan increased by

15.1 percent to 228,245. In metropolitan San Juan, the
number of Puerto Ricans staying at hotels and guest

houses rose 9 percent to 90,386. In the rest of the

Island, including the "paradores", overnight tourism

rose 16.5 percent to 137,859 registered persons.

During the last three years, government has been

actively promoting investment in hotel and other

tourist facilities. By the end of 1985 over $200

million was invested in hotel restoration and expansion

projects, and the trend has continued throughout 1986.

The number of available hotel rooms increased from

7,421 in 1984 FY to 7,7706 in 1986 FY, with an addi-

tional 2,000 rooms.










5) Promoting Agriculture and Agri-business
In general terms, agriculture has been in a very

difficult situation during the last three decades.

Even though some of its sectors have shown progress
during recent decades, the volume of food imports has

gone up and the share of total supply represented by

locally produced food items has decreased. Currently,

Puerto Rico imports two thirds of total supply of food

for human consumption.

The current goal is to increase food production,

which also implies an increase in income and employment

opportunities in the farms of Puerto Rico. The

Secretary of Agriculture agrees that increased produc-

tion through the application of modern technology in

agriculture is one of the most important government

objectives. The Department of Agriculture is planning,

also, the development of agro-industrial firms.

In 1986 FY, Gross Income in agriculture went down

to $596.7 million from $608.3 the previous year, a

decreasing rate of 1.9 percent. By the same token,

Gross Income in traditional harvest such as sugar,

molasses, coffee and tobacco, suffered a sharp decline.

Conversely, products such as milk, eggs, fruits, and

poultry yielded a higher level of Gross Income.








6) Developing Indigenous Research and Development
Capacity

Any assessment of recent economic development

patterns demonstrates conclusively that technology has

become a critical factor of production in emerging

industries. Thus, the development of a scientific and
technological capability is a necessary condition for

any future economic development of Puerto Rico.

Puerto Rico has a unique opportunity as well as an

important need to become a center for industrial

research and development. The need is to support

higher education and to promote the Commonwealth's

scientific community so that the Island does not remain

primarily a low wage economy continually subject to the

vicissitudes of wage rate competition from lesser

developed countries. The opportunity arises because

intense competition among high-tech firms drives them

to seek the lowest cost sources of supply for almost

everything, including production and/or research

activities.

Since the 1960's there are existing efforts toward

the creation of a public policy oriented to the devel-

opment of the Research and Development (RD) capacity.

However, no concrete plan was accomplished toward this

aim before the 1980's. Recognizing the critical role








of the R & D in the modern patterns of economic devel-

opment, the Planning Board invited a group of distin-

guished scientists and representatives of the public

and private sector to collaborate in drafting a public
policy on the development of Science and Technology and

to recommend the establishment of an organization to
provide direction to 'government efforts in this area.

In fact, the Commonwealth Governor created a Council on
Science and Technology as an adjunct to the Council of

Economic Advisors. This council will advice on the

disposition of a fund created as a result of the 1986

New Industrial Incentives Act for the purpose of

carrying out R & D activities in Puerto Rico.

B. Puerto Rico's Economic Growth During Fiscal 1986: Short
Term Overview


During Fiscal Year 1986, the Puerto Rican economy

enjoyed a growth rate in real Gross National Products (GNP)

of 2.6 percent and in its real Gross Domestic Product

(GDP) of 5.8 percent. The GNP refers to the output gener-

ated by local residents, while GDP includes all output

generated within the economy. The difference is made up by

payment to factors of production in the rest of the world.

In per capital terms, real GNP grew at a rate of 2.3 percent.








A striking aspect of economic behavior during 1986 FY

was a dramatic upswing in the second half of the year-

October through December 1986 as reflected in the Planning

Board Index of Economic Activity. For the first time in
many years, Puerto Rico's economy grew at a faster rate than

that of the United States.

