report on the competitiveness of puerto rico’s economy james orr federal reserve bank of new york...
TRANSCRIPT
Report on the Competitiveness of Puerto Rico’s Economy
James OrrFederal Reserve Bank of New York May 10, 2013
The views expressed here are those of the presenter and do not necessarily represent the views of the Federal Reserve Bank of New York or the Federal Reserve System.
85
90
95
100
105
110
115
120
2007 2008 2009 2010 2011 2012 2013
85
90
95
100
105
110
115
120
Regional Economic Activity: Index of Coincident Economic Indicators (CEI)
Index (Dec 2007=100) Index (Dec 2007=100)
Source: Federal Reserve Bank of New York; Government Development Bank for Puerto Rico Notes: The Puerto Rico composite index is based on a different methodology than the indexes produced by the FRBNY.
New York City
Puerto Rico
Oct09
Apr08 Nov05
-6
-4
-2
0
2
4
6
8
10
-6
-4
-2
0
2
4
6
8
10
Real GNP Growth: Puerto Rico and the United States
Percent Percent
Puerto Rico
United States
Sources: Puerto Rico Planning Board; U.S. Bureau of Economic Analysis.
1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009
50
60
70
80
90
100
110
120
130
140
150
1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009
50
60
70
80
90
100
110
120
130
140
150
Real GNP Per Capita: Puerto Rico
Index (1987=100) Index (1987=100)
Source: Puerto Rico Planning Board.
0
5
10
15
20
25
30
1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013
0
5
10
15
20
25
30
Unemployment Rate: Puerto Rico and the United States
Percent Percent
Source: U.S. Bureau of Labor Statistics. Notes: Data are seasonally adjusted. Shading indicates periods designated recessions by the National Bureau of Economic Research (mainland). Puerto Rico unemployment data unavailable prior to 1976.
Puerto Rico
United States
Challenges facing Puerto Rico
Challenges facing Puerto Rico
• Improving Labor Market Opportunities
Challenges facing Puerto Rico
• Improving Labor Market Opportunities• Developing Human Capital
Challenges facing Puerto Rico
• Improving Labor Market Opportunities• Developing Human Capital• Reducing the Costs of Doing Business
Challenges facing Puerto Rico
• Improving Labor Market Opportunities• Developing Human Capital• Reducing the Costs of Doing Business• Mobilizing Finance for Business Development
and Growth
Challenges facing Puerto Rico
• Improving Labor Market Opportunities• Developing Human Capital• Reducing the Costs of Doing Business• Mobilizing Finance for Business Development
and Growth• Lowering Dependence on a Shrinking Industry
2010 United States Puerto Rico Difference
Total 10.7 19.2 -8.4
By age cohort
16-24 20.4 39.0 -18.7
25-34 10.9 20.3 -9.4
35-44 8.9 17.1 -8.2
45-54 8.5 14.9 -6.4
55-64 8.2 10.8 -2.6
By education level (ages 25 to 64)
Less than high school graduate 16.5 30.8 -14.3
High school graduate 11.8 21.9 -10.2
Some college 8.8 14.9 -6.1
Bachelor's degree or more 4.9 8.0 -3.0
Figure 6. Unemployment Rates: Puerto Rico and the United States
Sources: 2010 Census (American Community Survey); Puerto Rico Community Survey.
Percent
2010 United States Puerto Rico Difference
Total 65.4 47.5 17.9
By age cohort
16-24 58.2 35.5 22.7
25-34 83.9 74.3 9.5
35-44 84.0 75.0 9.0
45-54 81.7 62.7 19.0
55-64 64.8 35.1 29.7
By education level (ages 25 to 64)
Less than high school graduate 62.9 39.1 23.8
High school graduate 75.8 56.5 19.3
Some college 81.6 70.2 11.4
Bachelor's degree or more 86.3 81.2 5.2
Figure 7. Labor Force Participation Rates: Puerto Rico and the United States
Sources: 2010 Census (American Community Survey); Puerto Rico Community Survey.
Percent
2010 United States Puerto Rico Difference
Average years of education (ages 25 to 64) 13.5 12.5 1.0
Percentage distribution, by education level
Less than high school graduate 10.9 21.0 -10.1
High school graduate 35.0 30.4 4.6
Some college 24.2 23.3 0.9
Bachelor's degree or more 29.9 25.3 4.6
Average years of education, by education level
Less than high school graduate 7.7 6.9 0.8
High school graduate 12.1 12.0 0.1
Some college 13.7 13.7 0.0
Bachelor's degree or more 16.8 16.7 0.2
Figure 8. Educational Attainment: Puerto Rico and the United States
Sources: 2010 Census (American Community Survey); Puerto Rico Community Survey.
