The Economy of Puerto Rico is one of the most dynamic in the Caribbean region. A diverse industrial sector has surpassed agriculture as the primary focus of economic activity and income. Encouraged by duty-free access to the US and by tax incentives, US firms have invested heavily in Puerto Rico since the 1950s. US minimum wage laws apply. Sugar production has lost out to dairy production and other livestock products as the main source of income in the agricultural sector. Tourism has traditionally been an important source of income for the island, with estimated arrivals of nearly 5.9 million tourists in 2007.
Current economic overview
Puerto Ricans had a per capita GDP estimate of $18,400 for 2007. Federal transfer payments to Puerto Rico make up more than 20% of the island's personal income. By comparison, the poorest state, Mississippi, had a median level of $21,587, according to the U.S. Census Bureau's Current Population Survey, 2002 to 2004 Annual Social and Economic Supplements. Since 1952 the gap between Puerto Rico's per capita income and the national level has changed substantially — From one third the U.S. national average and roughly half that of the poorest state in 1952, to 10% of the poorest state in 2007.
As of 2006, the unemployment rate was 11.7%. The U.S. state with the highest unemployment in October 2007 was Michigan, at 7.7%, and the U.S. average was 4.4%.
On November 15, 2006 the Government of Puerto Rico implemented a 5.5% sales tax. An optional 1-1.5% municipal tax had been in effect since May 2006.
Tourism is an important component of the Puerto Rican economy supplying an approximate $1.8 billion. In 1999 an estimated 5 million tourists visited the island, most from the United States. Nearly a third of these are cruise ship passengers. An increase in hotel registrations, which has been observed since 1998, and the construction of new hotels and the Puerto Rico Convention Center are indicators of the current strength of the tourism industry.
Puerto Rico is within the customs territory of the United States, but travellers from the island to the U.S. mainland are subject to customs and agricultural controls. U.S. citizens may travel without restriction between Puerto Rico and other U.S. territory; the proof of citizenship required at border crossings varies depending on the mode of travel.
Mail bound for the mainland from Puerto Rico and Hawaii is subject to USDA inspection for quarantined plant matter.
Puerto Rico may collect import duties only to the same degree it taxes the same goods produced domestically.