Short-term indicators 'point to a significant reac-

tivation of employment. Average employment increased to

777,000 from 758,000 for fiscal Year 1985. In the first
four months of fiscal year 1987, average employment

increased to 837,000 from 760,000 for the first four months

of fiscal 1986. Total seasonally adjusted employment

reached new highs when, during July-September 1986 quarter

was 831,700 and average unemployment rate was 18.06 percent.

A number of factors may explain this overwhelming

takeoff.

First, construction investment expenditures jumped from

$559 million in the first semester of the fiscal year 1986
to nearly $772 million in the second semester. This repre-

sents an increase of 38 percent. The public sector's

construction activity grew at a 59 percent rate during the

period while private sector did so at a 14 percent.

Second, the devaluation of the US dollar did not bring

about a reversal in the nation's trade deficit, as had been

expected. During calendar year 1986, that deficit reached






nearly $169.8 billion, an increase of $21.3 billion over

calendar year 1985. The main reason is that the dollar did

not fall against all traders, including those of some major

trading partners such as Canada, Mexico and some Asian

nations.

Third, the decrease in the price of petroleum had a

positive effect on the Island's economy and a mixed impact

on the United States, due to the negative impact felt in

many oil producing states. The Planning Board estimated

that the decrease in petroleum price during 1986 meant a

saving of close to $500 million for the Puerto Rican

consumers.

Fourth, Puerto Rican economy has enjoyed a period of

favorable conditions in the credit market, a moderate rate

of inflation and declining interest rates.



SECTION SIX


PROSPECTIVE BEHAVIOR OF PUERTO RICAN ECONOMY
OUTLOOK FOR 1987 AND 1988


A. Fiscal Year 1987

The forecast for the economy of Puerto Rico in 1987

calls for an even higher rate of growth than that for the US

economy. The consensus among private economists is for a

growth rate of between 4 and 5 percent, even though US

growth is estimated at only 2.3 to 2.5 percent. The

Planning Board economic model is projecting a real growth of

4.2 percent.









For fiscal year 1987, a whole number of positive

factors may play an important role in the behavior of the

economy:


1) High rate of expansion in construction

Construction expenditures are expected to grow at

an 18 percent rate, creating as many as 37,000 jobs

in the industry and'22,000 in related industries.
Public construction expenditures are expected to

grow at a 25 percent while those of the private

sector will grow at an 8.6 percent rate.

2) Dissipation of the uncertainty regarding 936
corporations and New Industrial Incentive Law


Will boost economic expansion in manufacturing and

service sectors.

3) Oil prices will remain more or less stable but also
inflation rate and interest rate


However, due to US dollar depreciation some

increase in the inflation rate is expected.

4) Favorable conditions in the credit market

5) Stabilization of the flow of federal transfers

in the last two years, the increase has been over

two percent.

However, some growth retarding factors will remain

active during the period. For instance, a new minimum wage law,








high consumer indebtedness and US twin deficits budget and

trade have to be considered as growth retarding elements.

B. Fiscal Year 1988

The economic outlook for fiscal year 1988 is something

optimistic. Puerto Rican economy is expected to grow at 3

to 4 percent rate. For many economists and analysts, public

expenditure will be the main.growth inducing element. Public

expenditure will be expected to grow between 7 to 8 percent

rate.

Although no recessionary period is forecasted, the

price of petroleum and the rate of interest, are expected to

increase relatively to the previous year level. Dollar

depreciation will drive up the inflationary rate in the

United States economy and thereby in the Puerto Rican

economy.



SECTION SEVEN
PROFILE OF SOCIO-ECONOMIC CHARACTERISTICS


This chapter attempts to assess the most recent

demografic trends and its relationship with the human

resources.

It will analyze the current conditions in the labor

force, rates of participation, employment and unemployment

in Puerto Rico.









1. Population and Labor Force

a) Population trends

The preliminary estimate of population in Puerto

Rico for 1986, is around 3,286,000 persons. This
figure represents a net increase of only 3,500

persons, or near that one percent of growth
comparatively with the previous year.