Figure 9. Human Capital and Income Per Capita: Puerto Rico and the Fifty States
Sources: 2010 Census (American Community Survey); U.S. Bureau of Economic Analysis; Puerto Rico Planning Board.
70,000
60,000
50,000
40,000
30,000
20,000
10,000
Average years of education of adult working age population
12.0 12.5 13.0 13.5 14.0 14.50
10,000
20,000
30,000
40,000
50,000
60,000
70,000Massachusetts
West Virginia
ConnecticutNew Jersey
Income (dollars)Income (dollars)
Correlation: 0.71
Puerto Rico
Figure 10. Types of Financial Institutions: Puerto RicoPercentage of System Assets, Except As Noted
Source: Office of the Commissioner of Financial Institutions.
2011 2010 2007 2000 1997
Commercial banks 39.6 43.1 41.6 38.2 35.8
International/offshore bank entities 25.5 24.1 35.9 35.8 31.5
Government banks 11.2 9.8 5.3 5.7 7.9
Investment companies 8.9 8.4 6.7 1.9 1.9
Credit unions 4.6 4.5 3.1 3.6 4.6
Securities brokers 3.2 3.5 0.6 4.2 7.1
Mortgage institutions 3.2 2.8 2.8 3.8 2.7
Finance companies 2.4 2.3 2.2 3.8 4.0
Leasing companies 0.9 1.0 1.3 1.0 1.4
Small loan companies 0.4 0.4 0.7 1.8 3.0
Venture capital funds 0.0 0.0 0.0 0.1 0.1
Total assets (millions of U.S. dollars) 172,029 168,214 211,437 123,534 83,637
0
5
10
15
20
25
1996 1998 2000 2002 2004 2006 2008 2010
0
5
10
15
20
25
Figure 13. Commercial Bank Nonperforming Loans: Puerto Rico
Percent Percent
Source: Office of the Commissioner of Financial Institutions.
Total
Individuals
Real estate
Commercial, industrial, and
agricultural
As a Percentage of Total Loans, by Segment
0
5
10
15
20
25
30
35
1990 1994 1998 2002 2006 2010
0
5
10
15
20
25
30
35
Figure 15. Employment within the Manufacturing Sector: Puerto Rico Thousands Thousands
Source: U.S. Bureau of Labor Statistics.
Chemical
Apparel
Computer and electronic production
Fabricated metalsPlastics and
rubber
Note: Data are annual.
Exports 73,739.2
Merchandise 66,077.6 Transportation 475.9 Visitors' expenditures 3,472.8 Miscellaneous services 2,554.3 Income on investments 1,158.6
Imports 87,629.8
Merchandise 48,285.6 Transportation 2,195.6 Travel expenditures 1,106.1 Miscellaneous services 1,226.5 Income on investments 34,816.0
Balance on merchandise transactions 17,792.00 Balance on services 1,974.80
Balance on investment income (33,657.40)
Figure 16. Balance of Payments: Puerto Rico, 2009
Source: Puerto Rico Planning Board.
Recommendations:
Recommendations:
• Reduce Barriers to Job Creation and Labor Force Participation
Recommendations:
• Reduce Barriers to Job Creation and Labor Force Participation youth sub-minimum wage design of benefit programs
Recommendations:
• Reduce Barriers to Job Creation and Labor Force Participation youth sub-minimum wage
Recommendations:
• Reduce Barriers to Job Creation and Labor Force Participation youth sub-minimum wage design of benefit programs
• Reform the Energy Industry
Recommendations:
• Reduce Barriers to Job Creation and Labor Force Participation youth sub-minimum wage design of benefit programs
• Reform the Energy Industry Regulatory commission
Recommendations:
• Reduce Barriers to Job Creation and Labor Force Participation youth sub-minimum wage design of benefit programs
• Reform the Energy Industry Regulatory commission
• Lower the Costs of Doing Business
Recommendations:
• Reduce Barriers to Job Creation and Labor Force Participation youth sub-minimum wage design of benefit programs
• Reform the Energy Industry Regulatory commission
• Lower the Costs of Doing Business• Foster Partnerships between Industry and Higher
Education
Recommendations:
• Reduce Barriers to Job Creation and Labor Force Participation youth sub-minimum wage design of benefit programs
• Reform the Energy Industry Regulatory commission
• Lower the Costs of Doing Business• Foster Partnerships between Industry and Higher
Education promote innovation and commercialization of research
Recommendations:
• Reduce Barriers to Job Creation and Labor Force Participation youth sub-minimum wage design of benefit programs
• Reform the Energy Industry Regulatory commission
• Lower the Costs of Doing Business• Foster Partnerships between Industry and Higher
Education promote innovation and commercialization of research
• Promote Independent Policy Evaluation