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Economic Activity

Puerto Rico's traditional agriculture was dominated by sugarcane, coffee, and tobacco, but in recent decades there has been a shift to the production of other crops and livestock. The tertiary or service sector employs about two-thirds of the labor force. Almost 90% of Puerto Rico's economic trade is with the United States, 10% is with the rest of the world, and less than 1% is with the neighboring Virgin Islands.

Agriculture. Until 1955, agriculture constituted Puerto Rico's main economic sector. Sugarcane, mostly for export to the American market, was the main crop, followed by coffee and tobacco. Sugarcane production declined as prices remained low, agricultural labor migrated to the United States, and urban expansion took over much sugarcane land. Coffee production, taking place mostly in the mountainous areas away from the pressures of urban expansion and supported by guaranteed minimum prices, has remained stable. Tobacco production has virtually disappeared. Considerable expansion has occurred in the production of dairy products, beef, pork, eggs, and poultry, although significant amounts of these products are still imported, primarily from the United States. There is also production of fruits and garden vegetables as well as of starchy vegetables, such as bananas and plantains.

Manufacturing. In the late 1940s, manufacturing was seen as the means by which Puerto Rico could develop economically, as political leaders of the time considered agricultural countries to be underdeveloped and industrial countries developed. As a consequence the government launched an industrialization program known as "Operation Bootstrap." Under this program the island was to become industrialized by providing labor locally, inviting investment of external capital, importing the raw materials, and exporting the finished products to the U.S. market. To entice participation, tax exemptions and differential rental rates for industrial buildings were offered.

Puerto Rico's manufacturing sector has shifted from the original labor-intensive industries, such as the manufacturing of food, tobacco, leather, and apparel products, to more capital-intensive industries, such as pharmaceuticals, chemicals, machinery, and electronics. Major manufacturing activities in the order in which they contribute to the manufacturing domestic income are chemical and allied products, machinery and metal products, food and kindred products, apparel and related products, printing and publishing, leather and leather products, stone, clay, and glass products, tobacco, paper and allied products, and textile mill products.

Services. Puerto Rico's largest economic sector is services, which includes wholesaling, retailing, professional services, communications, finance, tourism, and government. Most of the labor force is employed by the service sector. About 30% of the labor force within the service sector is employed by government, a high percentage. Otherwise, the employment structure resembles that of many developed countries.

The structure of the retailing sector has changed dramatically. Several decades ago retailing was dominated by small shops, geographically dispersed. Now strategically located modern shopping centers dominate. These range from large national shopping centers, such as Plaza las Americas, to large regional centers, such as Mayagüez Mall, Plaza del Caribe in Ponce, and Plaza del Atlántico in Arecibo, to many smaller local or neighborhood shopping centers.

Tourism. More than four million visitors come to Puerto Rico every year, mostly from the United States. Approximately one-third of these visitors arrive on large cruise ships that dock in San Juan for a short stay. Many visitors stay in the San Juan area, which has most of the first-class tourist hotels and casinos. However, first-rate hotels in Mayagüez, Ponce, and Fajardo provide good accommodations outside metropolitan San Juan. A smaller number of locally owned country inns, known as paradores, are found in the smaller towns and in some rural areas.

Transportation. Puerto Rico has three main seaports: San Juan, Ponce, and Mayagüez. Luis Muñoz Marín, the busiest and most modern airport in the Insular Caribbean, is located in Carolina, just east of San Juan. Puerto Rico also has smaller airports in Ponce, Mayagüez, Aguadilla, Arecibo, Humacao, Fajardo, Dorado, Vieques, and Culebra. The island has a network of well-developed paved roads. Goods are transported by truck as the railroad system was dismantled in the 1950s. The dominant form of personal transportation is the privately owned car; traffic problems are considerable. San Juan has taxis, rental cars, and a public bus system. Public transportation between cities is mostly based on público cars, privately owned vehicles for hire or with fixed fares between towns.

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