Population estimates for Puerto Rico have shown

almost a "plateau" behavior during the last

fifteen years. This means that the well mentioned

"population explosion" is only a myth than no

longer applies to the Island. Over the last fif-

teen years the death rate has remained almost

steady while the birth rate has declined. As a

result, the natural rate of growth of the popula-

tion has decreased from 2.1 percent in 1971 to 1.0

percent in 1986. Therefore, when natural growth

has declined significantly, total population growth

has decreased even more. In addition, migration

outflow has, also, contributed to a significant

decline in the rate of growth of the population.

The out-migration of the 1960's and 1970's has

continued into 1980's. Out-migration in 1986 stood

at 46,619 persons, the highest figure since 1957.








NET MIGRATION BALANCE IN PUERTO RICO

Net Balance

1960 23,742

1970 44,082
1980 16,101
1981 10,460

1982 33,297

1983 44,433

1984 38,484
1985 28,609

1986 46,619

Source : Puerto Rico Planning Board,
Economic Report to the
Governor 1986

The rising out-migration trend of the last few

years raises many questions about the composition

of the outflow. Recent surveys point out to the

increased migration of certain population segments,

notably, students, professionals, skilled workers

and military persons. These are considered "new"

groups, outside from the traditional working class

migrant found in the 1050's and 1960's. According

to the US Census of Population and Housing, Puerto

Rico born professionals in US increased almost 50









percent between 1970's and 1980's. Another

striking fact about outmigration is that near the

half of the emigration population was 16 to 24

years old, of which approximately one third were

students.

Giving this declining trend in population

growth, the dependency ratio 1 has also shown a

similar trend. From 1980 to 1985 the dependency

ratio fell from 71.3 percent to 66.6 percent, due

mainly to the decline in the population of 16 years

old or less. This situation implies that the labor

supply in the future, may be lessened, other things
constant.

Recently, the Planning Board has forecasted

the population for the year 1990, 1995, 2000 and

2005. According to such forecasting, the popula-

tion between 15 years old or less will show a

declining trend while the population of 65 years

old and over will show an increasing one. These

trends will imply a lower dependency ratio between

1985 and 2005. Another striking conclusion is that




SDependency ratio is equal to the proportion of population
between fifteen years old or less plus tne population o0 b5 years
old or more between the population between 16 and 64 years old.









median age is increasing through decades. This

means that population pattern is rapidly changing

toward an older aging structure.

b) Labor Force Trend
Civilian labor force is divided between

persons employed and those unemployed. In 1986,
civilian labor force reached the level of 977,000

in which 777,000 were employed and the rest

(200,000) were unemployed.. In absolute terms the

labor force increased by 13,000; the employed

persons by 19,000; and the number of unemployed

persons dropped by 6,000.

In terms of age structure, the labor force

was fed mainly by those persons between ages of 35

to 54. Conversely, the number of persons between

16 to 24 went down by 10,000. This drop is par-

tially explained by outflow migration in Puerto

Rico. Planning Board surveys have confirmed this

contention.








AGE STRUCTURE IN PUERTO RICO LABOR FORCE

(In Thousands Fiscal Years)



Age 1985 1986 Change


16-19

20-24

25-34

35-44

45-54

55-64

65-over

TOTAL

Source : Puerto
Report


39 35

133 125
271 274

244 252

170 177

82 85

22 25

964 977 *

Rico Planning Board, Economic
to the Governor, 1986, P.IX-11


-4

-8

+3
+8

+7

+3

+3

13


* Due to rounding, figures may not always equal the
total.

The employment rise experienced in recent

years, was most notable among the white collar

workers groups with constitute 44% of total employ-

ment figure. An increase of 16,000 on white collar

workers, including, 7,000 in professionals, drove

up markly the employment figures.











