« Monkey See, Monkey Do | Main | Success Through Failure for HP's CEO »

February 15, 2005

Economic Troubles in Puerto Rico to Cause Shifts in the U.S. Hispanic Demographic

If the economists at Global Insight are correct in their expectations for the Puerto Rico economy, immigration to the U.S. mainland may rise significantly over the next few years:

    . . . Many decisions over the last 20 years have altered the economic relationship between Puerto Rico and the United States. The phasing out of the IRS Special Code 936 (which exempted U.S. firms operating on the island from paying U.S. corporate taxes) over a period of 15 years ending in 2005 and the protests against the U.S. Navy's use of Vieques Island for target practice have not only complicated the business environment in Puerto Rico, but they have has also undermined its economy, which relies on the U.S. military presence in many communities. But not only has the U.S. military recently decided to vacate Vieques, it is now leaving the main island as a whole�creating economic distress for even more communities.
     In the past, when things were good on the "mainland," then things were good on the island. But that relationship has been changed and weakened. Puerto Rico now faces competition from the rest of the world, particularly China, Mexico, the Dominican Republic, followed by the rest of Central and South America. Free trade agreements and globalization are making it harder for the island to lure outside investment. It remains a hot spot for manufacturing, though, and has one of the best-educated workforces in the region, something that will help attract firms planning to do business in the "shining star of the Caribbean," as the government advertisement goes. Nevertheless, Puerto Rico has some of the most severe anti-business labor laws in the United States, as well as the largest number of holidays of any modern manufacturing environment, something that works against its competitiveness. . . .

The Mexican Hispanic population has been about 70%-75% of the U.S. Hispanic demographic in recent years.  Three major factors are likely to cause a marginal shift in the origins of the Hispanic populace in coming years:

• The economic problems in Puerto Rico identified above
• Probable disuption in the Central American textile industry caused by the lifting of WTO quotas
• Increased job creation in Mexico combined with a falling birthrate.

The combination of this factors could cause an important shift in the country origins of the U.S. Hispanic population, an important consideration for investors and marketers.

Trackback Pings

TrackBack URL for this entry:
http://www.heritagetidbits.com/cgi-bin/mt/mtb.cgi/4

Comments

Post a comment