Puerto Rico, with a GNP of $45.2 billion (2002 est.), has one of the most dynamic economies in the Caribbean region. Encouraged by local and remaining federal tax incentives, U.S. firms have invested heavily since the 1950s. Important industries include pharmaceuticals, electronics, textiles, petrochemicals, and processed foods. Agriculture, although representing only 3% of the labor force and approximately 1% of GDP, is centered in dairy production and livestock products. Tourism has traditionally been an important source of income representing approximately 7% of GDP, with estimated arrivals of nearly 3.9 million tourists annually, and employs 64,000 people. Manufacturing continues to decline and now represents approximately 40% of GDP contributing some $23.0 billion of a total GDP of $71.1 billion (2002). Employment in manufacturing has also declined from 22% in 1981 to 13.5% in 2000. Finance, insurance and retail services have undergone dynamic growth over the past decade and now account for 13% of GDP, contributing some $9.0 billion.

The foregoing notwithstanding, the Puerto Rican economy faces serious challenges arising from the loss of federal tax incentives and the continued weak global economy. While Puerto Rico's economy is one of the strongest in the Caribbean, it is still well bellow that of the poorest state on the Mainland -- Mississippi.

Puerto Rico is also a major market for U.S. Mainland retailers with household names such as JC Penney, Sears, Wal-Mart, Sam's Club, Marshall's, Home Depot, Big K-Mart, Costco, and Macy's. Annual retail sales in Puerto Rico are estimated to have totaled $15 billion in 2003. Average sales per square foot in Puerto Rico's shopping centers range from $600.00 to $700.00 compared to $115.00 to $522.00 on the U.S. Mainland. Puerto Rico ranks among the ten leading world customers of U.S. Mainland products, purchasing in excess of $15 billion annually. These purchases generate over 170,000 jobs on the Mainland. Puerto Rico's exports totaled $40 billion (FY 03) of which approximately 87% represented sales to the U.S. Mainland. If Puerto Rico were not part of the United States, it would represent the tenth largest trading partner.

The Island's labor force of 1.2 million (2000) by occupation is as follows: government 28%, manufacturing 13.5%, construction 8.6%, services 27.4%, finance 5.0%, retail 11.7%, and others 5.4%. Puerto Rico's labor force has either earned a college degree, acquired some college instruction, or is currently enrolled in an institution of higher learning. Reflective of this educated labor force is the literacy rate, which stands at 89% for the total population. The Island's per capita income is $9,634 and the average family income is over $25,000. The minimum wage is that promulgated by the U.S. Minimum Wage Laws. The unemployment rate is currently stated at approximately 12%. The inflation rate in Puerto Rico for calendar year 2000 stood at 5.7% vs. 2.5% on the U.S. Mainland. Among the 27 countries of the Caribbean and Central and South America, Puerto Rico is ranked 8th in GDP and 2nd in GDP per capita.