EMPLOYMENT BY INDUSTRIAL SECTOR

(Thousands Fiscal Year)


Industrial Sector 1985 1986 Change


Agriculture & Mining 39 41 + 2

Construction 36 36 0

Manufacture 138 140 + 2

Trade 147 149 + 2

Finance, Insurance & 23 26 + 3
Real State

Transportation, Communi- 44 48 + 4
cation and Other Public
Services

Services 151 157 + 6

Public Administration 80 180 0

TOTAL 758 777 19
Source : Puerto Rico Planning Board















EMPLOYMENT SHARE BY OCCUPATIONAL GROUP
(In Thousands) Fiscal Years)


Total 1975 1980 1986


White Collar 41 40 44
Blue Collar 39 40 36

Services 14 13 13
Farmers 6 5 5


Source : Puerto Rico
Report to the


Planning Board, Economic
Governor, 1986, P. IX-10












UNEMPLOYMENT RATE BY AGE : PUERTO RICO
(In Percentage)

AGE 1985 1986
16-19 53.2 54.6
20-24 39.8 39.1

25-34 22.6 22.4

35-44 16.1 15.1
45-54 12.2 12.1
55-64 11.8 11.0
65 or more 3.4 4.5

TOTAL 21.4 20.5

Source : Planning Board, Economic Report to the
Governor 1986, P. IX-17



In terms of unemployment rates by occupa-

tional group, farm workers depict the higher unem-

ployment rate while white collar shows the lower

rate.










UNEMPLOYMENT RATE BY OCCUPATIONAL GROUP
PUERTO RICO 1986




Occupational group

White collar. 10.5%

Blue Collar 29.0

Services 16.2

Farm Workers 29.1

Total Unemployment Rate 20.5%


Source : Puerto Rico Planning Board




In 1986, 72 percent of total employment was

generated by the services industrial sectors:

Trade, Finance, Insurance and Real Estate, Trans-

portation and Communication, Services and Public

Administration.

c) Unemployment Trend

The average unemployment for fiscal year 1986

was 200,000 or 20.5 percent of labor force. For

fiscal year 1985 unemployment reached the level of









206,000 persons or 21.4 percent; when compared to

1983 figures, it reflects a declining trend
although still somewhat high.




UNEMPLOYMENT AND THE RATE OP UNEMPLOYMENT
PUERTO RICO 1983-1986


Number of Rate of Rate of
Fiscal Year Unemployment Unemployment

1983 216,000 23.5
1984 209,000 22.0

1985 206,000 21.4
1986 200,000 20.5


Source : Puerto Rico Planning Board


Unemployment in Puerto Rico is mostly among

young workers. In 1986, the unemployment rate was

greatest for those between 16 and 19 years. In

fact, this unemployment rate was more than double

the overall unemployment rate.











RATE OF UNEMPLOYMENT BY INDUSTRY
FISCAL YEARS 1986






Industries 1986

Agriculture, Forestry and Fishing 30%

Construction 49

Manufacturing 20

Trade 15

Finance, Insurance and Real Estate 7

Transportation, Communication and other 12

Public Services

Services 17

Public Administration 15

ALL INDUSTRIES 20.5
Source : Puerto Rico Planning Board









In terms of unemployment rate by industry,

once again agriculture industry showed one of the

higher rates with an unemployment rate of 30

percent. The construction industries exhibited,

also, a high unemployment rate with a figure of 49

percent. Nevertheless, service industries depicted

lower rates of unemployment.

In summary, services industries have

generated most of the job positions created by the

Island's economy during the last three fiscal

years. Needless to say, Puerto Rico's economy is

moving faster toward a services economy rather than

an industrial one.

2. Assessment of the Behavior by Economic Sectors

Puerto Rico has a diversified economy. During the

fiscal period 1985-86, the manufacturing and the

services sectors generated the largest portion of the

net income of the Island. For instance, the manufac-

turing sectors generated 58 percent of the net income

of the Island during 1986. The services sector

(Transportation, Trade, Finance, Services, and Govern-

ment) generated 78 percent of net income. It should be

emphazised, however the huge proportion of net outflow

payments in the net income figure. Forty percent of

net income locally generated flew out of the Island.








Manufacturing sector is the one that creates a high net

outflow of factor payments mainly in property income.

In 1986, 71 percent of net income in manufacturing was

property income whereas the rest was employee compensa-

tion. High technology industries such as pharmaceu-

ticals, scientific instruments, computers,

microprocessors, medical products, and electrical

products, have experienced a huge volume of net profit.

Such industries operate under Internal Revenue Code 936

Section that permits them to repatriate profit to
United States, under several conditions.

On the other hand, the service ranks first in its

contribution to net income and growth. Transportation

industry, and Finance, Insurance and Real Estate, for

instance, contributed with almost 29 percent of the

Island's net income. Meanwhile, these industries are

those with higher rates of growth between 1985 and

1986.

Agriculture industry, nonetheless, felt a decline

in its net income from $388.1 million to $385.2

million. This decline was associated with a decrease in

property income from $199.8 million to $188.1, rather

than a decline in compensation to employees. Compensa-

tion to employees increased from $188.3 million to

$197.1 million.






Government industry declined in its relative

contribution to the net income. The government share

decreased from 19.3 percent to 18.5 percent and only

grew at a rate of 1.9 percent.

In summary, Puerto Rico's economy is so far, a

service economy rather than an industrial economy.

Service industry accounted for a significant amount of

employment as well as its contribution to the Island's

net income.


SECTION VIII


DEVELOPMENT STRATEGY AND PLAN FOR IMPLEMENTATION


A. Island-Wide Goal

The primary concern of the Planning Board is to

promote an overall comprehensive development of the

Island. This task is accomplished by a well-known

Comprehensive Development Plan which main focus is on

the creation of wealth or improving the quality of

life.

As previously mentioned, there exist six interme-

diate goals which the current Government Administration

is fully interested to achieve. These intermediate

goals are:

Goal 1 Retain Existing Industries and Foster New

Industries, including Services Sector.











Goal 2 Raising Sources of Funds for Local

Entrepreneur and Develop New Local

Entrepreneour Capacity.

Goal 3 Improving Infrastructure

Goal 4 Developing Tourism and Recreational

Facilities

Goal 5 Promoting Agriculture and Agribusiness

Goal 6 Developing Indigenous Research and Development

Capacity


B. Goals and Objectives

This section presents the goals and the objectives

states by current government in the comprehensive develop-

ment program.



GOAL 1

RETAIN EXISTING INDUSTRIES AND FOSTER NEW INDUSTRIES

OBJECTIVES




1-A Improving the competitive positions of industry and

business in the Island vis a vis Caribbean and United

States region.









1-B Fostering new high-technology industries for the

Island.

1-C Promoting export capacity, specially in the service

sector.
1-D Supporting the retention and expansion of existing

industry and business.








GOAL II


RAISING SOURCES OF FUNDS FOR LOCAL ENTREPRENEUR
AND DEVELOP NEW LOCAL ENTREPRENEUR CAPACITY

OBJECTIVES



2-A Creating new employment opportunities in local capital

entreprises.

2-B Raising indigenous entrepreneur capacity in order to

reduce foreign investor dependence.

2-C Raising sources of capital for joint-ventures and local

investors.










GOAL III


IMPROVING INFRASTRUCTURE

OBJECTIVES



3-A Promoting the allocation of new industries in the
Island.

3-B Improving quality of public goods such as water,

electricity, transportation and communication

services.






GOAL IV

DEVELOPING TOURISM AND RECREATIONAL FACILITIES

OBJECTIVES



4-A Restoring Puerto Rico to its position as the number

one destination in the Caribbean region.










4-B Developing the industry's potential as an important

contributor to the Island's economy. Specifically,

targets for the four-year period ending in 1988 are to

increase tourism's contribution to the GNP from 5

percent to at least 10 percent, and to create a minimum

of 30,000 direct jobs..
4-C Promoting hotel investments in order to increase output

capacity.

4-D Foster internal tourism in order to provide inexpensive

accommodation for the local residents vacations.




GOAL V

PROMOTE AGRICULTURE AND AGRIBUSINESS

OBJECTIVES


5-A Apply the best and most modern technology available to

the production of foodstuff.

5-B Adequate financing facilities for agricultural and

agro-industrial activities.

5-C Protection of agricultural produces from the common

risks that affect their business for instance, those of









a physical nature (climate and biological factors) and

economic forces (price instability and market

changes).

5-D Promotion of the organization of farmers so that they

take advantage of the benefits derived from their joint

efforts and group action.


5-E Objectives by most important agricultural sectors are:

Sugar Industry produce enough sugar to cover local

demand together with more efficient production

methods.

Coffee increase total production to bring it to the

level of local consumption.

Milk expand the market for whole milk by means of

demand promotion and the improvement of the marketing

and distribution system and methods, and the expansion

and diversification of the use of milk for processing

purposes.

Animal Products increase production and market share

of local food products by lowering costs and by improv-

ing marketing methods.

Fruits and Non-Starchy Vegetables increase production

to supply the local market, thus reduting imports and

to increase exports to United States and other

countries.








Starchy Vegetables increase total production of the

most important vegetables among this group, while

emphasizing improvements in technology and marketing.

Ornamentals increase production three or four-fold in

the next ten years, especially for exports.




GOAL VI

DEVELOPING INDIGENOUS RESEARCH & DEVELOPMENT CAPACITY

OBJECTIVES


6-A Fostering the scientific and technological capacity in

order to promote competitive edge in a more globalized

economy such as Puerto Rico.

6-B Fostering the scientific and technological capacity of

higher education institutions.

6-C Linking private and public efforts.

6-D Improving educational programs in the area of science

and mathematics.

6-E Developing a system of information to support the

development of the science and technology capacity in

the Island.









C. Strategies for Development

Goals and objectives are integral part of the EDA's

overall scheme for economic development. These goals,

however, can only be accomplished through an effective

implementation program. The development strategies that
will be presented in this section reflect the Island's

desire to be action-oriented and produce tangible results

within a reasonable period of time.

1. Strategy for Goal I

Much of the development of the manufacturing sector

in Puerto Rico can be attributed to various federal

and Commonwealth tax incentive, most notably

Section 936 of the Internal Reserve Code of 1986

(henceafter "Code") and the Commonwealth's Indus-

trial Incentive Program.

a) Section 936

The Commonwealth believes that Section 936,

as recently amended, will maintain the local

ability to attract industries to Puerto Rico.

In addition, such amendments will permit

financial institutions in Puerto Rico, includ-

ing Government Development Bank (GDB) and

Puerto Rico Economic Development Bank to use

Section 936 funds to finance industries in

eligible Caribbean Basin countries.








Commonwealth initiative is to maintain

Section 936 as present status.

b) New Industrial Incentives Law

A New Industrial Incentive Acts that offered

more favorable tax exemption benefits for

qualifying entities was approved by local

Legislature in 1986.

This legislation eliminated the declining tax

exemption over time and replaced it with the

highest previous percentage exemption (90

percent) on income and property taxes for the

duration of the exemption period. Export

service industries and Research and Development

operations qualify also for such tax

exemption.

c) Twin Plants and the CBI

Caribbean Basin Initiative (CBI) was designed

to encourage economic development in the

Caribbean and Central America, provide for

unilateral duty-free access to US market, tax

deductions and direct economic assistance

payments by US.

CBI contains measures designed to maintain

the competitive position of Puerto Rico. The

local government strongly supports the island's

involvement in the CBI, particularly in








relation to the development of twin plants, or

complementary projects between Puerto Rico and

Caribbean Basin countries. To assist in pro-

moting such projects, a special program of

financing has been launched by GDB. The New

Industrial Incentives Act, also, conferred

special incentives related to twin plant

operations.

d) Sub-Administration for the Development of
Native Entrepreneur

Under Law number six of July 1985, the

current Commonwealth Administration created

under Fomento the Sub-Administration for the

Development of Native Entrepreneur. Its

mission relies on creating and fostering a

greater local participation in the productive

base of Puerto Rico. Such entity is concerned

with the screening of the problems or obstacles

that deter native capital formation.

2. Strategy for Goal II

Current administration is concerned with the

development of the entrepreneurial capacity of the

Island. It is, also, concerned about small and

medium sized entrepreneurs whose economic activity

has the purpose of substituting imports, augmenting

exports and retaining jobs.








During fiscal year 1986, the Legislature

created the Economic Development Bank for Puerto

Rico (EDB), whose aim is to (a) supply and/or make

feasible financing for investment projects, and (b)

promote the development of new enterprises.

Recently the EDB is also involved in a plan for the

formation of local 'entrepreneurs.

The EDB management strategy can be summarized

as follows:

a) The formation of venture capital to make

possible development projects whose consequences

would be the creation of stable entreprises,

tempered to modern techniques of production,

marketing, management, as well as research and

development.

b) Identification of business opportunities to

establish enterprises capable of contributing

to the economic development of Puerto Rico.

c) Promote the formation of local capital.

d) Offer the entrepreneur favorable conditions in

capital investments avoiding competition with

private investors, but allowing the promoter to

keep a major interest in the enterprise; this

would motivate him to increase his efficiency

to maximize investment income.








e) Promote the development of Puerto Rican

industries through the Center of the Develop-

ment of Entrepreneurs, which will be operated

by the University of Puerto Rico in conjunction

with the Government Development Bank and the

Economic Development Administration. Counsel-

ing in management, marketing, and access to new

technologies will be offered to entrepreneurs.

The Center has five basic elements, supported

by the Bank:


Incorporate the concept of entrepreneur

development into the education system of

the Island.

Enable owners of small enterprises to

insure their permanence in the market.

Facilitate the conversion of managers into

entrepreneurs, avoiding the exportation of

professional technology and knowledge.

Transfer the product and process generated

by scientific research activities to

projects on manufacture and services.

Use resources from the University of

Puerto Rico and the Government Development

Administration to generate projects.








3. Strategy for Goal III

Current administration has designed a plan

aimed to improve the sorrowful state of the public
infrastructure. During the last two years near

$180 millions were invested in 116 new water treat-

ment plans and related projects that will benefit

4,930 families. -There are under construction,
also, more than 63 new projects which mean an

investment of $175.8 millions.

Public Building Authority (PBA) plans to

invest $642 million. Over the next four years

PBA's major investment will be in school and health

facilities.

The Puerto Rico Telephone Company, also,

expects to invest $790 million over the next five

years in an ambitious long-term improvement and

expansion program.

4. Strategy for Goal IV

The groundwork for action programs to achieve

such goals was prepared by the middle of 1985. In

order to promote hotel investment, new legislation

was enacted to:

Restore tax exemption to hotels.

Reduce hotel electricity rates.

Extend indefinitely and expand slot

machine operations.








Redesign gambling regulations.

Provide a financial arm to the Tourism

Company which would enable it to assist

industry through bond issues and other

financial tools.

A New Marketing strategy was implemented.

This strategy attempts, among others, to

expand efforts to eight additional cities

by a $5.4 million advertising campaign.

Intensify training and retraining opera-

tions for tourism-related personnel.

5. Strategy for Goal V

Agricultural policy includes, among others, the

following measures:

The use of the most modern technology

available.

Adequate financing facilities for agricul-

tural and agro-industrial activities.

Protection of agricultural producers from

the most common risks that affect agri-

business.

Develop a good insurance for crops and

farm animals and an adequate system and

methods of marketing and distribution,

including, market and price guarantees.

6. Strategy for Goal VI

Rapid technological changes in the world,








imposes a spillover over the future economic devel-

opment agenda in Puerto Rico. Current administra-

tion has developed an agenda to face the challenge

of a new era. At the beginning of 1987,the

Governor of Puerto Rico created an Adjunct Council

on Science and Technology.


The Adjunct Council, comprising representa-

tives of higher education, industry and government

and chaired by Profesor Pernando Agrait, President

of the UPR, will develop plans to marketing new

products and new technological processes.